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Equalization of Regional Development in Socialist Countries An Empirical Study

Equalization of Regional Development in Socialist Countries: An Empirical Study
Author(s): I. S. Koropeckyj
Source: Economic Development and Cultural Change, Vol. 21, No. 1 (Oct., 1972), pp. 68-86
Published by: University of Chicago Press
Stable URL: http://www.jstor.org/stable/1152905
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Equalizationof Regional Developmentin Socialist
Countries:An EmpiricalStudy*
I. S. Koropeckyj
Temple University
The equality of economic development among geographic regions, regardless of how defined, is an important goal in any country's economic policy.
This is particularly true under socialism for the following three reasons.
First, according to Socialist ideology, this system can be introduced only
in a country that is economically well developed. It follows that all regions
of such a country must be equally advanced; otherwise it becomes illogical
for some more advanced regions to be Socialist while less developed
regions are not. Second, one of the main characteristics of socialism is
egalitarianism; therefore all citizens, no matter in which region they
reside, should be assured equal opportunity for a higher standard of
living and for social advancement. Third, the Socialists believe that in a
multinational state, in which various nationalities inhabit their own ethnic
territories, the economic equality of these regions is a precondition for
achieving political, social, and cultural equality.1
Furthermore, Socialists claim that regional equality can be achieved
only under socialism. In simplest terms, this goal of equality will be
advanced when the backward regions grow at a faster rate than do the
more developed regions. The growth of underdeveloped regions depends
on many variables, such as construction of new enterprises, provision of
social overhead, urbanization, and population migration. In order that
these factors become effective, they should be introduced on a large scale
and at the same time. The massive deployment of resources and simultaneous decision making, according to this line of thinking, are possible
only under socialism, in which the state is the owner of material resources
and in which more or less centralized planning and management of the
national economy exist. In contrast, Socialists are convinced, the market
forces in capitalist economies are too weak and too slow to obtain results
comparable with those under socialism.
* I wish to thank my son Roman for his assistance with calculations.
1 For further discussion of this problem, see my "Industrial Location Policy in
the U.S.S.R. during the Postwar Period," pt. 1, in Joint Economic Committee,
Economic Performance and the Military Burden in the Soviet Union (Washington,
D.C.: U.S. Government Printing Office, 1970).
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I. S. Koropeckyj
The goal of regional equality, however, clashes with another very
important goal of Socialist countries: the maximization of the growth
rate for the entire national economy over some foreseeable future. Under
socialism, full employment exists by definition; therefore, assuming that
the saving rate has been determined, the growth rate can be increased if
the resources are transferred from sectors with lower productivity to
sectors with higher productivity-for example, from agriculture to industry. Also, the new resources-the entries in labor force and investment
-should be allocated to the high-productivity sectors. Since the productivity of resources employed in the same sectors depends considerably
on the location of enterprises, the maximization of growth rate will be
assured when the favored sectors are developed predominantly in regions
in which the productivity is higher than in the rest of the country. Such
regions are most often more advanced regions. In view of the relatively
low mobility of the population, those regions which are more developed
and in which the faster growing sectors are concentrated will advance
faster-for example, in terms of income per capita-than the remaining
The intent of this paper is to examine empirically the record of
Socialist countries in regard to the equalization of regional development.
In this group will be included only the Socialist countries of East Central
Europe (including, obviously, the Soviet Union). The emphasis will be
on the period since World War II.
It is generally accepted that the most appropriate indicator of the
level of economic development of a nation or a region is national income
per capita. Were such data available for the regions of Socialist countries,
it would be possible to determine the degree of interregional inequality
as well as the changes which have taken place under the Socialist system in
these countries and to compare them with market economies. In such a
way, an explicit supplement to the pioneering article by J. G. Williamson
could be made.2 There are, however, certain difficulties encountered in
undertaking this task. The Socialist countries estimate the national income
for individual regions, using as a rule the production method. Since they
are following the Marxist approach, this estimate includes only the net
value added in material production branches3 and excludes the net value
added in service and government sectors.4 Thus it is appropriate to refer
J. G. Williamson, "Regional Inequality and the Process of National Development: A Description of the Pattern," Economic Development and Cultural Change,
vol. 13, no. 4, pt. 2 (July 1965).
freight transportation, the production3 Industry, agriculture, construction,
serving communication, trade and public catering, material and technical supply,
procurements, and others.
4 The other important difference between Western and Marxist concepts of
national income lies in showing the returns to factors of production. The latter shows
explicitly only the return to labor and considers the return to other factors of production as a surplus created by labor for the society, which is then appropriated and
redistributed by the state.
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Economic Developmentand CulturalChange
to this concept as the net material product (NMP).5 The use of NMP
imparts a downward bias on interregional differences in terms of national
income because tertiary industries are usually much better developed in
rich, urbanized regions than in underdeveloped regions. This makes
rather difficult the comparison of Socialist with Western countries, which,
of course, include the service and government sectors in national income
estimates for their regions.
But the real obstacle is the fact that only a few of the Socialist countries
estimate the NMP by regions." The best in this regard is Yugoslavia,
which has provided this information since 1953 in sufficient detail for its
eight subdivisions. In addition, Yugoslavia calculates the NMP for its
basic political units, the communes. The USSR has calculated since 1956,
but published only since 1958, the NMP for its fifteen union republics.
The absolute data are, however, available only for the entire country and
for a few of the most important republics; for all of them, only the annual
growth rates are published. The NMP has recently been published for
the two constituent republics of Czechoslovakia for the period up to
1960, but not for its eleven microregions. Finally, a recent study provides
the percentage distribution of the NMP by seventeen administrative units
in Poland for 1961, 1965, and 1967.
