ABSTRACT
Restructuring of industry Manufacturing was the key sector under the command economy and great increases in output and employment were registered under Soviet leadership on the basis of low energy, transport and labour costs. The result was a dramatic structural change, particularly in the more backward economies of the SEECs. Heavy industry had priority because of its importance for the military-industrial establishment and for the engineering sector which produced the machinery needed for consumer goods. Particularly rapid growth occurred in the iron and steel industry and in non-ferrous metallurgy including aluminium. The priority for heavy industry meant exploitation of virtually all relevant raw materials. Hence the importance of the resource base, augmented by further mineral prospecting. Disparities in levels of production between countries and between regions narrowed but did not disappear. However, the generally large scale of production – frequently involving more than 5,000 workers – meant that towns could easily be dominated by just one or two industries. Moreover, the technological level was relatively low because the ECECs did not experience the scale of innovation which persistently marginalised the smoke-stack industries in the West. Socialist industry served relatively undemanding markets and there was little creative destruction: new capacities were almost invariably geared to net increases in output rather than the replacement of obsolete technology. When large enterprises did retool, their discarded machinery often cascaded down to small industries under the control of local authorities or cooperatives in the rural areas. Autarky was another distinct characteristic because, despite specialisation under Comecon auspices and substantial deliveries by ECECs to the Soviet market, the prime concern was the home market and few manufacturers achieved the efficiency necessary for a rewarding export business in the Western world. This was unimportant at first when almost complete separation was desired, but it became an embarrassment in the light of debts incurred in the West in connection with technological upgrading.
