Page:NATIONAL INTELLIGENCE SURVEY 18; CZECHOSLOVAKIA; THE ECONOMY CIA-RDP01-00707R000200110014-8.pdf/20

 APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200110014-8

4. Manufacturing and construction (S)

The development of manufacturing has followed the Soviet model, with its concentration on machine building and chemicals and neglect of light industry and food processing. The quality and mix of output likewise have come more and more to resemble those of Soviet manufactures. Famous before World War II for quality engineering and light industrial products, Czechoslovakia has failed to maintain its competitive position in world markets. The manufacturing sector has suffered from insulation from Western markets, a reorientation to the less-demanding market of other CEMA countries, and development policies that have funneled investment into new projects rather than into the modernization of existing plants. As a result, the industry finds itself at an impasse. The Eastern European market for Czechoslovak manufactures has weakened because the other countries have developed competing product lines and have increased purchases of Western machinery and manufactures. Moreover, Czechoslovak sales to the West cannot increase rapidly. Even the best of the country's goods find limited markets, and sales to the West usually have had to be made at a substantial loss. To improve the situation, costly adjustments in the product mix, increased purchases of Western technology, and drastic improvements in designing and marketing are needed.

a. Machinery and equipment

Czechoslovakia's machine building industry produces a broad range of equipment for all branches of the economy—a variety duplicated in Eastern Europe only by East Germany. The output of machine building enterprises grew by an average annual rate of more than 8% (U.S. estimates of value added) between 1950 and 1960, but the economic slowdown in the 1960's was reflected in an annual rate of growth of only 2.2% between 1961-65. Since then the average annual growth has been about 9%. Since machinery and equipment account for one-half of total exports, the machine building industry is of key importance to Czechoslovakia's export sector. About 12% of the industry's output is exported, nearly all of it to other Communist countries and the less-developed non-Communist countries. Output of the major types of machinery and equipment is shown in Figure 8.

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200110014-8