In view of these difficulties,this paper has a more limited objective: to
investigate interregionalinequality in terms of industrialization in Socialist
countries. The degree of industrialization can be best presented with the
help of net industrial output per capita.' Unfortunately, the net industrial
output data are available only for eight subdivisions of Yugoslavia
since 1953and two constituent republicsof Czechoslovakia since 1960. The
gross output of industry-which suffersfrom such well-known deficiencies
as the influence of the changes in vertical integration and in contributions
from other sectors-are published for regions in East Germany, Poland,
and can be fairly reliably estimated for the USSR. Hungary publishes
only the index of gross industrial output since 1965 and Czechoslovakia
(for its eleven subdivisions) since 1967. Bulgaria and Romania do not
publish any information on the industrialoutput by their regions. However,
5 As developed in Socialist countries, the national income for the entire country
and for individual regions can be estimated according to the production, distribution,
and final use methods. The national estimates based on these three methods must
be by definition the same. For an individual region, however, these three estimates
will deviate from the national income (still Marxist definition) actually created in
this region and among themselves because of existing price structure, the method of
distribution among all regions of total surplus value initially collected by the state,
the budgetary relations between the state and regions, and by the difference between
income earned and spent in individual regions. For the discussion of these problems
in regard to the USSR, see S. Sitarian, Natsional'nyi dokhod soiuznykh respublik
(Moscow, 1961); 0. O. Nesterenko et al., eds., Natsional'nyi dokhod Ukrains'koi
RSR v period rozhornutoho budivnytstva komunizmu (Kiev, 1963).
6 See
7 In Socialist countries the statistics on industry comprise
mining, electric power generation, and fishing.
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I. S. Koropeckyj
all these countries publish industrial employment data by regions for
various postwar years. When related to the population, these data can be
used as indicators of the degree of industrialization by regions. Obviously,
the employment data are not the perfect substitute for the output data;
the indexes of employment will differ from output indexes if the regions
differ not only in regard to the net output but also in regard to the change
of industrial structure and the changes of resource productivity.
The regional data on industrial employment might, of course, be of
interest per se, or they might serve as a good substitute for determination
of the industrialization levels by regions. But in the case of Socialist
countries, these data can be used as a good indicator of regional economic
development in general. The economic development in these countries
(following the example of the USSR) has meant first of all the rapid
development of industry, primarily of its heavy branches,8 a development
which could have been achieved basically through the transfer of labor
marginally employed in agricultureto industry.9This close direct relationship between the NMP per capita and the gross industrial output per
capita and between the NMP per capita and the industrial employment
per 10,000 population by regions is uniformly confirmed by the high
coefficients of correlation of cross-section data for three countries for
which the necessary data are available (table 1). The coefficient of correlation for the growth rates of these variables, as can be seen in this table,
Country and Years
1960 ...............
1968 ...............
Rates of growth .....
1958 ...............
1968 ...............
Rates of growth .....
1953 ...............
1967 ...............
Rates of growth . . . . .
Industrial Industrial
Output Employment
SOURCE.-See Appendix.
NOTE.-The NMP data for Poland are for the
years 1961 and 1967.
John P. Hardt, "East European Economic Development: Two Decades of
Interrelationships and Interactions with the Soviet Union," in Joint Economic
Committee, Economic Developments in Countries of Eastern Europe (Washington,
D.C.: U.S. GovernmentPrinting Office, 1970), p. 10.
9 Andrew Elias, "Magnitude and Distribution of the Labor Force in Eastern
Europe," in Joint Economic Committee, pp. 156 ff.
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Economic Developmentand CulturalChange
varies, however. It remains high for the USSR, but is lower for Yugoslavia
and still lower for Poland. The divergence between growth rates of
industrial output and the NMP per capita by regions in Yugoslavia and
Poland can be partially explained by the fact that, among all Socialist
countries, agriculture grew at the fastest rate in these two countries.10
As a result, the growth of NMP was relativelyless dependent on the growth
of industrial output than it was in other Socialist countries.
Nevertheless, it seems that in view of the foregoing, the assumption
can be made that the regional data on industrial employment are representative of the regional level of industrializationand of economic development in general. The subsequent analysis of interregional inequality and
the changes in this inequality will rest on these data.
As a measure of regional inequality, the weighted coefficient of
variation will be used following the example of Williamson."1The coefficient shows by what percentage on the average all regions deviate in
terms of the variable under consideration from the average value of this
variable for the entire country. The higher (lower) the value of this
coefficient, the larger (smaller) the degree of regional inequality. It is
possible that this coefficient might decrease over time while the relative
difference between the highest and lowest values might increase, and
vice versa. Its disadvantage is that, being based on the squared differences
between the value of the variable for each individual region and the
national value, the coefficient might be pulled upward when a few extreme
deviations are present.
Table 2 presents such coefficientsfor the countries under investigation.
They were calculated for all of them for industrial employment per 10,000
population; for the NMP per capita; and for industrial output per capita,
whenever the necessarydata were available. In order to observe the changes
over time, the coefficients are given for the earliest and for the most recent
years for which the data could be found. The calculations refer to the
highest administrative subdivisions whose names are listed in the Appendix. The subdivisions for all countries, except the USSR and Yugoslavia,
have the nature of microregions, that is, they have been created in order
to facilitate the country's administration. Since the statistical service has
been organized on their basis, these regions became de facto economic
regions also, in view of the fact that the planning and management of the
Gregor Lazarcik, "Growth of Output, Expenses, and Gross and Net Product
in East European Agriculture," in Joint Economic Committee, p. 481.
11 Williamson, p. 11. The coefficient of variation was calculated according to
the following formula:
'/ •(Yi --
where fi = population of the ith region, n = national population, yi = net material
product (industrial output) per capita or industrial employment per 10,000 population
of the ith region, and Ti= net material product (industrial output) per capita or
industrial employment per 10,000 population for the entire country.
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I. S. Koropeckyj
national economy is decentralized-or is supposed to be decentralizedto their level. The eight subdivisions of Yugoslavia are based on ethnic
and historical principles and hence they differ considerably among
themselves in size of area, population, and economic potential. Czechoslovakia, in addition to being subdivided into eleven microregions, is
most often analyzed in the literature in terms of ethnic subdivision into
Czech and Slovak republics.
In the case of the USSR, two subdivisions are used in table 2; one
refers to the union republics which, being organized according to the
ethnic principle, differ widely among themselves in all respects. In the
second subdivision, the largest two republics are subdivided into economic
regions-the Russian SFSR into ten and the Ukraine into three-and
these thirteen regions with the remaining thirteen republics combined,
represent a less diverse distribution. But still the latter is a distribution
of macroregions, in contrast to the distributions of microregions for all
Country and Number
of Subdivisions
Industrial Industrial
Output Employment
27 .................
