Stimulated by a high rate of investment and an infusion of Western technology, industry has expanded at a rapid rate. A qualitatively inadequate labor force, poor organization, and insufficiently experienced management personnel, however, have not been able to attain levels of efficiency and quality acceptable to the Romanian Communist Party and the government. Lowering the cost of production and improving quality are considered to be essential prerequisites for expanding exports, which are needed to pay for imports of materials and equipment. Various measures introduced since 1967 have not achieved the government's objectives. Economic plans for the 1971-75 period call for raising productivity through greater specialization of production and better utilization of plants and materials. To this end, several new economic laws were passed in December 1971, the contents of which were not yet known in early 1972.

NATURAL RESOURCES

Though widely varied, the country's mineral and agricultural resources are generally inadequate to maintain the current and planned levels of industrial production and exports. Natural gas is a major exception. Formerly plentiful supplies of crude oil are falling off, and the likelihood of discovering new deposits is considered poor by oil industry officials. The heavy dependence on outside sources of raw materials led the government to provide economic and technical assistance to several developing countries for the exploitation of their mineral resources in return for shipments of mined products. This dependence has also been a major determinant of the country's political relations with other members of the Council for Mutual Economic Assistance (COMECON), particularly the Soviet Union, and with noncommunist industrial nations of the West (see ch. 10).

Minerals and Metals

Information on the extent of most mineral reserves is unavailable. A delegation of Western petroleum experts who surveyed the petroleum industry at the end of 1970 made a tentative estimate that oil reserves would be exhausted in roughly eleven years at the current annual production rate of about 13 million tons. With a view to ensuring long-term crude oil supplies for the planned expansion of the domestic petroleum refining and petrochemical industries, the government has entered into economic cooperation agreements with several small petroleum-producing countries. The government has also discussed the possibility for joint exploration of offshore petroleum deposits in the Black Sea and elsewhere in the world with oil interests of various countries. In the meantime the government has been importing crude oil from Iran, Saudi Arabia, and Libya in exchange for industrial machinery and equipment. Oil imports from these countries in 1970 amounted to 2.1 million tons.

The major natural gas deposits that were exploited in 1970 are located in the Transylvanian basin and outside the Carpathian arc (see ch. 3). According to Romanian officials, the annual addition to reserves has been double the volume of annual production. Gas output has expanded steadily from about 365 billion cubic feet in 1960 to 845 billion cubic feet in 1969. Natural gas has been used for electric power production in thermal plants, for space heating, and as a raw material for the chemical industry. Less than 1 percent has been exported through a pipeline to Hungary.

Western observers believe that imports of natural gas from the Soviet Union may be initiated in the early 1970s. This belief is based on information that a gas pipeline to be built from the Soviet Union to Bulgaria will pass through eastern Romania, fairly close to the major port of Constanta, which is far removed from domestic sources of gas. Negotiations to this effect are not known to have taken place.

Deposits of coal are small and, with few exceptions, low grade. Known reserves in 1970 were reported to include less than 1 billion tons of bituminous and anthracite coal and 3.5 billion tons of lignite. Fields at Petrosani in the Jiu Valley of the southern Transylvania Alps contain 98 percent of the bituminous coal reserves; 90 percent of the lignite reserves are located in Oltenia, in the southwestern part of the country. Open pit mining is possible in much of the lignite area.

In order to conserve crude oil and natural gas, production of coal and lignite has been substantially increased and is scheduled to rise rapidly in the 1971-75 period. From 1950 to 1970 total coal output increased at an annual rate of 9.2 percent, including a growth of more than 15 percent per year in lignite output. By 1975 coal output is to reach from 37 million to 38.5 million tons, which corresponds to a planned annual increase of about 10.6 percent from the level of 22.8 million tons mined in 1970. The production of lignite is scheduled to advance more rapidly than that of bituminous and anthracite coal.Two-thirds of the mined coal tonnage with 56 percent of its caloric content was used in 1970 to fuel electric power plants. Only 1.3 million tons were usable in the manufacture of coke, in large part as an admixture to imported coking coals of superior quality. The severe and growing shortage of domestic coke supplies poses a major obstacle to the expansion of the iron and steel industry. In 1969 it was necessary to import 2.1 million tons of metallurgical coke and 633,000 tons of coking coal.

