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Bulgaria: Industrial Decentralization
Country Study > Chapter 3 > The Economy > Economic Policy and Performance > The Era of Experimentation and Reform > Industrial Decentralization

INDUSTRIAL DECENTRALIZATION


In industry the "New System of Management" was introduced in 1964 and lasted until 1968. This approach intended to streamline economic units and make enterprise managers more responsible for performance. In June 1964, about fifty industrial enterprises, mostly producers of textiles and other consumer goods, were placed under the new system. Wages, bonuses, and investment funds were tied to enterprise profits, up to 70 percent of which could be retained. Outside investment funds were to come primarily from bank credit rather than the state budget. In 1965 state subsidies still accounted for 63 percent of enterprise investment funds, however, while 30 percent came from retained enterprise earnings and only 7 percent from bank credits. By 1970 budget subsidies accounted for only 27 percent of investment funds, while bank credits jumped to 39 percent, and retained enterprise earnings reached 34 percent. The number of compulsory targets for the Fourth Five-Year Plan was cut to four: physical output, investment funds, input utilization, and foreign trade targets. The pilot enterprises did very well, earning profits that were double the norm. By 1967 two-thirds of industrial production came from firms under the new system, which by that time had embraced areas outside consumer production.

Another distinctive feature of the Bulgarian economy during the 1960s was the high level of net capital investment (total investment minus depreciation). The average of 12 percent from 1960 to 1970 was the highest in all of Eastern Europe. As in the past, investment in heavy industry received the lion's share -- over 80 percent of total industrial investment. Capital accumulation (net investment plus net inventories) averaged 29 percent from 1960 to 1970, also a very high level.

Data as of June 1992




Last Updated: June 1992


Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Bulgaria was first published in 1992. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on Factba.se.

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