11 ..................
11 ..................
East Germany:
15 ..................
15 ..................
20 ..................
20 ..................
17 ..................
17 ..................
17 ..................
16 ..................
16 ..................
15 ..................
15 ..................
15 ..................
26 ..................
26 ..................
8 ...................
8 ...................
NOTES.-SeeAppendix. N.A. = not available.
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Economic Developmentand CulturalChange
other analyzed countries, except, of course, Yugoslavia. A further disaggregation of the USSR in terms of population is possible to the lower
administrative level-autonomous republics, territories, provinces, and
national districts. However, the data that can give any indication of the
economic development of these subdivisions are limited to the percentage
of urbanites in the total population; and the level of urbanization is
considered, particularly in the USSR, an important indicator of industrialization and economic development in general.12 Calculated on this
basis, the cofficient of variation showed a decrease from .400 to .321
between 1959 and 1970;13 this is consistent, as will be shown below, with
the behavior of three variables for most of the countries under analysis.
As can be seen from the table, the coefficient of variation for industrial
employment declined in all cases. As a result, this coefficient in recent
years was around the .300s for most countries, being higher only for
Hungary and Poland. The coefficient for industrial output per capita,
wherever available, was in magnitude and behavior similar to that for
industrial employment. The coefficient for the NMP per capita in all
three cases was lower than the coefficient for the other two variables, and
in the cases of the USSR and Yugoslavia it increased between the
benchmark years.
While the reasons for regional differences in economic development
and the theory and practice of eliminating them (under socialism in
general and in the specific countries in particular) are outside the scope
of this article, only the systematic relationship between regional inequality
and its most obvious factors will be empirically investigated here. One
such factor is the level of economic development. It has been theoretically
shown and empirically proven on the basis of cross-section and time
series data that the relationship between the level of economic development of a country and the interregional inequality within it resembles an
inverted "U."'14 In other words, interregional inequality is smaller in
both mature and backward countries than in countries at an intermediate
level of economic development. The increasing inequality of developing
countries can be attributed to the migration of labor, primarily of skilled
labor, to capital flow from the relatively less developed to the growing
regions, to existing external economies in the latter, and to government
policies. On the other hand, the reasons for the decrease in this inequality
in more mature countries include mainly greaterpurchases of raw materials
Cf. Ia. G. Feigin, ed., Zakonomernosti i faktory razvitia ekonomicheskikh
raionovS.S.S.R. (Moscow, 1965), pp. 162 ff.
13 See Tsentral'noe Statisticheskoe Upravlenie, Narodnoe khoziaistvo S.S.S.R.
v 1959 g. (Moscow, 1960), pp. 27-33; Pravda,April 19, 1970. The data are from the
two postwar censuses and refer to 162 and 163 subdivisions, respectively.
Gunnar Myrdal, Economic Theory and Under-Developed Regions (London:
Gerald Duckworth, 1957),chaps. 3-5; Albert O. Hirschman,TheStrategyof Economic
Development(New Haven, Conn.: Yale UniversityPress, 1958),chap. 10; Williamson,
n. 2 above.
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I. S. Koropeckyj
and agricultural products by advanced regions from underdeveloped
regions; increases in productivity in underdeveloped regions as a result
of migration; and, most important, growth-promotinggovernment policies.
The data in table 3 should prove helpful in answering this question.
Column 1 shows the relative GNP per capita by countries in descending
order, Czechoslovakia being the highest.15 These estimates are for the
year 1955, but the ranking has remained unchanged in more recent years,
though the range of variation decreased somewhat.16 According to these
data, the countries can be divided into three groups. The most developed
group includes Czechoslovakia and East Germany. Calculation of one
source places their incomes approximately at the level of some West
European countries.17Thus, by inference, these countries can be included
East Germany ............
USSR ....................
Hungary .................
Poland ...................
Romania .................
Bulgaria .................
Yugoslavia ...............
Index of GNP
(CSSR = 100)
Rate of Change
in Coefficient
- 2.12
.274 (.357)
- 1.26
SOURCES.-Col. 1, Pryor and Staller, p. 2, table 1; cols. 2 and 3, table 2.
NOTE.-For the USSR the coefficients are presented for the distributions by
union republics and, in parentheses, by union republics and economic regions combined.
Frederic L. Pryor and George J. Staller, "The Dollar Values of the Gross
National Products in Eastern Europe 1955," Economics of Planning 6, no. 1 (1966):
2. Although in 1955 Czechoslovakia and East Germany had equal GNP per capita,
in the succeeding years the position of the latter deteriorated relative to the former.
16 There are also available estimates of GNP per capita for these countries by
Everett E. Hagen and Oli Hawrylyshyn, "Analysis of World Income and Growth,
1955-1965," Economic Development and Cultural Change 18, pt. 2 (October 1969):
41, tables 8A and 8B, for 1960 and 1965. The estimates for six countries, without the
USSR and Yugoslavia, are given by Maurice Ernst, "Postwar Economic Growth in
EasternEurope (A Comparisonwith WesternEurope),"in Joint Economic Commit-
tee, New Directions in the Soviet Economy (Washington, D.C.: U.S. Government
Printing Office, 1966), p. 877, table 1, for 1964; and Thad P. Alton, "Economic
Structure and Growth in Eastern Europe," in Economic Developments in Countries
of Eastern Europe, p. 49, table 4, for 1967. The ranking of these countries in all these
years is the same as in 1955, with only one exception: In 1960, 1964, and 1965 Bulgaria
and Romania reversed their positions.
were at about the same level as
17 In 1960 Czechoslovakia and East Germany
such well-developed countries of Western Europe as Belgium, Denmark, and Norway. The position of Czechoslovakia and East Germany deteriorated in regard to
the enumerated countries in 1965, and in that year their GNP per capita was approximately in the same range as that of the Netherlands, Austria, or Italy (see Hagen
and Hawrylyshyn, pp. 34, 36, 41).