Workable deposits of iron ore are situated in the vicinity of Resita and Hunedoara in the southwest. Other known deposits, particularly those at Ruschita and Lueta, have a low metal content and harmful radioactive admixtures. Suitable mining and processing methods to handle these ores have not been developed and are not believed to be economically feasible. Domestic mines provided about 32 percent of requirements in 1965 but only 17 percent in 1970; by 1975 the importance of native iron ores will have further declined. Imports of iron ores almost quadrupled in the 1960s and reached a volume of 3 million tons in 1969. Most of the imports came from the Soviet Union.

Information on basic nonferrous ore reserves is tenuous and, in part, conflicting. The tenor of published reports points to a scarcity of reserves, low metal content of ores, and difficulties in ore processing. The great majority of existing mines are said to have only enough reserves left for a few years' production. Consideration has been given to the recovery of nonferrous metals from industrial wastes, such as blast furnace slag and metallurgical dross. For the time being, domestic reserves appear adequate to cover the needs of lead and zinc production and a portion of the requirements for smelting copper and aluminum. The bulk of bauxite and alumina and a substantial quantity of copper must be imported.

Romania is reported to be extracting small amounts of gold and silver. It is also mining uranium ore, which has been exported to the Soviet Union in exchange for isotopes and enriched uranium for use in experimental nuclear installations.

Timber

The country's 6 million acres of forests constitute a valuable source of raw material. Information on the volume of the annual tree harvests has not been published. Substantial quantities of lumber and, increasingly, of lumber products and furniture have been exported, although at the expense of domestic consumption.

In a program to conserve and rebuild this important resource, which was severely overexploited during World War II, a strict limitation was placed in the early 1950s on the annual volume of timber cut. A further reduction in the amount of timber felling was decreed for the 1971-75 period. Through a more efficient utilization of the timber and the expansion of wood processing, including the manufacture of plywood, chipboard, and furniture, the value of the output, nevertheless, increased substantially. Exports of lumber and wood products accounted for 13.4 percent of total exports in 1970, but this ratio is scheduled to decline to 6 percent in 1975, not because of a reduction in the volume of these exports but as a result of a planned expansion of other industrial and food product exports.

ELECTRIC POWER

Electrical power development has proceeded at a rapid pace. The installed generating capacity of 7.3 million kilowatts in 1970 was four times larger than the capacity available a decade earlier. Eighty-four percent of the installed capacity in 1970 was in thermal power plants, and the remaining 16 percent, in hydroelectric stations. Hydroelectric capacity development had been relatively more rapid, with a sixfold increase during the decade.

The production of electrical energy increased even faster than installed capacity because newly built plants operated at greater efficiency. The output of 35 billion kilowatt-hours in 1970 was 4.6 times greater than output in 1960. Power output is scheduled to reach 58 billion to 60.8 billion kilowatt-hours in 1975. These figures imply an average annual increase in power production of 10.5 to 11.7 percent, compared with an average increase of 16.5 percent in the 1960-70 period. Thermal power plants accounted for 92 percent of the output in 1970, and hydroelectric stations, for only 8 percent. Output per unit of thermal capacity was more than double that of hydroelectric generators. The total hydroelectric power potential that could be economically developed has been estimated at 24 billion kilowatt-hours per year.

The Romanian power grid is connected to the power grids of Bulgaria, Czechoslovakia, and Yugoslavia. This tie-in makes possible a more efficient use of available power through mutual exchanges to equalize the load and provides some insurance in the event of regional power failures.

