Beginning in 1951, following the Soviet economic model, Romania adopted annual and five-year economic planning. As in the Soviet system, the principle of democratic centralism applied (see Organizational Structure , ch. 4). Thus, the economic plans coÍÍÍÍmpiled by the central planning organs became the law of the land, and compliance was mandatory.

In theory, the Unitary National Socioeconomic Plan, as economic plans were officially called after 1973, was based on information on current plan fulfillment, requests for resource allocations, and recommendations for investments that originated on the lowest echelons and rose through the bureaucracy to the central planners. Such a system involved a certain amount of give and take as enterprises and centrale "negotiated" with the ministries for favorable production targets and resource allocations. In turn the ministries lobbied for their respective sectors to gain priority consideration in the state budget. But during the 1980s, input from lower echelons in the planning process received less consideration. In part, this development was due to the unreliability of information reported by the managerial cadres, from the local level up to the heads of the economic ministries themselves. Plan fulfillment data were supposed to serve as the basis on which future economic plans were compiled, but in the 1980s data became skewed when salary reforms--the so-called global accord--began linking managers' incomes to the performance of the economic units under their supervision. In 1986 this remuneration system encompassed nearly 11,000 managers and bureaucrats, even including the heads of ministries and the deputy prime ministers. In order to maintain their incomes, officials simply falsified performance reports. As a result, aggregate production figures were grossly inflated, and annual and five-year plan targets based on these figures became increasingly unrealistic.

Besides distorting production reports, managers resorted to other income-protecting measures that impeded the flow of accurate information to the central planners. Because wages and salaries were tied to plan fulfillment and severe penalties were levied for shortfalls--even when caused by uncontrollable factors such as power shortages, drought, and the failure of contractors to deliver materials and parts--it was in the interests of the enterprises, centrale, and ministries to conceal resources at their disposal and to request more inputs than they really needed. Managers concealed surplus operating reserves to ensure production in the event of unforeseen bottlenecks. This practice made accurate inventories impossible, resulting in inefficient use of resources.

Data as of July 1989