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Economic Developmentand CulturalChange
in group 2 of Kuznets's well-known classification of countries by level of
economic development.18 In group 3, Kuznets lists only the USSR, but
Hungary and Poland can be included in this group as well, because their
GNPs per capita, as shown in table 3, do not differ much from that for
the USSR. Finally, the least developed countries are Romania, Bulgaria,
and Yugoslavia, and consequently they belong to Kuznets's group 5.
Column 2 of this table shows the coefficient of variation for industrial
employment for the most recent year.
According to the previously outlined hypothesis, one should expect
the coefficient to be lower in the top and the bottom groups and higher in
the intermediate group. The table shows that this is, in general, indeed
true. One exception is the USSR. This country rightly belongs to the
intermediate group in terms of economic development, but its coefficient
for the distribution of union republics is lowest among all analyzed countries. The deviation of the USSR from the hypothesis advanced here is
much less pronounced when the coefficient for the distribution of union
republics and economic regions (.357) is used. The hypothesis of inverted
"U" will be made more credible in the table if the USSR is included in
the top group. But even without this shift, the hypothesis looks valid in
view of the fact that the number of observations is only eight, and one
should not expect to get the normal distribution in any respect in such a
In his article, Williamson has shown the relationship, also on the
basis of time-series data, between the level of economic development and
interregional inequality. In other words, there is a tendency for mature
countries to decrease this inequality, while countries in the initial stage of
economic growth tend to increase it. Is this also true for Socialist countries? Table 2 shows that all of them decreasedtheir interregionalinequality
in terms of industrial employment between the initial and terminal years,
irrespective of their levels of economic development. Yet the coefficient
of variation decreased quite differentlyfor individual countries. A measure
of this decrease, the average annual rate of decrease, is given in column
3 of table 3. If the tendency established by Williamson for free-market
economies were true also for Socialist countries, the rate of decrease
should be directly proportional to the relative level of economic development. However, such a relationship is not observed at all.19
On the other hand, one can observe in column 3 a tendency which
can also be represented by an inverted "U": The rate of decrease in the
interregional inequality was lower in the top and bottom groups, with the
exception of Bulgaria in the latter, and higher in the intermediate group,
again with the exception of the USSR. One plausible explanation for the
Simon Kuznets, "QuantitativeAspects of the Economic Growth of Nations:
Level and Variability of Rates of Growth," Economic Development and Cultural
Change5 (October 1956): 17, table 4.
19 r is equal to .123.
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I. S. Koropeckyj
low decrease of coefficient among relatively more developed countries
could be the fact that the inequality among their regions is already low
and the possibility for further leveling out is limited. In the case of the
relatively underdeveloped nations, the low rate of decrease in coefficient
could possibly indicate the planners' preference for the maximization of
growth rate for the entire country at the cost of equalization of interregional
inequality, and these two objectives, of course, are often contradictory.20
Thus the possibility and preference to achieve the decrease in interregional
inequality seems to be present in the countries of the intermediate group.
In addition to the level of economic development and, obviously,
to the explicit commitment on the part of the state to regional equalization,
a hypothesis can be advanced that some other factors under socialism may
have had systematic influence on the attainment of this goal. Three such
factors can be quantitatively investigated:
1. Industrialization means bringing into the production process some
previously unemployed or underemployed resources, human as well as
natural, that are spread throughout the country. Often these resources
cannot be easily moved, or moved at all. Therefore, the greater the growth
rate of industry, the more industrialization spreads spatially and causes
interregional differences to decrease.
2. Soviet-type industrialization places special attention on the growth
of heavy industry. Since heavy-industry branches, which include mining
and primary processing of raw materials, among others, are obviously
more location bound than consumer industries, such an industrialization
approach consequently should show relatively faster growth of those
regions in which conditions for these branches are present. It might be
expected, therefore, that the higher the growth of heavy industry, the
lower the decrease in interregional inequality.
3. The productivity of resources and the growth of this productivity
usually vary among individual regions of a country. In order to maximize
the growth for the entire country, the resources should be allocated to the
regions in which the resource productivity grows fastest, with the obvious
consequence of increased interregional inequality, at least in the intermediate future. Thus, the inverse relationship between the growth of
resource productivity and the decrease in regional inequality can exist.
However, no systematic relationship among these three factors,
considered as independent variables, and the decrease in coefficient of
variation for industrial employment, as a dependent variable, can be
This can be seen on the example of investmentpolicy in Romania. According
to John Michael Montias, "The investmentprogramin Rumaniaalso gives expression
to the systematicpolicy of building plants on the basis of the latest world technology,
no matter how capital-intensiveit happens to be. This policy conflicts with the aim
of providing as many peasants as possible with job opportunities in the cities, an
aim that apparentlyfits on a lower rung of the planners' priority scale" (Economic
Development in Communist Rumania [Cambridge, Mass.: M.I.T. Press, 1967], p. 232).
The implication of such a policy to interregionalinequality is obvious.
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Economic Developmentand CulturalChange
empirically proved for the countries under consideration. In the first two
cases the coefficient of correlation is statistically insignificant, while in the
third case it is too low to be convincing.21
There remains one more problem to be considered, namely, whether
there is any relationship between the decrease in economic differences
among regions and the fact that these regions are inhabited by different
nationalities. The problem is important, because, as was stated earlier,
Marxists believe that the attainment of political and cultural equality
among concerned nationalities is contingent on the attainment of economic
equality. Perhaps more important, in multinational countries there is a
strong pressure by nationalities living in underdeveloped regions for
growth-promoting assistance from the federal government. Economically
disadvantaged nationalities believe that the federal government, under
socialism, is in an excellent position to provide such assistance because
of public ownership of means of production and because of the central
planning. The attitude of the advanced regions in this respect is ambivalent.
On the one hand, they would like to get rid of the burden of subsidizing
via the federal budget a minimum standard of living, mainly in the form
of collective services, in the underdeveloped regions; but, on the other
hand, they are reluctant to supply the substantial investment funds needed
for the big push in underdeveloped regions. Without this help from the
advanced regions, a sustained growth in the underdeveloped regions,
with eventual ability to support themselves, is unthinkable. Still, in sum,
one would expect the tendency toward regional equalization to be stronger
in multinational states than in an ethnically homogenous country.
