NATIONAL INTELLIGENCE SURVEY 18; CZECHOSLOVAKIA; THE ECONOMY

• Document Type: CREST
• Collection: NIS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP01-00707R000200110014-8
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 37
• Document Creation Date: October 25, 2016
• Sequence Number: 14
• Content Type: REPORTS

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3. M and :petals
a. Ferrous metallurgy
b. Nonferrous metals
c. Construction materials
4. Manufacturing and construction
a. Machinery and equipment
b. Chemicals
c. Light industry
d. Agricultural processing
e. Construction
C. Government finance and economic policy
1. National economic planning and policy
Page
2. Government finance 21
a. Financial organization 22
b. Currency 22
c. Financial planning 22
3. Economic institutions 24
D Trade 25
Page
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I. Domestic
2. Foreign
a. Organization
b. Growth and direction
c. Commodity structure
d. Problems
e. Balance of payments
FIGURES
4 1
Fig. 10 Selected light industry products
(table)
Page
Fig. 1
Strategic supply position, 1972 table)
3
Fig. 2
Area, production, and yields of
(table)
principal crops table)
4
Fig. 3
Data on livestock and livestock
Fig. 14
State budget, 1971 and 1972 table)
products table)
5
Fig. 4
Energy position, 1972 table)
7
Fig. 5
Output of major fuels and power
1960 -1972 (table)
Fig. 17
(table) I
7
Fig. 6
Production of selected minerals and
metals (table)
11
Fig. 7
Production of selected construction
materials table)
13
Fig. 8
Production of principal types of
machinery and equipment (table).
14
Fig. 9
Principal products of the chemical
industry (table)
16
4 1
Fig. 10 Selected light industry products
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26
28
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30
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18
20
21
24
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(table)
Fig. 11
Selected products of agricultural
processing industry table)
Fig. 12
Structure of investment, 1948 -1972
(table)
Fig. 13
Investments by branch of the economy
(table) I..
Fig. 14
State budget, 1971 and 1972 table)
Fig. 15
Trade and trade balances, 1948 -1972
(table)
Fig. 16
Volume of trade with major partners,
1960 -1972 (table)
Fig. 17
Commodity structure of foreign trade
(table)
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The Economy
A. Economic appraisal (C)
Czechoslovakia includes, in Bohemia and Moravia,
one of the oldest and most highly developed industrial
areas of Europe and, in Slovakia, one of the more
backward areas. This contrast is reflected in the
disproportionate share of Bohemia and Moravia �the
Czech Lands �in the country's economic activity, an
advantage that has persisted despite attempts since
1968 to upgrade Slovakia's level of development. With
about 62% of the area and 68% of the population, the
Czech Lands account for three- four!ns of industrial
output and two- thirds of agricultural output.
Under the postwar Communist regime, the country
embarked on an ambitious policy of extensiv-
economic development, which concentrated on heavy
industry at the expense of the traditional consumer
oriented industries and agriculture. The unbalanced
economic development which followed led tc a period
of rapid growth in the late 1950's but then contributed
to a period of economic stagnation in the early 1960's.
This stagnation reflected serious economic difficulties.
In 1965 the regime of Party General Secretary Antonin
Novotny reluctantly adopted an economic reform
program designed to deemphasize heavy industry and
decen.ralize economic decisionmaking. Progress in
implementing reform, however, was only half hearted
until January 1968, when the more liberal group of
leaders headed b% Alexander Dubcek took power.
Dubcek, primarily concerned with political reform,
enacted some of the economic measures promised by
Novotny but in effect set the economy adrift. Gustav
Husak, Dubeek's successor, has scrapped the reform
program, relying on tight domestic controls, moderate
economic goals, and close relations with the U.S.S.R
He has made some concessions to the consumer but
the Fifth Five Year Plan (1971 -75) focuses on heavy
industrial development.
I. Size and level of economic activity
In both size and population Czechoslovakia is
somewhat smaller than the average for the countries of
Communist Eastern Europe. Its total output of goods
and services (the gross national product or GNP),
estimated at US$36.7 billion for 1972, yields a per
capita figure of about $2,540, noticeably larger than
that of the U.S.S.R. or the other Eastern European
Communist countries except East Germany. The
relatively large output per capita is directly related to
the high level of industrialization. Industry employs
38% of the labor force and accounts for about one -half
of GNP. These shares are close to the proportions for
East Germany and well above those for other
Communist countries.
Manufacturing is the largest branch of industry. For
its size, Czechoslovakia has the most comprehensive
machine building industry in the world, developed
largely since World War H. Sever. I branches of light
industry are traditional, including those engaged in
the production of textiles, shoes, g!z.,s, and ceramics,
but these branches have been much neglected since
World War 11. Agricultural output covers a large share
of domestic food consumption and provides for export
of some specialty food products, such as malt, hops,
and beet sugar.
Per capita output of heavy industrial products, such
as steel, is one of the highest in the world, but the
economy is grossly inefficient by Western standards. It
was not always so. Czechoslovakia emerged virtually
undamaged from World War II with an industrial
capacity matching that of West Germany, on a per
capita basis. In 1948, the year of the Communist
takeover, Czechoslovakia undoubtedly was better off
than West Germany. Per capita industrial production
25 years later, however, is less than three fourths of the
West German level.
Investment has received a larger share of GNP in
Czechoslovakia than in West European countries, and
personal consumption it smaller share. Investment has
accounted for more than 40% of GNP in recent years,
almost as large a share as personal consumption.
Defense expenditures have been estimated at abort
5% to 6% of GNP, and government administration
and welfare, about 9% to 10 Because the share of
personal consumption is smaller than in Western
Europe, Czechoslovakia compares even less favorably
with Western Europe in consumption than in output.
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Nevertheless, the Husak regime has made consumer
goods more available, and by Eastern European
standards the Czechoslovaks live well. Most amenities
arid luxuries remain scarce arid expensive, however.
2. Economic growth and reform
Communist control has been more costly to
Czechoslovakia than to other, less developed
economies in Eastern Europe. Since, 19.50, GNP has
increased at an average annual rate of less than V"(",
the lowesi in Eastern Europe. Throughout the 1550's
the regime found it easy to force the development of
heavy industry as the chief objective of economic
policy, and the results were in a %vay impressive. From
1950 to 1960, industrial employment increased by
105i and catput rose by 92i. The ease of increasing
exports to the U.S.S.R., the availability ci surplus
agricultural labor, and the� popular ac�ceptanev of it
very slow improvement in living conditions made it
ease for the regime to expand output. As it result, the
leaders were hardly aware of the lag in efficiency
output per unit of input grew by only 1 1,