Almost two-thirds of the thermal energy output in 1970 was based on natural gas fuel, and one-third, on coal—mostly coal of very low quality. Less than 3 percent of the fuel used was accounted for by oil. The proportion of natural gas in the fuel balance was roughly the same as in 1960 but ten percentage points lower than in 1965. The share of coal, particularly of low-grade coal, has been rising, in line with the government's policy of conserving natural gas for use in the petrochemical industry.In 1971 construction was virtually completed of a huge hydroelectric station at the Iron Gate on the Danube River, built jointly with Yugoslavia and equipped, in part, with turbines made in the Soviet Union. The station's twelve turbines have a total capacity of 2.1 million kilowatts and are planned to produce about 11 billion kilowatt-hours of electricity per year. The output is to be evenly divided between the two participating countries. Nine of the twelve turbines were reported to have been in operation in September, and six were reported to have been connected to the Romanian national power grid in November. Completion of the Romanian portion of the project almost doubled the country's hydroelectric capacity and increased its power output potential by about 15 percent.

A second, much smaller, hydroelectric station with a capacity of 400,000 kilowatts and a planned output of 1.5 billion kilowatt-hours per year is to be built jointly with Yugoslavia on the Danube River below the Iron Gate plant. Plans for this station were to be initialed by the negotiators before the end of 1971, but information on the dates for the start and completion of construction is not available. Plans for the construction of yet another power station on the Danube River, as a joint venture with Bulgaria in the Cernavoda-Silistra area, were announced in the fall of 1971. This station is to have a capacity of 760,000 kilowatts and an annual output of about 3.8 billion kilowatt-hours. Construction is apparently scheduled to begin in 1975.

An agreement with the Soviet Union to build a 440,000-kilowatt nuclear power station, using a Soviet reactor, was signed in May 1970. Construction of the plant is to begin in 1972, and completion is scheduled for 1978. The agreement culminated extensive negotiations with the Soviet Union and several noncommunist countries. The ultimate choice is believed by Western observers to have been dictated primarily by political considerations.

Initial plans for nuclear power plants called for an installed capacity of 1 million kilowatts by 1975 and 2.4 million kilowatts by 1980. Construction was to begin in the 1966-70 period, but this target was not met. A subsequently revised plan for the 1971-80 period envisaged the construction of nuclear plants with a total capacity of from 1.8 million to 2.4 million kilowatts. Construction of the plants was to begin between 1971 and 1975, and their commissioning was to take place in the 1976-80 period. No information has been made public on the contemplated source or sources of the equipment for these plants, other than the agreed-upon Soviet unit. Romania must rely on foreign technical assistance for its nuclear energy program.

ORGANIZATION

In 1969 industry, excluding construction and small private artisan shops, comprised 1,151 enterprises employing almost 2 million persons. Seventy percent of the enterprises, which included 92 percent of the employed persons, were owned and operated by the state, and the remaining were run by collectives, including collective farms. State industry produced 95.7 percent of the gross output; collective enterprises contributed 4.1 percent; and private establishments accounted for only 0.2 percent of total production.

Seventy percent of the state industrial enterprises, which included 89 percent of the persons employed by the state, were administered by central authorities; the remaining were subject to the jurisdiction of local government bodies. Collective enterprises are subject to governmental controls; their activities are covered by the annual and five-year economic plans, and many of the enterprises act as suppliers of tools, spare parts, and miscellaneous equipment to state enterprises on a contractual basis. Their main function, however, is to provide consumer goods and services for the population.

Centrally administered enterprises include the largest and most important industrial units. A consolidation of these enterprises in 1969 reduced their number by half and correspondingly increased their average size. Employment per enterprise in 1969 averaged 2,860 persons; it ranged from 800 persons in printing to more than 8,000 persons in the leather and footwear industry. Individual enterprises may be composed of more than one plant, which accounts, in part, for the large number of workers. Over 60 percent of the enterprises under central government administration had more than 1,000 workers each, and almost 27 percent employed more than 3,000 workers per enterprise.

Enterprises under local government jurisdiction were generally smaller—95 percent of these employed from 200 to 2,000 workers each—but even in this group there were some enterprises with more than 5,000 workers. Collective enterprises were still smaller—77 percent employed no more than 500 workers per unit. One collective enterprise, nevertheless, employed between 2,000 and 3,000 workers.

Employment in construction totaled 648,000 persons in 1969. Information on the number and organization of construction enterprises is not available.

