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Abstract

A set of economic reforms called the New Economic Mechanism (NEM) was introduced in Bulgaria in 1979 in an attempt to reverse a decade of slowing production growth and escalating costs. The NEM was intended to spur productivity increases by decentralizing management, giving individual production units more control over production and input decisions, and tying enterprise income and workers' wages more closely to production results. However, in the 4 years since its implementation the NEM has not yet been fully implemented. Decisionmaking is still highly centralized, and unprofitable firms continue to be subsidized. While production growth has been respectable, it has been achieved at great cost to the Bulgarian economy as input costs have continued to rise. Agricultural exports have not risen as fast as was hoped, and imports have increased. Imports from the United States have declined, on the other hand, and are not expected to rise much during the rest of the eighties.

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