Foreign trade played an important role in the national economy of Communist Czechoslovakia as opposed to the economic system of the Soviet Union.
Foreign trade played an important role in the national economy of Communist Czechoslovakia as opposed to the economic system of the Soviet Union.
After the 1948 coup d'état, foreign trade enterprises successfully carried out the government's policy of rapidly redirecting the bulk of the country's foreign trade to communist states in the period from 1948 to 1953.
Many observers contended, however, that the new system had seriously adverse effects on the economy. Isolating domestic producers of export products—primarily manufactured goods—from developments abroad slowed the introduction of new technology, the upgrading of the appearance of products, and the development of sales and service staffs with adequate parts inventories. Isolation hampered the development of export industries and products, reinforcing the autarkic bias of the Soviet model.
After Joseph Stalin's death in 1953, Czechoslovak trade with the Western world gradually revived, although it still was far below prewar levels. More than two-thirds of the foreign trade continued to be with Comecon member states. Because of its relatively advanced industrial position within Comecon, Czechoslovakia initially had a secure market for its machinery and equipment exports. As years passed, however, the Soviet Union absorbed growing portions of Czechoslovakia's export capacity and very soon the country came to depend on the Soviet Union for imports of raw materials as well.
By the 1960s, it became clear that the country's dependence on foreign trade was substantial and that a restructuring of the economy was necessary.
In the 1970s, the government authorized a number of large enterprises to deal directly, or through affiliations with Czechoslovak foreign trade companies, with foreign purchasers of their products. To encourage further export and modernization, the central authorities permitted Czechoslovak firms to retain a regulated portion of export proceeds. Authorities also acknowledged that the economy seriously lagged behind the non-communist industrialized countries in application of new technologies. In response, they increased imports of Western products and processes that incorporated advanced technology.
In the mid-1970s, the terms of trade for Czechoslovakia began to deteriorate rapidly. In 1975 the pricing system used to set values on imports and exports in trade between communist countries was adjusted to make them more current and closer to world prices. The adjustment raised the price of fuels and raw materials (primarily Czechoslovak imports) much more than it did manufactured goods (the country's main export). The same trend manifested itself in trade with Western industrialized countries.
During the late 1970s, the terms of trade continued to worsen; greater and greater quantities of exports were required to purchase the same volume of imports. The combination of worsening terms of trade and the difficulty of expanding exports caused Czechoslovakia's trade imbalance to grow in almost every area. Between 1975 and 1979, the country's excess of imports over exports was nearly US$1.2 billion with the Soviet Union, US$690 million with Eastern Europe, and US$3.3 billion with noncommunist developed countries. These imbalances emerged despite efforts to conserve fuel and raw material use, to slow the volume of other imports, and to increase exports.
During the 1970s, Czechoslovakia, like other countries of Eastern Europe, turned to West European credit sources to obtain financial help for imports as well as longer-term investments in modern technology.
Czechoslovakia did not publish information on these credits. However, one Western estimate placed Czechoslovakia's hard currency debt to the West at the end of 1979 at US$4 billion gross and about US$3.1 billion net. Czechoslovak officials had been much more prudent in building up a foreign currency debt than had several other East European nations, however, and the country's credit standing remained good.
Beginning in 1980, Czechoslovakia was able to achieve a trade surplus with non-communist countries, but only by drastically curtailing imports. When Western banks tightened credit to Eastern Europe in 1982 (largely in reaction to Polish insolvency), Czechoslovakia redoubled its efforts to curb imports and pay off its debt. This cautious attitude continued to prevail even after the creditors' policy eased. The government's stance did have the disadvantage of depriving Czechoslovakia of potentially helpful Western technology.
However, at the end of 1984, Czechoslovakia could boast one of the lowest net hard currency debts per capita (about US$15 per inhabitant) in Eastern Europe; only Bulgaria's debt was lower. With the Soviet Union, by contrast, Czechoslovakia continued to run a substantial deficit.
In the mid-1980s, according to official statistics, Czechoslovak trade activities remained overwhelmingly oriented toward intra-Comecon trade. Within Comecon, in keeping with the plan for regional specialization set forth in the Comprehensive Program of 1971, Czechoslovakia concentrated on production of machine tools and electric railroad locomotives; the traditionally strong Czechoslovak armaments industry also remained important. In 1985, almost 78% of total Czechoslovak foreign trade turnover was with Comecon members. Trade with "developed capitalist countries", by contrast, was listed at just under 16% and developing countries accounted for over 6%.
Most Western analysts believed that official Czechoslovak methods of calculation tended to overstate considerably the value of trade conducted in transferable rubles, i.e., with Comecon partners, and to underestimate the value of hard currency trade with non-communist countries. Nevertheless, the general structure of Czechoslovakia's foreign trade was unmistakable.