In most countries under consideration there are national minorities,
but in only three of them-the USSR, Yugoslavia, and Czechoslovakiado the various nationalities live compactly on their ethnic lands, with,
moreover, administrative subdivisions based on ethnic and historical
considerations.22 Figures in tables 2 and 3 show a rather mixed trend in
21 r is equal for: (1) growth rate of industry to .208; (2) growth rate of heavyindustry branches to .098; and (3) growth of labor productivity to .535. The data
for all countries except the USSR for the period between 1950 and 1968: (1) from
Laszlo Czirjak, "Industrial Structure, Growth, and Productivity in Eastern Europe,"
in Economic Developments in Countries of Eastern Europe, p. 437, table 3; and for
the USSR between 1950 and 1965 from James H. Noren, "Soviet Industry Trends in
Output, Inputs, and Productivity," in New Directions in the Soviet Economy, p. 281;
(2) between 1948 and 1967 from Czirjak, p. 447, table 9, and for the USSR 1950-65
calculated from Noren, p. 280, table 1; (3) 1950-67 from Czirjak, p. 438, table 6,
and for the USSR between 1950 and 1965 from Noren, p. 282, table 2.
22 Also, in Romania the Hungarians represent an important minority, primarily
in Transylvania. According to the census of March 15, 1966, they accounted for
8.4 percent of the total population (Scinteia, September 18, 1966). Until 1966 a
substantial part of the territories inhabited by Hungarians was organized into the
Hungarian Autonomous Region. The reform of that year changed the division of
the country from sixteen to forty regions, and the Hungarian Autonomous Region
has been divided into Covas and Harghita regions. In addition, the Hungarians
constitute significant minorities in the following regions: Bihor (32.9) percent, see
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I. S. Koropeckyj
respect to the regional equalization in these countries. On the one hand,
in terms of industrial employment there was a slight decrease in the
coefficient in all three of them between the benchmark years. It is not
surprising, because of the low level of their coefficients, that it is difficult
to expect any strong decreasing tendency. The decline in the coefficient
is also observed in terms of industrial output per capita for the USSR and
Yugoslavia. On the other hand, the interregional inequality in terms of
the NMP per capita rose for these two countries. In view of the inherent
importance of this problem, it is worthwhile to take a look at these three
countries separately.
The number of nationalities living on their ethnic territoriesis perhaps
larger in the USSR than in any other country of the world. Statistical
data that can give a picture (although one far from adequate) of relative
economic development of individual nationalities are available chiefly
for fifteen union republics. Since this breakdown is too aggregative, it
conceals many important divergencies among nationalities which are
constituent parts of union republics. This is primarily true of the largest
among them-the Russian SFSR. As table 2 shows, there was a slight
decrease in the coefficients of variation for industrial output and industrial
employment for the union republics in 1958 as compared with 1950. This
trend was reversed afterward, when the coefficient for industrial output
had been rising and that for industrial employment had remained almost
without change through the 1960s (table 4). The NMP per capita indicates
1958 AND 1968
SOURCEs.-NMP and industrial output, see Appendix; employment, TsSU, Trud v SSSR (Moscow, 1968), pp. 43-71; population,
various issues of TsSU, Narodnoe khoziaistvo SSSR.
NOTE.-N.A. = not available.
Revista de Statisticd, 1968, no. 8, p. 72); Bragov; Maramureq; and Satu-Mare. In
terms of industrial employment per 10,000 population, the industrial development
of these regions is by and large at the nationwide level. (I wish to thank Dr. George
Pall for this information, and to express appreciation to him and his colleagues of the
Resealch Project on National Income in East Central Europe, Columbia University,
for aid with statistics of some of the countries under consideration.)
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Economic Developmentand CulturalChange
growing disparity among republics for this latter period also.23 This
reversal is remarkable because it took place during the period of decentralization of planning and management of Soviet industry which lasted
from 1957 to 1965. In any case, these fluctuating developments throughout
the postwar period certainly do not prove the continuous determination
of Soviet planners to equalize the levels of economic development among
fifteen national republics, although this objective and its alleged successes
are constantly publicized by Soviet propaganda. This is not to deny that
in absolute terms the progress of some underdeveloped republics was
significant; however, it was not strong enough to improve their position
relative to that of more advanced republics in per capita terms. The
faster population growth in the former was partly the reason for this
On the other hand, there is a definite trend observable toward the
reducing of interregional inequality within the largest Soviet republic,
the Russian SFSR, which accounts for more than one-half of the country's
population and almost two-thirds of the national income and total
industrial output. The coefficient of variation of industrial output per
capita declined for ten regions of this republic from .523 in 1940 to .354
in 1958 and .234 in 1968.25 This strong decline, and also the decline in
the divergence among three regions of the Ukraine, were responsible for
the reduction of this coefficient when it is calculated for these thirteen
regions and the remaining thirteen republics combined (table 2).
I have argued elsewhere that the principal reason for the lack of
equalization trend among union republics and for the existing trend
toward equalization among the regions of the RSFSR is the preoccupation
of Soviet leaders with defense considerations in locating industry.26 This
objective is of such paramount importance in the USSR that both the
economic objective-the maximization of national income for the entire
country-and the ideological-political objective-the equalization of
development level among republics-are subordinated to it. It was mainly
the defense consideration that was responsible for the shift in the 1930s
of the gravity center of Soviet industry from the western industrial centers
23 According to one calculation, this coefficient increased 37.2 percent between
1958 and 1965 (see V. Zlatin and V. Rutgaizer, "Comparison of the Levels of Economic Development of Union Republics and Large Regions," Nauchnye doklady
vysshei shkoly-ekonomicheskie
nauki, no. 8 [1968], translated in Problems of Eco-
nomics 12 [June 1969]: 12, table 1).
24 The CentralAsian republics,Kazakhstan, Uzbekistan, Kirghizia,Tadjikistan,
and Turkmenia, which are among the least developed in the USSR, showed an
increase in the total population of more than 40 percent between the censuses of
1959 and 1970, while the average for the country was 16 percent (see Pravda,April
19, 1970, p. 1).
25 Sources the same as for the USSR in table 2.
See my Location Problems in Soviet Industry before World War II: The Case of
the Ukraine(Chapel Hill: University of North Carolina Press, 1971), chap. 5; and
my contribution in Economic Performance and the Military Burden in the Soviet
Union, pt. 3.
