ABSTRACT
The demise of the command economy by 1954 did not mean the end of formal planning in Yugoslavia, although the drawing up of one- and five-year social plans is less important than the informal interaction between government bodies, banks and firms. Like most socialist nations, with whom it shares a common ideological heritage; Yugoslavia has assigned a low investment priority to agriculture. The soft budget constraint plus the fact that Yugoslavs hold most of their savings in foreign currencies, whose value in dinars rises with devaluation, has also made it nearly impossible to have an effective monetary policy. A foreign-trade bank, the Yugoslav Bank for International Economic Cooperation, finances most trade. Yugoslavia's post-war leaders inherited some of its most intractable social and economic problems—in particular, those of ethnic diversity, underdevelopment, rural underemployment, and regional income inequality. External political pressures on the country have resulted largely from a fierce determination to remain independent.
