Strategic Decisions on Industrialization: Case of Galati Steel Works

Abstract

The industrialization under a communist regime has some particularities generated by the state ownership, centralized administrative planning and, last but not least, by the communist leaders’ visions on the roles of industries. During the reign of Josef Stalin, who considered that major role in the economy had to be played by the heavy industries, in the Soviet Union there were built large industrial complexes where the former peasants were transformed in industrial workers. His successor, Nikita Khruhschev, who had a different vision on industrialization, assigned increasing roles to the consumer-oriented industries and agriculture. He promoted also the specialization among the economies of Soviet Union and its Eastern European satellites. This new orientation met the opposition of Gheorghe Gheorghiu – Dej, the Romanian communist leader who initiated, since the late 1950s, a gradually emancipation from the Soviet tutelage. An episode of confrontation between the Romanian and Soviet communists on the industrial policies was the 1960 decision of building a gigantic steel mill at Galati, a town from the South – East of Romania where Gheorghiu – Dej spent his youth. Despite the De – Stalinization process launched in the Soviet Union in 1956, the Romanian communists’ initiative followed a Stalinist type of industrialization. Moreover, when the Soviet Government proposed, in the spirit of the division of labor within the socialist camp promoted by Khruhschev, that the new plant should transform in steel the pig iron produced by their industrial complexes, Romanian communists viewed this plan as a threat to the country’s economic development and they rejected it. This paper explores some circumstances of the decision on building of the new steel mill which dramatically changed the economic and social profile of Galati.

Keywords: Industrialization under communist regimes, Economic development, Galati Steel Works

JEL Classification: N60, O14, O25, P20, P23