Why did Yugoslavia's economy perform so well?

[TerranGames]

Basically, this chart.

I admit, the title's a bit misleading, since I'm focusing down on Slovenia and Croatia specifically (the other republics drag it down to between Hungary and Poland, though still on track to beat them before the stagnation).

What's going on here? I know that the "Real Existing Socialism" countries were infamous for their stagnation and lower living standards, and you can see that on the chart, with the Warsaw Pact countries barely keeping up with the UK, then starting to stagnate and fall behind in the late 70's onward, forming the bottom of the chart. But with Slovenia and Croatia, the two richer Yugoslav republics, you can see both of them not just keeping up, but catching the West until austerity kicks in in the 80's, and according to this chart, Slovenia even overtakes the UK and Japan in '79. Japan! During it's economic miracle!

As I understand it, they kept heavily subsidizing and bailing out inefficient enterprises, and not threatening them with bankruptcy, and kept printing money and getting more IMF loans, so they suffered from high inflation, unemployment, and eventually the economy tanked when the IMF made them do austerity to renegotiate their debt, after Western import demand collapsed after the oil crisis, so I assume that their "miracle" would be more modest if they sorted that out to be more sustainable, but still, why do they stand out above the Warsaw Pact countries?

I've tried to do some research as to why this happened, and I've read some stuff talking about guest workers not being counted properly, unsustainable IMF loans, soft budget constraints, more industrialized starting position, price controls, and a whole lot of other stuff, and I suspect that there's some number fudging here, but I don't know what to make of it all. Does anyone here know more about this than me? Why is this like this?

Thanks!

 

[WaywardHillHaints]

Well, while this comment probably isn't all that helpful, my understanding is that they practiced a more market-oriented form of socialism and as such that might have helped a little bit. You'll see that Croatia's economy really starts to climb after the more market-socialist reforms are implemented in the 50s, as before that Yugoslavia followed a more Eastern Bloc like model.

 

[Mad Bad Rabbit]

Tito was better at socialism than Kruschev or Brezhnev? (mainly by being willing to reject or ignore ideological elements like Lysenkoism that flat did not work)

 

[SealTheRealDeal]

View attachment 872669

Basically, this chart.

I admit, the title's a bit misleading, since I'm focusing down on Slovenia and Croatia specifically (the other republics drag it down to between Hungary and Poland, though still on track to beat them before the stagnation).

[snip]

but still, why do they stand out above the Warsaw Pact countries?

The Northwest Territories have a GDP per capital of 92,961USD which is higher than America's per capita GDP. Why is Canada outperforming America? /s

The other republics (which make up the vast majority of the population) were a lot poorer. Looking at Slovenia in isolation and trying to extrapolate Yugoslav success from that is backwards logic. Slovenia has been substantially more developed than the regions to its south since Habsburg times, it was like a mini Bohemia for the Austrian crown, and Belgrade's best efforts to redistribute Slovenia's wealth failed to bridge the gap. If you looked at the richest and most developed regions of the other socialist states you'd likewise find that those regions can match or surpass the per-capita wealth of capitalist countries.

 

[prani]

View attachment 872669

Basically, this chart.

I admit, the title's a bit misleading, since I'm focusing down on Slovenia and Croatia specifically (the other republics drag it down to between Hungary and Poland, though still on track to beat them before the stagnation).

What's going on here? I know that the "Real Existing Socialism" countries were infamous for their stagnation and lower living standards, and you can see that on the chart, with the Warsaw Pact countries barely keeping up with the UK, then starting to stagnate and fall behind in the late 70's onward, forming the bottom of the chart. But with Slovenia and Croatia, the two richer Yugoslav republics, you can see both of them not just keeping up, but catching the West until austerity kicks in in the 80's, and according to this chart, Slovenia even overtakes the UK and Japan in '79. Japan! During it's economic miracle!

As I understand it, they kept heavily subsidizing and bailing out inefficient enterprises, and not threatening them with bankruptcy, and kept printing money and getting more IMF loans, so they suffered from high inflation, unemployment, and eventually the economy tanked when the IMF made them do austerity to renegotiate their debt, after Western import demand collapsed after the oil crisis, so I assume that their "miracle" would be more modest if they sorted that out to be more sustainable, but still, why do they stand out above the Warsaw Pact countries?

I've tried to do some research as to why this happened, and I've read some stuff talking about guest workers not being counted properly, unsustainable IMF loans, soft budget constraints, more industrialized starting position, price controls, and a whole lot of other stuff, and I suspect that there's some number fudging here, but I don't know what to make of it all. Does anyone here know more about this than me? Why is this like this?

Thanks!

https://en.wikipedia.org/wiki/Relocation_of_Serbian_industry_during_the_Informbiro_period
this is also a factor

 

[Reflection]

Yugoslavia was officially communist, but really practiced a fusion of communism and capitalism, long before China or Vietnam ever did. They allowed for things like private businesses, free markets, local autonomy and entrepreneurship while the state still managed all the major industries. Basically, the state ran all the big stuff, but on the side privateering individuals were allowed to run their own businesses freely, so long as it was to the overall benefit of the state.

Nothing was ever too big, no major conglomerates that could rival the core government, but you saw things like privately owned retailers, restaurants, and artisan workshops. You also saw things like publishers, manufacturers, distributors and importers/exporters exist as well. Also, Yugoslavia was able to benefit from being the most western-friendly communist state, and did a lot of business and trade with both Blocs on top of the other Non-Aligned Movement members.

I'm not a professional economist or anything, but I have to imagine the implementation of free markets within the socialist structure of the state and being friendly to both rival Blocs of the Cold War, on top of numerous other countries in the NAM, was a major boost to Yugoslavia as a nation.