Area Handbook for Romania Part 34

About 48 percent of the industrial investment was absorbed by building construction and installation work, 37 percent was spent on machinery and equipment, and 15 percent was devoted to the increase of working capital. One-third of the investment in machinery and equipment from 1966 to 1969 was used for procurement abroad, that proportion having increased from about one-fifth in the 1956-60 period.

Although substantial progress has been made in the expansion of industrial capacity, construction of new industrial plants has been beset by many problems and has consistently lagged behind official plans. Inadequate planning, poor design, disregard of the limitations of the materials base and of potential markets, improper location, excessive size of projects, and long delays in project development and in construction have been among the difficulties most frequently discussed in the country's press. Completed plants often require years to attain the projected output level, and many plants have never reached it.

Large losses to the economy have also been caused by long delays in installing new equipment, much of it imported at a heavy cost in foreign exchange. At the end of 1969 the Grand National a.s.sembly was officially informed that the volume of unused equipment amounted to 3.5 billion lei; some of the equipment had been lying idle for from ten to twelve years. Government officials realize the urgent need to improve investment performance, particularly in view of the large investment program planned for the 1971-75 period.

PRODUCTION

Industrial production in 1970 was 3.8 times larger than it had been ten years earlier, according to official data. This increase is equivalent to an average annual growth rate of 12.8 percent. A rise of 11.2 percent in industrial output was unofficially reported for 1971. In terms of Western statistical concepts and methods, the annual increase in industrial output was estimated at 11.5 percent for the 1960-68 period, compared to an officially reported growth rate of 13.2 percent.

Industrial growth in Romania has been among the highest in countries of Eastern Europe.

In line with the government's priorities, production of capital goods increased at an annual (official) rate of 14.2 percent, and that of consumer goods advanced by 10.2 percent. The proportion of capital goods in the total output therefore increased from 62.9 percent in 1960 to 70.6 percent in 1970; it is scheduled to reach 72.8 percent by 1975.

Although the output of consumer goods increased 2.6 times during the ten-year period, the availability of goods to consumers did not rise proportionately because an increasing volume was exported to pay for imports of machinery and raw materials. Shortages of consumer goods, including foodstuffs, were not eliminated by 1971. The output of newly introduced products, such as chemicals and television sets, increased more rapidly in the 1960s than did the output of traditional items (see table 13).

Improving the quality of manufactured products has been a major concern of the party and government, particularly from the point of view of compet.i.tiveness in foreign markets. With some exceptions, such as men's and women's knitwear, a lack of compet.i.tiveness was clearly demonstrated in mid-1971 by the results of a giant Romanian trade exhibition in Duesseldorf, West Germany. This exhibit was reported to have achieved just the reverse of what was intended and to have demonstrated the inferiority of Romanian goods compared to Western European and j.a.panese products. Quality considerations, however, did not inhibit an attempt to market a Romanian-built motor vehicle of the jeep type in the United States.

_Table 13. Output of Selected Industrial Products in Romania, 1960 and 1969_

---------------------------------------------------------------------- Product Unit of Measure 1960 1969 ----------------------------------------------------------------------

Pig iron thousand metric tons 1,014 3,477 Steel do 1,806 5,540 Coal and lignite do 6,768 16,976 Crude oil do 11,500 12,346 Natural gas billion cubic feet 365 850 Electricity million kilowatt-hours 7,650 31,509 Fertilizers[1] thousand metric tons 71 720 Artificial fibers do 4 56 Plastics do 12 137 Synthetic rubber do 0 55 Tires thousand units 743 3,166 Paper thousand metric tons 140 398 Tractors units 17,102 24,895 Motor vehicles do 12,123 56,998 Cement thousand metric tons 3,054 7,515 Timber million cubic feet 139 186 Textiles million square yards 393 672 Footwear million pairs 30 63 Radios thousand units 167 428 Television sets do 15 221 Sugar thousand metric tons 391 428 ---------------------------------------------------------------------- 1. In terms of plant nutrients.

Source: Adapted from _Anuarul Statistic al Republicii Socialiste Romania, 1970_ (Statistical Yearbook of the Socialist Republic of Romania, 1970), Bucharest, 1970, pp. 186-195.

By decrees issued in 1970 and 1971 the State Inspectorate General for Product Quality was established as an organ of the Council of State with wide powers to establish and enforce quality standards, including the imposition of economic and criminal sanctions. At the same time, the decrees provided that extra payments be made to individuals and groups of workers who turn out products of superior quality. In announcing the creation of the new agency, Romanian commentators remarked that an administrative approach to the solution of the quality problem was made necessary by the failure of other measures.

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