The internal management structure of state enterprises has undergone a transformation. By decision of the party's Central Committee in April 1968, amplified by another decision in May 1970, the principle of collective management replaced that of one-man management in all enterprises and state economic organizations. Management committees are chaired by enterprise directors and consist of the following members: the managerial personnel, appointed by the ministry; the chairmen of the trade union, as legal representatives of the enterprise trade union committees; the secretaries of the party committees and of the communist youth organizations in the enterprises; and a number of employee representatives.

The secretaries of the two party organizations were given full membership in May 1970 in a move to strengthen the control by the party. Before that date the secretaries of the party committees merely participated in the discussions, and the secretaries of the communist youth organizations played no role at all. County and municipal party organs also provide direction for the management committees' work.

According to party decisions, the management committees are deliberative organs with powers to make decisions concerning the conduct of the technical, economic, and social activities of the enterprise. Two-thirds of the membership constitutes a quorum, and decisions can be adopted by a simple majority of those present. In cases of disagreement between the committee chairman (the enterprise director) and a majority of the management committee, the matter is submitted for resolution to the higher administrative body.

A lack of legislation to legalize the institution of the management committees and conflict of the new party directive with earlier legislation that established the principle of one-man management hampered the introduction of the new management system. No clear-cut guidelines were provided for the scope of the management committees' competence or the numerical strength of employee representation. The function of the management committees was also undermined by higher administrative echelons through continued imposition of detailed directives concerning the work of the enterprises—contrary to the announced party policy of loosening central controls. Confusion prevailed about the relationships between management, management committees, and higher economic bodies.

There is no evidence on the effectiveness of the supplemental party decision of May 1970 in resolving the problems besetting the functioning of the management committees. A new law on the organization and management of state enterprises and institutions was passed by the General Assembly toward the end of 1971, but information on the provisions of that law was not available in early 1972.

Another new element in the management of enterprises is the general assembly of employees, introduced in 1968 along with the management committees in accordance with the principles of collective management and socialist democracy. Adequate legislation to formalize the new institution had not been passed by late 1971, but an appropriate provision may have been included in the new law on industrial organization.

As described by a high government official, the general assembly of employees or, in the case of large enterprises, of employee representatives is a forum that will assure effective participation by workers and specialists in the organization and management of the economy and in decisionmaking concerning the fulfillment of enterprise plans. General assemblies are supposed to exercise control over the activities of management committees. Their authority extends beyond the discussion of problems and evaluation of performance to recommending and adopting decisions.

General assemblies are convened twice a year. On these occasions the enterprise management committee must present to the assembly reports on the committee's activities, on the results of enterprise operations, and on the fulfillment by the enterprise of its economic and social obligations. Together with the trade union committee of the enterprise, the management committee must also present to the assembly for discussion and approval the draft of a new collective contract listing mutual obligations of the management committee and of the employees. Decisions reached by the general assembly are obligatory for the management committee. Decisions on measures that require action by higher authorities must be handled by the relevant bodies responsibly and expeditiously.

Representatives of superior economic organs, including the ministries, and of county and local party committees participate in the work of the general assemblies of employees. The reason given for this participation is the opportunity that it provides for the management to become more familiar with problems of interest to the enterprise.

Available evidence indicates a wide variation among enterprises in the degree of influence exercised by the general assemblies of employees. Toward the end of 1971 some management committees were still reported to be disregarding or downgrading general assembly proposals, but such instances were said to be growing progressively fewer.

Industrial enterprises are grouped into combines, trusts, and, since 1969, so-called industrial centrals. The centrals were created in an attempt to improve the organizational structure of industry, reduce control by the ministries and other central government agencies, and provide greater flexibility, in order to increase industrial efficiency. A major task assigned to the centrals is to introduce specialization of production.

