Predrag Rajsic writes in today’s Mises Daily:
If we look at and analyze economic indicators, we have to admit that the idea of the robustness of the Yugoslav economy was an illusion and that the “well-being” that many former Yugoslavs are recalling with nostalgia was borrowed at the expense of future generations. These generations are now paying the bill for the collapse of the unsustainable economic system of socialist Yugoslavia, along with paying the bill for the destructive wars of the 1990s, and the interventionist economic policies of former Yugoslavia’s successor states.
The first sign that the robustness of the Yugoslav economy was an illusion appeared immediately after Tito’s death. The 1980s were marked by constant delays of the beginning of the repayment period for Yugoslavia’s maturing external debt due to the financial weakness of the economy. In 1991, Yugoslavia had about $20 billion of external debt. Previous to that, the International Monetary Fund reduced Yugoslavia’s total debt by $1.8 billion because the country simply did not have the means to repay the interest, let alone the principal. What preceded this outcome? This outcome was preceded by several decades of building an economy whose structure was such that its survival depended on a constant increase in foreign debt — an addict economy.