the Warsaw Pact invasion of Czechoslovakia in 1968, agricultural production further deteriorated. Large quantities of bread grain had to be imported to feed the population. The imports came from the Soviet Union but also from West Germany. However, since the Czechoslovak state had to pay with hard currency for Western deliveries, this created large budget deficits. The situation began to change at the end of the 1980s. Massive reprivatization had begun, and it continues to the present day ( 1993).
The efforts of economists to convince the leaders that reforms were unavoidable did not go on without some results in other sectors of the economy. In 1964, the third five year plan was simply abandoned, and preparations for changes began. In 1967, the so-called new economic model was introduced. Now financial goals replaced quantitative ones. A new, three-tiered system of prices was established; in one tier prices were freed of all controls, another retained regulated prices, and the third included a mixture of the two. However, the prices of major consumer goods remained in the second tier. There occurred a period of two years during which signs of recovery appeared.
In late 1966, the general framework of reforms, proposed by Ota Sik, was accepted in principle. However, the implementation of reforms was, once again, postponed. The invasion of 1968 not only put a stop to the reform efforts but reversed those that had already been introduced. The years of "normalization" (see Normalization in Czechoslovakia) between 1968 and 1975 began with the dismantling of whatever changes had been made in the previous few years. Czechoslovakia once again followed the Soviet line. Administrative decentralization was introduced, but it was not accompanied by the decentralization of economic management. The central authorities did go so far as to delegate some authority to the trusts and, in exceptional cases, to individual enterprises. They established funds for bonuses for managers in case the work norms were surpassed.
In 1975, a "new" type of economic unit, the so-called concern was established in order to channel research and technological innovations to the firms. At the same time, agriculture received a higher priority in investment allocation. Once again, tinkering with the system did not bring about the desired results. On the one hand, animal husbandry began to produce enough meat and dairy products for the needs of the population, and there were enough other supplies of foodstuffs. However, the dogmatism of the leadership prevented further improvements. In 1975, new taxes were imposed on collectives in order to prevent the rural population to live better than industrial workers. In the late 1970s, the world economy began to change rapidly. The situation in Czechoslovakia was not favorable to make adjustments to the changes. By the middle of that decade, it became clear that the communist approach to economic development was a complete failure. It was unavoidable to realize that the system could not be reformed; it had to be abolished. This is the task that postcommunist Czech and Slovak leaders are currently trying to solve.
Stevens John N., Czechoslovakia at the Crossroads: The Economic Dilemmas in PostwarCzechoslovakia