Under the Czechoslovak system, foreign trade was a state monopoly, supervised by the central Ministry of Foreign Trade. The ministry oversaw the operation of about thirty foreign trade enterprises. As intermediaries between the domestic export producers or import purchasers and the external market, the enterprises were responsible for arranging contracts as well as for financing and generally supervising Czechoslovak foreign trade, usually setting prices that have little connection with domestic production factors.
The foreign trade companies bought Czechoslovak goods for export at domestic prices and sold foreign goods to Czechoslovak customers at domestic prices; but the other half of these transactions, involving actual foreign trade, took place in foreign currencies in foreign markets. The government budget then made adjustments to compensate for any unwanted gains and losses caused by varying foreign and domestic prices.
An important characteristic of the Soviet model that was imposed on Czechoslovakia in 1948 was the attempt to insulate the domestic economy and minimize the impact of world economic trends. The system accomplished this in part by severely restricting foreign currency transactions and confining them to official channels at fixed and favorable exchange rates. Within a few years, the exchange rate had lost its historical basis and no longer bore any direct relationship to purchasing power in other currencies.
Czechoslovak trade was heavily concentrated among a relatively small group of countries. According to official statistics, five countries accounted for 71.7% of all foreign trade in 1985:
The Soviet Union exerted a powerful influence over the Czechoslovak economy. In 1985 it accounted for 44.8% of foreign trade turnover, according to official statistics.
In 1985 by far the most important export from Czechoslovakia to the Soviet Union was machinery and various kinds of equipment, such as machine tools, power generating equipment, instruments and laboratory equipment, agricultural machinery, railroad rolling stock and other transport equipment, and equipment for the food, textile, and chemical industries. Such items made up over 60% of exports to the Soviet Union.
Other minor items were ores and metals, clothing and footwear, chemicals, furniture, domestic appliances, and beverages. Czechoslovak imports from the Soviet Union, by contrast, consisted primarily of raw materials and energy-related items; petroleum and petroleum products accounted for almost 43% of import value, and natural gas and electricity totaled 18%. Other imported products were machinery and transport equipment, representing almost 10% of total imports; metal ores, coal and coke, and pig iron and ferroalloys made up almost 8%. Second, third, and fourth in order of rank in Czechoslovak foreign trade turnover were East Germany, Poland, and Hungary.
Among noncommunist countries, an important trade partner was West Germany (fifth in rank). Principal Czechoslovak exports to West Germany in 1985 were various manufactured goods (especially paper and paperboard, textiles, and iron and steel products), mineral fuel products (briquettes, coke, and refined petroleum products), and chemical products. Principal imports from West Germany were machinery (textile- and leather-working machinery, machine tools, and electrical machinery and instruments), chemical products, and various manufactured goods.
Other East European Comecon countries, such as Bulgaria, Romania and Hungary, were also of considerable importance (seventh and ninth in rank, respectively). Czechoslovak exports to these countries in 1985, according to official data, consisted mainly of machinery and transport equipment, chemical products, and (especially to Hungary) coal and briquettes. Imports likewise were primarily machinery and transport equipment, chemical products, and various other manufactured goods. Czechoslovakia also imported food and animal products from Hungary.
Other significant trading partners were Austria, Britain, Italy, and France. Engineering products, which accounted for more than 50% of all Czechoslovak exports, had a share of only 10 to 11% in noncommunist trade, owing to very strong and successful West European competition. Instead, consumer goods, metallurgical products, chemicals, and fuels and raw materials were more important. With regard to imports from noncommunist countries, Czechoslovakia in 1986 was especially interested in the high technology offered by Western Europe and Japan (twenty-fifth in rank). Particularly in demand were products from engineering, electronics, and electrical engineering industries, as well as biotechnology and pharmaceuticals. As of 1985, Czechoslovakia also conducted substantial amounts of trade with Yugoslavia, the People's Republic of China, Syria, and Cuba.
Czechoslovak trade with the United States (twenty-third in rank) was modest. In 1985 Czechoslovak exports to the United States included, among other things, footwear and jewelry, glassware, steel bars, wire, shaped steel, prepared or preserved meats, and hops. In 1985 imports consisted, among other things, of raw materials (hides and skins, seeds for producing vegetable oil, and ores and concentrates of base metals), specialized industrial machinery, and printed materials.
During the late 1970s and early 1980s, Czechoslovakia had imported substantial amounts of grain from the United States, but more abundant domestic harvests enabled the country to reduce these imports in the mid-1980s.
Czechoslovakia was a landlocked country in Central Europe, created in 1918, when it declared its independence from Austria-Hungary. In 1938, after the Munich Agreement, the Sudetenland became part of Germany, while the country lost further territories to Hungary and Poland. Between 1939 and 1945, the state ceased to exist, as Slovakia proclaimed its independence and the remaining territories in the east became part of Hungary, while in the remainder of the Czech Lands, the German Protectorate of Bohemia and Moravia was proclaimed. In 1939, after the outbreak of World War II, former Czechoslovak President Edvard Beneš formed a government-in-exile and sought recognition from the Allies.