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I. S. Koropeckyj
near Moscow, Leningrad, and Donbas to the Asiatic parts of the RSFSR:
the Eastern Urals and Western Siberia. This shift obviously continued
during the war, when the European parts of the country were occupied
or were too close to the front lines. Finally, this trend has been intensified
since the middle of the 1950s, in view of the threat from China. Primarily
in view of this geopolitical consideration, the economic buildup of Eastern
Siberia and the Far Eastern regions of the RSFSR and the resulting
decrease in interregional differences of this republic can be understood.27
The acuteness of the nationality problem in Yugoslavia needs no
elaboration here.28The differences of economic development among such
developed republics as Slovenia or Croatia, on the one hand, and the
officially designated underdeveloped republics of Bosnia and Hercegovina,
Macedonia, Montenegro, and the autonomous republic of KosovoMetohija, on the other hand, are truly great. On the satisfactory elimination of these interregional economic inequalities perhaps depends the
survival of Yugoslavia as a state. However, the achievement of this goal
has been counterbalanced by the simple economic fact of life, namely,
that resources are usually more productive and, moreover, that their
productivity grows faster in developed than in underdeveloped regions.
And resources flow in the direction of the developed regions, even if that
is contrary to the political requirements. As a result, there has been very
little, if any, progress toward the solution of inequality problems in
Yugoslavia.29 The situation is aggravated by the fact that population
growth is higher in underdeveloped than developed regions.30
In order to achieve the goal of regional equality, the Yugoslav leadership had to devise the appropriate policies and to adjust them to changing
conditions. Specifically, the period of the 1950s was characterized by the
decentralization of economic decision making to the level of the lowest
administrative unit-the commune. Still, the federal government retained
responsibility for the targets of nationwide importance; in order to meet
them, allocation of investable funds to more developed regions was
required. Furthermore, external threat made it necessary to expand the
munition industries which were also concentrated in these regions. As
27 Outside the RSFSR the special attention to the development of Kazakhstan
was probably also in response to the Chinese challenge.
See Paul Shoup, Communism and the Yugoslav National Question (New York:
Columbia UniversityPress, 1968), chap. 6; F. E. Ian Hamilton, Yugoslavia:Patterns
of EconomicActivity (London: G. Bell & Sons, 1968), chap. 16.
29 For example, the NMP per capita in highly developed Slovenia was 3.8 times
larger than that for Kosovo-Metohija in 1953, but 5.2 times larger in 1967. The
respectiveratios for industrial output per capita were 9.4 and 6.5.
30 Cf. K. Mihailovic, "On the Yugoslav Experience in Backward Areas," in
Backward Areas in Advanced Countries, ed. E. A. G. Robinson (London: Macmillan
Co., 1969), p. 265. Thus the population grew at 1.82 percent in four underdeveloped
regions between 1953 and 1967, the NMP 7.41, and the industrial output 12.06
percent. The respective rates for the remainderof the country were: 0.78, 7.75, and
10.59 (see sources to table 2 in Appendix).
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Economic Developmentand CulturalChange
AND 1967
SOURCES.-See Appendix and various issues of Statistioki Godiinjak
table 5 shows, this resulted in an increase in the differencesamong republics
during this period of time. To avoid continuous budgetary grants-in-aid to
backward regions in order to maintain the minimum social services to the
population, between 1957 and 1961 the federal government undertook a
massive investment program in the backward regions.31 The consequent
growth of these regions at a faster rate than the national average caused
regional divergences to decrease somewhat. This can be observed in the
behavior of coefficients of the three variables in table 5. Having reached
their peak in the early 1960s, they have been declining since. However,
this progress could be endangered by the 1965 reforms that give greater
economic power to the republics.32 This might create another obstacle
to the flow of resources from the more developed to the less developed
regions because the borders among them might become more rigid. Yet
the authorities believe that further progress in equalization will be assured
with the help of the Fund for Crediting the Economic Development of
Economically Lesser Developed Republics and Regions, created in 1965.
That organization was made responsible for providing not only the
investment funds but also the technical know-how and the skilled personnel
to these regions.33
Since the creation of Czechoslovakia after World War I, Slovakia,
which accounts for more than one-third of the country's total area and
nearly one-third of its total population, has been considered an underdeveloped region. Very little was done to reduce the economic inequality
Shoup, p. 234.
Paul Shoup, "The Evolution of a System," Problems of Communism 18, nos.
4-5 (1969): 76.
Shoup, Communism and the Yugoslav National Question, p. 239.
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I. S. Koropeckyj
between Slovakia and other regions during the interwar period. On the
other hand, there can be little doubt that considerable progress in this
direction has been achieved since World War II. Thanks to large investments, financed to a considerable extent by more developed regions,34and
to the transfer of labor from agriculture to other economic sectors, the
Slovakian NMP and, first of all, the industrial output, grew at a faster
rate than did that for the entire country. For example, the gross output of
industry grew between 1948 and 1968 in Slovakia at 12.3 percent annually,
whereas the nationwide rate was equal to 9.2 percent, and the respective
rates for industrial employment were 4.7 and 2.3 percent.35 In terms of
NMP per capita, available since 1960, Slovakia improved its position from
80.2 percent of the nationwide level in that year to 83.5 percent in 1968.
The improvement in terms of net industrial output per capita was even
greater during the same period of time, from 66.5 to 77.2 percent.36The
advance of Slovakia would have been even greater if it were not for the
sectoral and geographical dissipation of investment which resulted often
in failure to benefit from the economic advantage of large-scale production.37 Other reasons mentioned for insufficientgrowth of Slovakia are the
weak theoretical basis for regional planning and deficiencies in the
implementation of plans.38
This discussion has been concerned with the investigation of the
statistical relationship in Socialist countries between the level, and its
changes, of interregional inequality and the various factors that may influence it. The relationship established for the market economies (that the
degree of inequality is the highest in the countries at the intermediatelevel
of economic development) seems to be applicable also to Socialist countries, at least in terms of industrial employment per 10,000 population.
