Prior Economic Problems Due To The Economic Destruction Of Yugoslavia

Lastly, the death of Tito caused further economic decline due to both prior economic problems and economic problems post Tito's death. During Tito's time as ruler, his vision was for a third way economy, in which saw Yugoslavia working with both East and West without being dominated by either. Despite communist representation, Yugoslavia was the most free of the communist states , as Tito's system allowed for small businesses which ultimately allowed for small luxuries and modest wealth. Due to Tito's system and other economic measures, Yugoslavia was at times more prosperous than poorer capitalist countries within Europe. Following Tito's death in May 1980, Yugoslavia was beset by serious economic difficulties. This was due to the reappearance of internationality relations, the clear decline in the effectiveness of established
decision making institutions and procedures, and by the increasing levels of conflict and the struggling leadership of Yugoslavia. The year of Tito's death saw Yugoslavia with a debt totalling $20 billion which was a drastic increase from the debt in 1973 which was a total of $4.7 billion . It was clear to the people of Yugoslavia and the leaders of Yugoslavia that the country was in crisis. Without the guidance of Tito and his more economically pleasing system of government, the new leadership and Yugoslavia itself struggled under the weight of economic decline and crisis.
As conflict increased within Yugoslavia and between other nations and Yugoslavia, the economic crisis worsened and the federation became increasingly untenable. The economic crisis whilst not being the main cause of Yugoslavia's dissolution, did contribute to it as it was part of the repercussions of Tito's death.
The economic difficulties within Yugoslavia had magnified long-neglected problems and weaknesses and made the need for correction more prominent. This gave rise to more controversy and debate over the leadership of the country and whether the present circumstances demanded new and effective economic and political reforms that would ultimately carry the country in the direction of what the west calls 'liberalisation' . The other alternative was to abandon existing 'liberal' formulae and return to more 'conservative' ones. Yugoslavia was essentially divided and in a situation of stalemate. Whilst Tito's death was not the immediate cause of the economic crisis Yugoslavia
was faced with, it had marked the beginning of the economic decline. As debts were already totalling $20 billion the year of Tito's death, the escalation of conflict saw debts increase exponentially, resulting in the decline of the Yugoslavian economy. The escalation of conflict was a result of few factors, with a main factor being the increase of nationalism and the desire for autonomy. With the Yugoslavian people already being dissatisfied with the state of Yugoslavia and the struggling government, the economic crisis only increased their desire to separate from Yugoslavia. The economic crisis affected some areas of Yugoslavia more than others, such as Serbia. Serbia's economy collapsed as a result of war cost, which left many people struggling. It was estimated by an economics professor at Belgrade university that $6.5 billion was lost in trade and production as a result of the civil war . The Serbian communists whom had been in control of Yugoslavia at the time reacted to the economic crisis by drawing on the country's hard-currency reserves. This was detrimental for the already struggling federation as the Yugoslav government decided to devalue the dinar to approximately 104 to the dollar, which economists argue was an attempt to hide the governments manipulation of the economy and that the "devaluation was a license for them to steal' . It wasn’t long before Yugoslavia broke up as a result of the conflict and economic crisis. Serbia, alongside Montenegro had been the last republics that remained within Yugoslavia and supported 'national communism', however eventually they too broke away due to the severe repercussions of conflict and economic crisis as a result of rising nationalism and the death of Tito.