The next phase of Bulgarian postwar economic development included the First Five-Year Plan. This plan made an important contribution to the pattern of Bulgaria's socialist economic development by creating the institutional apparatus for long-term industrial planning. Already in 1945, the wartimÍÍÍÍe Directorate for Civilian Mobilization had been replaced by a Supreme Economic Council that extended the previous organization's authority over resource allocation. Now the state's existing economic ministries were subdivided into one ministry for each branch of production. By January 1948, a separate and politically powerful State Production Committee (SPC) was established. By October 1948, representatives of the new SPC and the existing Main Directorate for Statistics had set out the criteria for calculating plan fulfillment.

The announced targets for the First Five-Year Plan (1949-53) confirmed the economic priorities indicated by the previous TwoYear Plan. Agriculture was to receive 17 percent of new investment and industry 47 percent. Gross industrial output was to grow by 119 percent, primarily because of a 220 percent increase in heavy industry. Light industry and agriculture were to raise output by 75 and 59 percent, respectively. The rapid collectivization and mechanization of agriculture was expected to achieve the last target while freeing labor for industry, construction, and transportation. Because about 25 percent of the country's national income was invested in the economic infrastructure, the standard of living remained low.

In 1952 the plan was declared fulfilled a year ahead of schedule, but statistics on the period were too incomplete and contradictory to evaluate its actual results. Substantial bottlenecks existed in material inputs and outputs. Agriculture received less investment than planned (only 13 percent), and showed no growth through the period (see table 12, Appendix). The effect of low agricultural output rippled through other sectors of the economy, hindering production in related industries. Substantial material and technical aid came from the Soviet Union, but with a steep price: Bulgaria was expected to sell products to the Soviet market at below-market prices, and the arrogance of Soviet economic advisers caused serious resentment.

Continuing problems with excessive labor turnover forced the regime to cut back the targets for heavy industry in the Second Five-Year Plan (1953-57), and average annual industrial growth fell from 20.7 to 12.7 percent during that period. This was the first of several dramatic swings that characterized Bulgarian economic development throughout the postwar period. The average annual growth rate of agriculture increased from negative 0.9 percent to 4.9 percent in the Second Five-Year Plan, but the same indicator for the overall NMP dropped from 8.4 to 7.8 percent. The industrial share of the NMP exceeded that of agriculture for the first time in this period.

Two important economic events occurred at the Seventh Party Congress of the BCP, which met 100in mid-id-1958. The party declared that Bulgaria was the first country besides the Soviet Union to achieve full collectivization of agriculture (estimates put the figure at 92 percent at this time), and it announced the goals for the Third Five-Year Plan. That plan, which began in 1958, set relatively moderate initial quotas that included substantially more production of consumer goods. In 1959, however, a BCP decision to make a "Great Leap Forward" (borrowed by the press from Mao Zedong's concurrent program for the Chinese economy) drastically raised quotas: by 1965 industrial output was to be three to four times the 1957 level, and by 1961 agriculture was to produce three times as much as it had in 1957. To achieve the latter goal, agriculture was again reorganized. Amalgamation of collective farms cut their number by 70 percent, after which average farm acreage was second only to the Soviet Union among countries in Eastern Europe. The grandiose Zhivkov Theses, as the quota program came to be known, were tempered noticeably by 1961, when the economy's inability to achieve such growth was obvious to all.

Meanwhile, throughout the late 1950s urban unemployment had been a major problem. The new collectivization drive brought another wave of peasant migration to urban centers. Compounding this problem was a cutback in Soviet imports of industrial inputs, which created some excess capacity in heavy industry. Thus, the intensified industrialization of the Third Five-Year Plan also aimed at absorbing surplus labor.

Trade relations with the Soviet Union and Eastern Europe also played a large role in the investment priorities of the Third FiveYear Plan. Food processing and agriculture were earmarked for greatest growth, because these sectors, together with chemical fertilizers and small electric equipment, were now areas of Bulgarian responsibility in the plans of the Council for Mutual Economic Assistance (Comecon--see Glossary) for greater East European trade. After a reduction in 1955, Bulgaria faced greatly increased export obligations to the USSR, Czechoslovakia, and the German Democratic Republic (East Germany) in the late 1950s. The latter two could provide badly needed industrial machinery in return, and the USSR provided vital raw materials and energy.

The party leadership initially resolved to fulfill the third plan, like the first, within three or four years although none of its goals were reached, the party declared fulfillment in 1960, and Zhivkov survived the popular disillusionment and economic upheaval caused by his totally unrealistic theses. At that point, the twelve years of the second phase of Bulgarian postwar economic development had wrought major structural changes in the Bulgarian economy. Industry's share of the NMP increased from 23 percent to 48 percent as agriculture's share fell from 59 percent to 27 percent. By 1960 the value produced by heavy industry matched that of light industry, although food processing for export also grew rapidly. Throughout the second phase, budget expenditures consisted primarily of reinvestment in sectors given initial priority. Meanwhile, the completion of collectivization had shifted 678,000 peasants, about 20 percent of the active labor force, into industrial jobs. The average annual increase in industrial employment peaked at 11.5 percent between 1955 and 1960.

Data as of June 1992