However, in view of the fact that the inequality decreased between benchmark years in all countries under consideration, the hypothesis that this
inequality tends to decrease for most advanced countries and to increase
for the least developed countries cannot be confirmed. One can observe
of a Backward Area in Czechoslovakia,"
34 Pavel Turcan, "The Development
in Robinson, p. 244.
Statisticeska rodenka CSSR, 1969 (Prague,
35 Federalni Statisticesky13•fad,
1970), pp. 22-23, 26-27, 58-59, 60-61.
Ibid., pp. 151, 160.
37 Turcan, pp. 249 ff. It is interesting to note that the Czechoslovak approach
toward the problem of capital-intensity of investment was exactly opposite to that
of Romania (see n. 20 above). According to Turcan, "investments [in Slovakia] were
directed towards branches that had the highest requirements in manpower, whilst
the technical level of the new installations was often only a secondary consideration"
(p. 250). This obviously explains why the growth rate of employment in industry
was considerably higher than that of output. It is certainly also responsible for the
decrease in the coefficient of variation for industrial employment among eleven
Czechoslovak microregions (table 2).
38 J. Ferianc, "Problems of Regional Planning in Czechoslovakia and of Research
into Regional Models," in Economic Development for Eastern Europe, ed. M. C.
Kaser (London: Macmillan Co., 1968), pp. 104-6.
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Economic Developmentand CulturalChange
instead that the relatively developed and relatively underdeveloped
countries show the lower decline in the interregional inequality than the
intermediate countries. Two other hypotheses must be rejected: (1) that
there is a direct correlation between the growth rate of industrial output and
the rate of decrease in interregional inequality; (2) that there is an inverse
correlation between the growth rate of heavy industry output and the
rate of decrease in interregional inequality. On the other hand, the possibility that there is an inverse correlation between the growth rate of labor
productivity and the rate of decrease of interregional inequality cannot
be completely ruled out. In regard to the relationship between the ethnic
heterogeneity of a country and the economic inequality of its regions, it
is impossible, of course, to make any generalizations on the basis of only
three countries which, in addition, have had completely different experiences. Nevertheless, it is safe to say that this factor seems not to have been
overly influential on the regional equalization. Internal and external
exigencies (among them very likely the political strength of federal authorities and the degree of decentralization in economic decision making) may
appear to be of decisive importance.
Yet from all this discussion one fact stands out clearly: The inequality
among microregions decreased in terms of industrial employment in all
eight countries, if the USSR is also included on the slim evidence of
urbanization. This decrease, although at various rates, took place despite
significant differences among these countries in terms of the level of
economic development. There is probably no doubt that this has something to do with the Socialist system of their economies. Such factors as
the centralization or the degree of decentralization in decision making,
the full employment of all resources, the general emphasis on rapid economic growth, and the structural changes certainly can be influential on
the reduction of interregional inequality. Further research is therefore
obviously needed to generalize these factors, as well as the other factors
relevant to all Socialist countries, and to determine the specific reasons
for both the existence and the changes of regional inequality in particular
Sources and Notes to Tables
Bulgaria. Tsentral'noStatisticheskoUpravlenie,Statisticheskigodishnik
za NarodnaRepublikaBulgaria,1959 (Sophia, 1959), pp. 279, 283; St. god.
1969, pp. 405, 419.
Czechoslovakia. Calculated on the basis of indexes and the percent
distributionfrom Statni Statisticesky~
'Lad, StatistickarodenkaC.S.S.R., 1967
(Prague, 1967), pp. 108, 205; Ustredni Komise Lidove Kontroly a Statistiky,
ScitaniLudu,Domua Bytu v CeskoslovenskeSocialistickeRepublikek 1.Breznu
1961 (Prague, 1965), pp. 312-13; Stat. roc. 1969, pp. 134, 238.
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I. S. Koropeckyj
East Germany. Staatliche Verwaltung fir Statistik, Statistisches Jahrbuch
1955 Der Deutschen Demokratischen Republik (Berlin, 1956), pp. 29, 178, 278;
Stat. Jahrb. 1969, pp. 1, 40, 62-63, 105.
Hungary. K6zponti Statisztikai Hivatal, Statisztikai evkdnyv, 1968
(Budapest, 1969), pp. 478-516.
Poland. Population, industrial output, and industrial employment from
Gl6wny Urzqd Statystyczny, Rocznik statystyczny 1968 (Warsaw, 1968), p. 28;
Rocz. stat. 1969, pp. 41, 57-78, 122-23; G.U.S., Przekroje terenowe 1945-1965
(Warsaw, 1967), pp. 290-92; Rocz. stat. 1961, pp. 114-15. The NMP per
capita was calculated in the following way. A study by G.U.S., Analiza
tworzenia i podzialu dochodu narodowego Polski wedlug wojewodstw, Seria
Studie i prace statystyczne, No. 20 (Warsaw, 1969), gives the percent distribution of the NMP by wojewodstwo for the years 1961, 1965, and 1967 and also
the absolute data for the total (pp. 14, 87). Population from Rocz. stat. 1965,
p. 14, Rocz. stat. 1968, pp. 5-76.
Romania. Directia Centrala de Statistica, Anuarul Statistic al Republici
Socialiste Romdnia 1960 (Bucharest, 1960), pp. 70-73; An. Stat. 1969, pp. 67,
USSR. The NMP was calculated in the following way. A. I. Vedishchev,
"Soizmerenie urovniei khoziaistvennogo razvitia ekonomicheskikh raionov
S.S.S.R.," in Ekonomicheskie problemy razmeshchenia proizvoditel'nykh sil
S.S.S.R., ed. A. A. Ivanchenko (Moscow, 1969), p. 82, gives the indexes of
NMP per capita by union republics for 1965. These data with the data for
population, growth rates of NMP for union republics, and the absolute figure
of NMP for the USSR (Tsentral'noe Statisticheskoe Upravlenie, Narodnoe
khoziaistvo S.S.S.R. v 1965 g. [Moscow, 1966], pp. 9, 589, 590; Nar. khoz.
