Economic model and theory The economy of the SFR Yugoslavia and thus of the Socialist Republic of Croatia was initially influenced by the Soviet Union. As the Communist Party of Yugoslavia was a member of the
Communist International, Yugoslav communists thought that the Soviet way to socialism was the only option to create a socialist state. In the early years of the SFR Yugoslavia, Communist members suppressed critics towards the Soviet Union and harbored sympathies towards it. In the CPY, it was generally thought that state ownership and
centralism were the only ways to avoid economic breakdown and that without the state ownership and administrative control it would be impossible to accumulate vast resources, material and human, for economic development. Since every undeveloped country needs vast resources in order to start developing, and Yugoslavia was among them, communists thought that this was the only way to save the economy of Yugoslavia. Also, their ideology included elimination of the private sector, as they thought that such an economic system was historically wasteful.
Economy during the war The first process of nationalization started on 24 November 1944, when Yugoslav Partisans dispossessed their enemies of their assets. The first victims of the confiscation were occupiers and war criminals. However, not long after, the assets of 199,541 Germans, the whole German minority, including 68,781 ha of land, were confiscated as well. Until the end of the war, the state controlled 55% of industry, 70% of mining, 90% of ferrous metallurgy and 100% of the oil industry.
Renewal of the economy In the SR Croatia, material damage and losses were high. In the war, the SR Croatia lost 298,000 people, 7.8% of its total population. Because of the 4-year partisan war, bombings, over-exploitation of raw materials and agricultural resources, and destruction of roads and industrial facilities, the state entered into economic chaos. The peasantry that provided goods to all the conflicting sides in the war was devastated and human losses were also high. The damage to industry in Yugoslavia was the worst in Europe, while the SR Croatia was among the most damaged republics of Yugoslavia, along with Bosnia and Herzegovina and Montenegro. The communist authority needed to act in order to prevent hunger, disorder and chaos. Yugoslavia lacked qualified workers, so the economy's renewal was mostly based on mass volunteer work. The recruitment for volunteer work was conducted with propaganda promising a better communist future, especially for members of Yugoslav partisans and youth. Another segment of these labourers were those who feared persecution, mainly opponents of the communist regime and Nazi collaborators. They entered volunteer labour in order to escape persecution. A third segment of the work force consisted of prisoners of war, who worked the hardest jobs. The distribution of food and material needed for industry depended on quick rebuilding of damaged roads. The Zagreb-Belgrade railway had been in reconstruction day and night, so the first train to travel this railway after the war, did it by the end of June 1945. Minefields also had to be cleared. Even though relations between the Western countries and Yugoslavia were tense, significant help to the people of Yugoslavia came from the
UNRRA, an American aid agency formed as a branch of the United Nations. They distributed food, clothes and shoes, which helped the country avoid mass starvation. Between 1945 and 1946, the UNRRA deployed 2.5 million tons of goods, mostly food, worth US$415 million. This amount was equal to twice the imports of the
Kingdom of Yugoslavia in 1938, or 135% of its tax revenues. It is generally thought that UNRRA fed and clothed some 5 million people.
