The Dialectics of Decentralization: Economic Reform and Regional Inequality in Yugoslavia

Abstract

Economic reform in Communist states is usually evaluated in terms of a dichotomy between traditional “command” economies and systems in which production and investment decisions are “decentralized” in the hands of immediate producers. This distinction tends to be misleading, especially when applied to multinational and/or federal states. This is the case for two reasons. First, the concept of decentralization may be disaggregated into a number of political and economic policy packages whose goals are not necessarily compatible. Second, differences in policy preferences among sub-national leaders are resolved in favor of a particular set of alternatives by the form of decentralization chosen at the national level. In Yugoslavia, decentralist reforms have subordinated the goal of reducing interregional economic inequality to the goals of rapid and stable economic growth, despite the fact that both “decentralist” goals have been equally espoused by federal planners.