Neither the organizational forms of the centrals nor their authority and responsibility vis-À-vis the enterprises and ministries have been clearly defined or legally established. The resultant uncertainty, experimentation, and bureaucratic disharmony have created considerable confusion in the administration of industry, which has been inimical to the attainment of the efficiency goal. At the same time, a variety of factors, including a shortage of investment funds, an inflexible price structure, and the method of evaluating enterprise performance, have militated against the expansion of specialization. Industry officials believe that it may require from three to five years to resolve the organizational problems posed by the creation of the centrals and that many other problems will have to be solved before specialization can become a reality.

Industrial combines, trusts, and centrals function under the jurisdiction of industrial ministries, of which there were eleven at the end of 1971 (see ch. 8). Industrial ministries have undergone an almost continuous process of reorganization. New ministries have been created; old ones, abolished; still others, amalgamated and split. Spheres of the ministries' activities have been reshuffled, and their internal structures have been modified—all in the interest of improving socialist industrial organization and raising the efficiency of production. One foreign observer remarked that, whenever something went wrong in the economy, reorganization in one form or another was undertaken in an effort to solve the problem through administrative means.

LABOR

The average number of persons employed in industry in 1969 was 1,980,000, or about 40 percent of total employment excluding those employed on collective farms. Industrial employment had increased by 725,000 persons in the 1960-69 period. Employment in construction grew more rapidly—from 372,000 persons in 1960 to almost 648,000 in 1969. At the end of 1969 women constituted 43 percent of employment in industry and less than 9 percent in construction. In industry, the proportion of women in blue-collar and white-collar jobs was about equal. In construction, however, women occupied one-third of the white-collar positions and only 5 percent of the blue-collar jobs.

A distribution of employment by industry branches is available only for enterprises under the direct jurisdiction of the central government. Of these, machine building and metalworking absorbed 27 percent of the employed; fuels and metallurgy, 15 percent; forestry and woodworking, 15 percent; textile production, 12 percent; and chemicals and food processing, 7 percent each. Several less important industry branches accounted for another 11 percent of industrial employment, and an unlisted residue of fifty enterprises employing almost 100,000 persons, presumably constituting the defense industry, made up the balance of 6 percent.

The growth of employment in the 1960-69 period varied widely among the different industry branches. Whereas the number of employed rose by 60 percent for centrally administered industry as a whole, it increased by almost 2.4 times in the chemical branch, somewhat more than doubled in the production of cellulose and paper, and grew by 80 percent in nonferrous metallurgy and in machine building and metalworking. The lowest increases in employment occurred in the production of fuels, in ferrous metallurgy, and in the manufacture of glass and china. The increases in employment did not necessarily correspond to the priority ratings of the individual branches; high priority branches received relatively much larger investment.

The labor force is numerically redundant but qualitatively inadequate for the needs of modern industry. Despite the existence of labor training programs, there is a shortage of skilled personnel at the intermediate level, such as technicians and foremen. Few workers have professional school training; most acquire their skills through short courses or on-the-job training. The number of skilled workers is too small to allow efficient two-shift operation of plants throughout most of industry. The lack of adequate skills and the associated inept handling and poor maintenance of imported sophisticated machinery have been responsible for frequent breakdowns. The resultant work stoppages and the under-utilization of available capacity have had a deleterious effect on productivity.

Because of a high rate of investment and large-scale imports of advanced Western technology and equipment, productivity per worker nevertheless has been rising at a relatively rapid rate. According to official data, productivity in industry increased by an annual average of 7.5 percent in the 1960-69 period, but the increase in 1969 was less than 5 percent. Official plans for the 1971-75 period call for an annual growth in productivity of at least 7.3 percent. Western economists, however, estimated the rise in productivity to have been only 5.6 percent per year in the 1960-67 period, compared to an official figure of 8 percent. Despite the impressive gains, productivity in industry remains low, mainly because of the inadequate qualifications and work habits of the labor force and the shortcomings of industrial organization and management.Industrial labor discipline has been a subject of continuing concern to party and government. Both labor turnover and absenteeism have been high. During the first nine months of 1969 almost 455,000 workers left their jobs in centrally administered enterprises, in many instances without the requisite official permission. During the same period worktime losses from absenteeism amounted to about 12 million man-hours. Abuse of the provision for leave without pay and loafing on the job have also contributed significantly to losses of worktime. For centrally administered industry as a whole, the loss of worktime from all causes, including stoppages caused by deficiencies of the supply and distribution system, amounted to almost 47 million man-hours in the third quarter of 1969—the equivalent of about 74,400 workers.