The economy of the Czech Republic is a developed export-oriented social market economy based in services, manufacturing, and innovation that maintains a high-income welfare state and the European social model. The Czech Republic participates in the European Single Market as a member of the European Union, and is therefore a part of the economy of the European Union. It uses its own currency, the Czech koruna, instead of the euro. It is a member of the Organisation for Economic Co-operation and Development (OECD). The Czech Republic ranks 12th in inequality-adjusted human development and 24th in World Bank Human Capital Index, ahead of countries such as the United States, the United Kingdom or France. It was described by The Guardian as "one of Europe’s most flourishing economies".
The economy of Mongolia has traditionally been based on agriculture and livestock. Mongolia also has extensive mineral deposits: copper, coal, molybdenum, tin, tungsten, and gold account for a large part of industrial production. Soviet assistance, at its height one-third of Gross domestic product (GDP), disappeared almost overnight in 1990–91, in the time of the collapse of the Soviet Union. Mongolia was driven into deep recession.
The Council for Mutual Economic Assistance was an economic organization from 1949 to 1991 under the leadership of the Soviet Union that comprised the countries of the Eastern Bloc along with a number of socialist states elsewhere in the world.
The Socialist Republic of Czechoslovakia (1948–1990) had significant natural resources available. Energy resources included coal and lignite, but to meet energy needs the country also engaged in energy conservation, imports of oil and natural gas from the Soviet Union, and nuclear power and hydroelectricity programs. Czechoslovakia had limited deposits of various metallic mineral ores, and the bulk of mineral supplies were again imported. Other resources within the country were agricultural land, forestry, and labor power.
In the mid-1980s, Communist Czechoslovakia was prosperous by the standards of the Eastern Bloc, and did well in comparison to many richer western countries. Consumption of some goods like meat, eggs and bread products was even higher than the average countries in Western Europe, and the population enjoyed high macroeconomic stability and low social friction. Inhabitants of Czechoslovakia enjoyed a standard of living generally higher than that found in most other East European countries. Heavily dependent on foreign trade, the country nevertheless had one of the Eastern Bloc's smallest international debts to non-socialist countries.
The Czechoslovak Socialist Republic (1948–1989) greatly developed an already substantial industrial base, and became an important supplier of industrial products to other Comecon nations. By the mid-1980s, however, despite attempted remedial measures, Czechoslovak industry was lagging the West: it was energy intensive, innovation and investment in new plant were insufficient, and labor productivity was low.
The Comprehensive Program for Socialist Economic Integration was set up in 1971, laying the guidelines for Comecon activity until 1990. The distinction between "market" relations and "planned" relations, made in the discussions within Comecon before the adoption of the 1971 Comprehensive Program, is still a useful approach to understanding Comecon activities. Comecon remained in fact a mixed system, combining elements of both plan and market economies. Although official rhetoric emphasized regional planning, it must be remembered that intra-Comecon relations continued to be conducted among national entities not governed by any supranational authority. They thus interacted on a decentralized basis according to terms negotiated in bilateral and multilateral agreements on trade and co-operation.
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The Czechoslovak Socialist Republic, formerly known from 1948 to 1960 as the Czechoslovak Republic or Fourth Czechoslovak Republic, was the official name of Czechoslovakia from 1960 to 29 March 1990, when it was renamed the Czechoslovak Federative Republic. On 23 April 1990, it became the Czech and Slovak Federative Republic. From 1948 until the end of November 1989, the country was under Communist rule and was regarded as a satellite state in the Soviet sphere of interest.
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The trade policy of Japan related to Japan's approach to import and export with other countries.
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Tuzex was a series of state-run shops in Czechoslovakia from 1957 to 1992 which did not accept normal Czechoslovak koruna currency but only vouchers which could be purchased from banks using foreign currency. They supplied luxury items: local goods in short supply and in particular foreign goods. The Tuzex vouchers were effectively an unofficial parallel currency.
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Vietnam's foreign trade has been growing fast since state controls were relaxed in the 1990s. The country imports machinery, refined petroleum, and steel; it exports crude oil, textiles and garments, and footwear. The balance of trade has in the past been positive but recent statistics (2004) showed that it was negative.
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Czech Republic and Indonesia established diplomatic relations in 1950. Both nations has agreed to forge ties to deepen relations, especially in business and trade sector. Indonesia has an embassy in Prague, while Czech Republic has an embassy in Jakarta that also accredited to Brunei, Timor Leste, Singapore and ASEAN, and honorary consulates in Bali, Makassar and Surabaya.
This article incorporates text from this source, which is in the public domain . Country Studies. Federal Research Division.
