Why turbulent Kosovo has marble sidewalks but troubled industries

Yugoslavia's poorest region, Kosovo, never seems to catch up with the rest of the country no matter how much money is poured into it. This is because the area's energy and transport facilities are so much poorer than those in the north - and because the birthrate (the highest in Europe) is so much greater in the south. In fact, one unit of investment in northern Croatia is 71/2 times as productive as one in southern Kosovo, the Zagreb Economic Institute calculates.

It is Yugoslavia's own north-south problem in microcosm. And it can lead to ominous political consequences, as shown by last spring's nationalist demonstrations by the Kosovars (ethnic Albanians) that left eight protesters and one policeman dead.

For the Kosovars, it's a cause of constant resentment that they still trail far behind the rest of the country in economic development 35 years after the launching of postwar Yugoslavia with its dreams of economic equalization.

For the Serbs, it's a cause of constant exasperation that the Kosovars turn the donations from the rich parts of the country into marble sidewalks and the handsomest university library in all of Yugoslavia (as one disgruntled northern taxpayer expressed it), while never seeming to get their own industry past the handout stage.

The task of getting a laggard economic region to a takeoff point is not impossible. Bosnia, another Yugoslav hinterland, has made the transition, even though no one admits this yet officially. For the rest of the 1981-85 five-year plan, Bosnia will still receive federal development funds. But by 1985 it will be considered mature enough to continue on its own economic strength, leaving Kosovo and Montenegro as the main underdeveloped regions.

Kosovo's problems seem more intractable, however, for historical and geographic as well as demographic reasons. Kosovo, unlike the once Austrian-ruled Slovenia and Croatia in the north, was for centuries under the rule of an Ottoman empire that cared very little for industrial development. The deeper one went into the Ottoman Balkan provinces, the more primitive the economy. Kosovar was among the most primitive of all. Even the unification of Yugoslavia after World War I did little to modernize the region.

In the post-World War II period there has been a conscious attempt to bring Kosovo into the 20th century. But setbacks have included (besides the birthrate) politically guided investment in prestige projects rather than in a sound economic base, a draining of population away from farms to the glamorous city, and overeducation of an unemployable Kosovar intelligentsia in the 10-year-old university in Pristina.

The urgent question must therefore be how Kosovo can get out of the vicious circle of underdevelopment. And just about the only answers that have come up that go beyond more-of-the-same are energy and raw-materials investment and direct investment.

The former is promising because of Kosovo's concentration of lignite, nickel, lead, zinc, and other resources - and Yugoslavia's push in the current five-year plan to reduce imports, especially energy. One of the investment priorities between now and 1985 is coal, and it is hoped that accelerated lignite production could stimulate the overall Kosovo economy.

The idea of having prosperous northern enterprises invest directly in Kosovo companies (rather than funneling money through the more politicized development fund) has long been a pet proposal of the Slovenes. Now the Slovenes have won Belgrade's approval for half of their mandatory contribution to Kosovo's development to come in this form.

There are precedents for such direct cooperation. Fifteen years ago Slovenia's big wine enterprise took an active interest in developing Kosovo vineyards and marketing Kosovo wine in West Germany and Britain. There has been similar cooperation in pharmaceuticals, and Slovene companies are now investing heavily in the expansion of lignite production and in construction of a thermonuclear power station in Kosovo. Proposals are also circulating for Slovenia's labor-short textile industry to farm out work to Kosovo's underemployed population.

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