2.3. THE ECONOMIC AND SOCIAL DEVELOPMENT OF KOSOVA

Until the end of World War Two and to the mid-fifties, Kosova was a typical agrarian country with an undeveloped industry. Agriculture participated in the creation of the national (social) product with 70%, while 80% of the industrial product was carried out by "Trepca". This was a consequence of a discriminatory and colonial policy of the so-called first Yugoslavia, which left Kosova out of every industrialization process and economic and social development. After the Second World War, in the scope of former Yugoslavia, the economic and social development was realized according to the socialist concept of industrialization model with a dominant status of the social/state-owned property. Even though, some considerable results in the economic and social transformation were achieved. The national product increased with an annual rate of 4,9%, or for 7 times. The national product per capita also increased for 2.7 times, so that in 1989 it reached a level of about 700 $US per capita. Based on these indicators, some important infrastructure conditions were created, a relatively diversified structure and a considerable development of human resources.

Even though, such a development had an extensive character, and was forwarded with several problems and conflicts, and as a consequence, the differences in development between Kosova and other parts of Yugoslavia increased permanently. While in 1947, the development of Kosova reached 49% of the average Yugoslav level, in 1989 it declined at 27% only. This means that the development trends were accompanied by many problems and conflicts which were mostly as a consequence of a very heavy historical heritage and Yugoslav centralist economic system by which until the seventies ('70), Kosova had an inferior position.

The economic growth and development were realized more as a result of the impact extensive rather than quality factors. First of all, the sectors of energy were developed, then non-ferrous metals and ferrous metallurgy, which were not included under the function of the dynamic development of Kosova, in particular to an employment of the population capable to work. An over average development dynamics had sectors with an unfavorable position at the economic system of former Yugoslavia, in particular in the price system, monetary system, system and custom's policy, etc. Thus, the unified solutions of the economic system, not taking into consideration the development specifics of Kosova, became a source of many disproportions in the economy. This was especially expressed with a very low level of the economic development, compared to other federal units and international relations.

2.3.2. DEVELOPMENT CHARACTERISTICS

A historic review of the economic development during various periods of time, helps to understand the source of the development problems and conflicts, and their consequences in the economic aspects as well as in social and political problems in Kosova. After the World War Two, in 1947, the population of Kosova was 728.000 inhabitants, where the participation of agriculture population was 80,9%, the natural birth rate of the population 2,55%, the illiterate rate (over 10 years) 62,5%, and a very low employment rate - 16 persons per 1000 inhabitants. The share of industry in the national product was 16,1%.

The growth rate

Period National product Nation. prod per capita

1948-1965 5.7 3.4

1966-1970 6.0 3.4

1971-1975 7.5 4.4

1976-1980 3.6 1.5

1981-1985 1.8 -0.4

1986-1988 1.1 -1,3

During the period between 1947-1965, the economic development of Kosova was effected with an annual growth rate of 5.7%, but one should consider the fact that the development basis was symbolic. This was rather an agrarian development with significant problems in the social and demographic field. The economic structure was not developed at all, while it was represented with a small number of industrial branches, mainly in minerals and non-ferrous metal processing, wood processing and plates (tiles), and production of coal, which participated with 90% in creating the national product in industry.

In this period, the economy of Kosova did not have an appropriate treatment in the economic system of former Yugoslavia, even though it was a territory with the lowest development level. Until 1956, time when all investments were financed by free state funds, Kosova remained almost out of the investment activities. After this, Kosova would establish a development infrastructure with unfavorable financing sources, with long investment cycles, and an unfavorable investment structure. This time marks the beginning of development problems, which during the later stages will become very difficult to be faced with.

During the development period 1965-1970, even though Yugoslavia proclaimed the economic reform, Kosova still remained as a region with a symbolic level of development. The annual growth rate of 6,0% was rather a result of a low development base (level), and putting into operation of some capacities of the extractive industry.

The participation of the national product of Kosova in that of former Yugoslavia dropped from 2,3%, as was in 1947, in 2,0% in 1965, and 1970. Also the national product per capita marks some permanent declining tendencies, so that from 38,6% in 1965 of the Yugoslav average it dropped to 33,7% in 1970. These negative tendencies of the economic development level were accompanied also by a negative tendency in the field of the social and demographic development.

These trends are a consequence of a centralistic administration in economy, an inappropriate treatment of the undeveloped regions, especially of Kosova. An unfavorable industrial structure was created, as a consequence of an investment policy directed from political centers.

A higher rate of economic growth and quality changes in the production structure, Kosova had in the periods from 1971-1975 and 1976-1980. The economic and political system in former Yugoslavia was decentralized up to a certain level, while the constitutional position of Kosova in the economic system of former Yugoslavia was completely equal with the republics. At this time, a strengthening of economic authorizations, especially in the field managing of the development policy, budget policy, financing and international cooperation was expressed. On the federal level there existed a veto mechanism in regulating issues on economic and development policy. These circumstances had a positive impact in branching of development, in creating new economic complexes. The preconditions for the development of an educational, scientific, and social infrastructure of the population were created.

Of a significant importance was the project of the University of Prishtina, which was in a direct function of overall development of transformations in Kosova.

The policy for an economic stimulation of undeveloped regions, brought some improvements, after the establishing of the Federal Fund, for crediting of the undeveloped federal units (Kosova, Bosnia & Herzegovina, Macedonia and Montenegro). Only by the beginning of the seventies, Kosova was included in the Yugoslav policy to induce development through crediting of the economic development. But, this policy was not proven as an efficient model in overcoming problems generated by the economic system.

At the beginning of the eighties, as a result of the economic and political crisis in Yugoslavia, the Kosova issue deteriorates, as one of the very complex problems, which permanently crosses the boundaries of former Yugoslavia. The national product during the period 1981-1985 was increased by a 1,8% average, while during the period 1986-1989, such an increase was 1,1% only. This development dynamics was slower than the growth of the population, so that expressed in the national production per capita is a negative development of the Yugoslav average, level declines at 27% (1989). The problem of unemployment becomes a very serious problem, so that by the end of the eighties, it reached 38,8%. Now, the share of the population of Kosova in the population of former Yugoslavia, increased at over 8,0%, employment 3,1%, the share in the fixed production funds was 2,8%, while in the national product 2,2% only.