The Price of Closing-Up

During the first four months of the last year, the registered imports in the territories of the new Yugoslavia amounted to US$ 2.2 billion, while in the same period this year they were at the mark of US$ 2 billion. Apparently, we have managed to successfully overcome the troubles on the imports side.

On the other hand, exports failed significantly with US$ 1.3 billion, so the trade deficit reached US$ O.7 billion for the said period. This exactly matches the total 1991 trade deficit for territories now comprising the new Yugoslavia. As the hard currency reserves are running low, it is obvious that imports will have to be drastically restricted during the forthcoming period.

When an important decrease in imports is imminent as an economic necessity, the political discontent with the world's attitude towards us begins to foster some old ideas, ideas which have brought no good to the Serbian economy in the past.

Foreign trade is switching to barter arrangements and is increasingly turning towards Russian and other non-convertible and non-competitive markets. On the other hand, the restricted possibilities in the sale of commodities abroad justify the closing-up of the economy and its orientation towards the domestic market.

Manufacturing goods for the domestic market means that all production costs will be covered, all losses made-up and that goods of any quality will be accepted. The impossibility of free imports once again stimulates the need for industries whose products should replace the imported goods. The import substitution strategy is one of our well-known experiences. In the late 70's, it made us plunge into a foreign debt crisis, from which we have not yet managed to emerge. As is our habit, that which did not work once ought to be tried again.

As Yugoslavia's frontiers shrank and the outside world expanded, the foreign trade regime changed, and the economy increasingly began to rely on domestic consumers. They are the ones who paid the dearest for such "attention".

Small markets per se are doomed to monopolies. The former Yugoslav market was not large enough for many manufacturers. With its reduction to one third of what was, the number of monopolists suddenly rose. Now even the manufacturers of plastic milk containers and newsprint have the opportunity of becoming monopolists. The old monopolists, such as car manufacturers, must envy them for the ease with which they achieved it.

We are witnessing numerous efforts to substitute goods, which were once bought from the western parts of ex-Yugoslavia, with domestic products. Why should we have to trade with the "enemies" when we can produce and buy everything within "our own country"? It is nice to be proud, but we should know that an economy relying on such a division of labor does not pay wages higher than 100 Deutsche Mark per month. Trading with "enemies" is, after all, more profitable.

There have been more publicly made promises that inter-republican trade will be resumed than practical moves. An uneven division of labor and market shrinkage have contributed more to the diminishing standard of living than war operations themselves.