1964, p. 9; Nar. Khoz. 1967, p. 9; Nar. khoz. 1968, pp. 9, 570) were used for the
estimation of NMP per capita by republics for 1958 and 1968. The industrial
output by republics was estimated by using the absolute data for 1960 from
Paul K. Cook, "The Administration and Distribution of Soviet Industry," in
Joint Economic Committee, Dimensions of Soviet Economic Power (Washington, D.C.: U.S. Government Printing Office, 1962), pp. 704-32, adjusting it
for boundary changes, and expanding it for other years with the help of official
indexes. See my study in Economic Performance and the Military Burden in the
Soviet Union, appendix tables 1 and 2. For 1968, Nar. khoz. 1968, pp. 12, 189.
Employment data from Nar. khoz. 1965, p. 141; Nar. khoz. 1968, p. 206;
Vedishchev, p. 63.
Yugoslavia. Savezni Zavod za Statistiku, Statisticki Godis•njakJugoslavifi
1963 (Belgrade, 1963), p. 339; Stat. god. 1969, pp. 332, 361.
Bulgaria. 1968 population, 8,370 thousand; area, 42,823 sq. mi.; twentyseven Okryza: (1) Blagoevgrad, (2) Burgas, (3) Varna, (4) Veliko Tyrnovo,
(5) Vidin, (6) Vratsa, (7) Gabrovo, (8) Kyrdzhali, (9) Kiustendil, (10) Lovech,
(11) Mikhailovgrad, (12) Pazardzhik, (13) Pernik, (14) Pleven, (15) Plovdiv,
(16) Razgrad, (17) Ruse, (18) Silistra, (19) Sliven, (20) Smolian, (21) Sofia,
(22) Stara Zagora, (23) Tolbukhin, (24) Tyrgovishte, (25) Khaskovo, (26)
Shumen, (27) lambol.
Czechoslovakia. 1968 population, 17,781 thousand; area, 49,370 sq. mi.;
two republics, Czech and Slovakian; eleven Kraj: (1) Praha, (2) Stredo'esky,
(3) Jiho'esky, (4) Zaipado'esky, (5) Severo'esky, (6) Vichodo'esky, (7)
Jihomoravsky', (8) Severomoravsky, (9) Zaipadoslovensky, (10) Stredoslovensky,
(11) Vychodoslovensky.
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Economic Developmentand CulturalChange
East Germany. 1968 population, 17,084 thousand; area, 41,816 sq. mi.;
fifteen Bezirk: (1) Berlin, (2) Rostock, (3) Schwerin, (4), Neubrandenburg,
(5) Potsdam, (6) Frankfurt, (7) Cottbus, (8) Magdenburg, (9) Halle, (10)
Erfurt, (11) Gera, (12) Suhl, (13) Drezden, (14) Leipzig, (15) Karl-Marx-Stadt.
Hungary. 1968 population, 10,236 thousand; area, 35,919 sq. mi.;
twenty Megye: (1) Budapest, (2) Baranya, (3) Bacs-Kiskun, (4) Bek6s, (5)
Borsod-Abauj-Zempl6n, (6) Csongrnd, (7) Fejer, (8) Gy6r-Sopron, (9) HajduBihar, (10) Heves, (11) Komairon, (12) N6grad, (13) Pest, (14) Somogy,
(15) Szabolcs-Szatmair, (16) Szolnok, (17) Tolna, (18) Vas, (19) Veszpr6m,
(20) Zala.
Poland. 1968 population, 32,456 thousand; area, 120,319 sq. mi.; seventeen Wojew6dstwo: (1) Bialystok, (2) Bydgoszcz, (3) Gdanisk, (4) Katowice,
(5) Kielce, (6) Koszalin, (7) Krak6w, (8) Lublin, (9) L6dz, (10) Olsztyn,
(11) Opole, (12) Poznani, (13) Rzesz6w, (14) Szczecin, (15) Warszawa, (16)
Wroclaw, (17) Zielona G6ra.
Romania. 1968 population, 19,721 thousand; area, 91,699 sq. mi.; sixteen
Regiunea in 1959: (1) Bacau, (2) Baia-Mare, (3) Bucuresti, (4) Cluj, (5)
Constanta, (6) Craiova, (7) Galati, (8) Hunedoara, (9) Iasi, (10) Oradea,
(11) Pitesti, (12) Ploesti, (13) Stalin, (14) Suceava, (15) Timisoara, (16)
In 1968 Romania was divided into forty Judetuls. In order to make two
benchmark years comparable, the 1968 distribution was combined back into
sixteen regions of 1959, as follows: (1) Bacau, Neamt; (2) Maramures; (3)
lalomita, Ilfov, Teleorman, Bucuresti; (4) Bistrita-Ndsaud, Cluj, Silaj; (5)
Tulcea, Constanta; (6) Dolj, Gorj, Mehedinti, Olt; (7) Braila, Galati,
Vrancea; (8) Alba, Hunedoara; (9) lai, Vaslui; (10) Bihor, Satu-Mare;
Vilcea; (12) Buzau, Dimbovita, Prahova; (13) Brasov, Sibiu;
Arge,, Suceava; (15) Arad, Caras-Severin, Timis; (16) Covas, Harghita,
(14) Botosani,
USSR. 1968 population, 237,816 thousand; area, 8,649,489 sq. mi.;
fifteen Union Republics: (1) Russia, (2) Ukraine, (3) Belorussia, (4) Uzbekistan,
(5) Kazakhstan, (6) Georgia, (7) Azerbaidzhan, (8) Lithuania, (9) Moldavia,
(10) Latvia, (11) Kirghizia, (12) Tadjikistan, (13) Armenia, (14) Turkmenia,
(15) Estonia.
26 Union Republics and Economic Regions: (1) Northwest, (2) Central,
(3) Volga-Vyatka, (4) Central Black Earth, (5) Volga, (6) North Caucasus,
(7) Ural, (8) West Siberia, (9) East Siberia, (10) Far East, (11) Donets-Dnieper,
(12) Southwest, (13) South and remaining 13 republics (without Russia and
the Ukraine).
Yugoslavia. 1967 population, 20,154 thousand; area, 98,766 sq. mi.; six
Republics: (1) Bosnia and Hercegovina, (2) Montenegro, (3) Croatia, (4)
Macedonia, (5) Slovenia, and Serbia is broken down into (6) Serbia proper,
(7) Voivodina, (8) Kosovo and Metohija.
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