Agrarian reform At the same time as the persecution of political enemies, communist authorities conducted the Agrarian Reform, a reform made on 23 August 1945. This process included dispossession of wealthy citizens and peasants. Agrarian Reform changed the ownership relations of agricultural properties. Land that was above 35 acres was taken from its owners. Nearly half of taken lands were transformed to agricultural areas (state property), while the other half was given to poor peasants. This reform also included the colonization in the SR Croatia where people from the so-called depressed areas moved to areas from which the
Volksdeutsche had been expelled. In the SR Croatia, colonization occurred in
Slavonia, while colonists were the poor peasants, mostly
Croatian and
Bosnian Serbs. The confiscation of property was also conducted; people who were trading during the war were declared war profiteers and by this, the state gained factories, banks and large shops. The communists also introduced a new way of distribution of agricultural products. In order to supply the people who lived in towns and cities, they introduced the redemption of those products. The policy of distribution was based on the idea that the working segment of society should have an advantage in quantity and diversity of goods over the non-working, parasitic segment. This led to development of black markets and speculation. The next step in the implementation of the Agrarian Reform was
nationalization of the large assets of the bourgeoise. On 28 April 1948, when small shops and the majority of crafts had been nationalized, the private sector in the SR Croatia was liquidated to the end; out of 5,395 private shops, only 5 remained active. This decision was a double-edged sword: while the poor segment of society was satisfied by it, the large majority of the population was resistant and ready to revolt. Just like in the Soviet Union, the state controlled the entire economy, while free trade was forbidden in favour of central planning. Because of this, the state started rational distribution of necessities for living, which were distributed among the population based on remittances, while consumers gained a certain amount of certificates each month for buying a certain amount of certain goods, including food, clothes and shoes. In the spring of 1949, the state introduced high taxes on private farmer's economies which farmers were unable to pay. This forced them to enter into the peasant labour unions, formed based on the Soviet
kolhozes. In such a manner, the state introduced forced collectivization of villages. This collectivization soon disappointed the poor peasants who got their land for free in the process of dispossession of wealthy peasants. Even though the communists thought that collectivization would solve the problem with food, on the contrary, the collectivization created the so-called "Bread Crisis" in 1949. The process of dispossession in Yugoslavia lasted from the middle of 1945 until the end of 1949. It was the fastest process of dispossession, even compared to East European communist states. For this process, the state needed a large number of officials who were members of the Communist Party, receiving orders from the Politburo, thus leaving the Yugoslav republic without any power in the economy. The economy of one republic was depending on decisions made by the Politburo in Belgrade, thus Yugoslavia become a strictly centralized state. Moreover, the liquidation of the private sector, cleansing of the state apparatus and high officials and their replacement by half-educated partisans, drastic reduction of the gap between payments of ministers and workers (3:1), and emigration and deaths of the bourgeois class led to the disappearance of the middle class in the social structure, which had a negative effect on social life.
Industrialization Five-Year Plan , 4th
Secretary of the Communist Party of Croatia, a creator of the Five-Year Plan Industrialization was the most significant process in the economic development of the SR Croatia, as communists promoted industrialization as the main factor in fast development. After the process of renewal, the process of industrialization and electrification started based on the Soviet model. The whole economy, the creation of a system and the formulation of the strategy of development in the Five-Year Plan, was in the charge of
Andrija Hebrang. As President of the Economy Council and President of the Planning Commission, Hebrang was in charge of all ministries that dealt with the economy. Alongside Tito,
Edvard Kardelj and
Aleksandar Ranković, he was the most influential person in Yugoslavia. As a chief of the whole economy, Hebrang finished his Five-Year Plan in winter 1946–47 which was approved by the government in spring 1947. Because of the lack of knowledge, the Plan copied the Soviet model. The factories which were built faster were factories that were in the sector of heavy and military industry, of which the most known in SR Croatia were "
Rade Končar" and "
Prvomajska". In the Five-Year Plan, Hebrang wanted to increase the industrial production by five times and agricultural production by 1.5 times, increase the GDP per capita by 1.8 times and the national revenues by 1.8 times. The plan also included the increase of qualified workers, from 350,000 to 750,000. For the SR Croatia, it was decided that its industrial production needed to be increased by 452%. The fast development in industry required a high number of workers, so from 461,000 workers in 1945, in 1949 there were 1,990,000 workers. On 17 January 1947, Kardelj stated to the Central Committee of the Communist Party of Croatia that Yugoslavia would be industrially stronger than Austria and Czechoslovakia. Both Kardelj and Bakarić advocated development of light industry, instead of Hebrang's idea for industry that would serve agriculture. The Five-Year Plan was indeed exaggerated; this plan did not have qualified personnel, market (placement) and capital; even so, the state continued with its implementation. All across the country, the state built the sites, and all projects of industrialization and electrification were made with propaganda that the population would have lower poverty and unemployment. The unemployment was indeed reduced, however, new employees were not educated for their jobs, so many objects were built slowly and many of them were not built at all. Following the current views of the Communist Party, the role of leading the economy was given to the
directorate-generals, as a link between the ministries and the Party's leadership. By their implementation, the state gained even greater control over the economy. The companies had their
legal person; however, they did not have operational autonomy, since they were, as state organs, under state control. == Religion ==