Poor labor discipline was officially blamed on the failure of the prevailing wage system to provide adequate work incentives. After some experimentation in the food-processing industry during 1968 and 1969 a new wage system was introduced throughout industry on March 1, 1970, still on an experimental basis. Some of the changes brought about by the highly complex new system included: a reduction in the spread between wage rates in different industry sectors and between the upper and lower limits within certain wage categories; the establishment of in-grade wage differentials depending upon the personal achievement of the worker; a rise in the proportion of basic wages to total pay (which also includes bonuses); and a tightening of the provisions concerning the payment of bonuses. Provision was also made for withholding a portion of the pay in the event that production targets are not fulfilled.

Downgrading the importance of bonuses was intended to stimulate the raising of skill levels by making higher earnings dependent primarily upon promotion to higher wage categories, based on qualification rather than on surpassing quantitative production norms. As a means of reducing labor turnover, a seniority system was introduced, with wage increases based on length of service in the same unit. The reform of the wage system was accompanied by a general rise in wages averaging 12.3 percent.

A further increase in wages is planned for the 1971-75 period. The minimum wage of 800 lei (for value of leu, see Glossary) is to be raised to 1,000 lei in September 1972 and to 1,100 lei in 1975. The average wage is scheduled to reach almost 1,500 lei in 1972 and 1,805 lei at the end of the five-year period. In accordance with past policy, the rise in wages will be kept well below the increase in productivity (see ch. 14).

Along with the modification of the wage system, legal measures were enacted to tighten labor discipline. These measures provide for the imposition of fines up to 10,000 lei for violations of economic contracts and fines of from 50 to 1,000 lei for negligence while on duty; they oblige employees to make good the full amount of any damage for which they are responsible; and they enable the enterprise management to reduce workers' wages when standards of social behavior are not met. Penalties may be imposed by the enterprise director or the management committee. The only recourse open to workers is an appeal to the higher administrative bodies.

The broad concept of standards of behavior offers a wide latitude for the exercise of individual judgment by management. No criteria have been provided for determining the conditions under which wages may be cut or the maximum permissible amount of the wage cuts. The new rules thus introduced an element of discretionary exercise of punitive authority. They also deprived the accused of recourse to the courts, which had been available to them under earlier legislation.

INVESTMENT AND CONSTRUCTION

Industry has consistently received more than half the total investment in the economy. In the 1966-70 period industrial investment out of the state budget (centralized investment) amounted to 162.1 billion lei—a volume almost as great as that invested during the preceding fifteen years. Additional investment out of enterprise resources was only about 1 percent of the total and had been even less in earlier years. From 86 to 90 percent of the industrial investment was channeled into branches producing capital goods. Centralized investment in industry during the 1971-75 period is planned at 281.2 billion lei, or about 60 percent of the total planned investment.

Industries producing fuels and energy absorbed the largest share of investment, but their share declined from 51 percent in the 1951-55 period to 31 percent in the 1966-70 period. The high priority accorded to the development of the chemical industry was reflected in a doubling of that industry's investment share from less than 7 percent in the former period to 14 percent in the 1960s. Similarly, a drive for qualitative improvement in machine building and metalworking was accompanied by an increase in the proportion of investment devoted to that industry from a level of 7 to 8 percent in the 1951-65 period to 14 percent in the second half of the 1960s. Ferrous metallurgy absorbed about 10 percent of the investment in the fifteen-year period that ended in 1970. A need to expand exports of manufactured goods and to provide material incentives for the working population stimulated a rise of investment in the light and food industries to 13 percent of the total in the 1966-70 period, compared to a share ranging from 7.5 to 10 percent in earlier five-year periods.

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 Assembly 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 competitiveness in foreign markets. With some exceptions, such as men's and women's knitwear, a lack of competitiveness 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 Japanese 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

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.