Making automobiles in Yugoslavia: Fiat technology in the Crvena Zastava Factory,1954–1962

Abstract

The license agreement between the Italian Fiat and the Yugoslav Crvena Zastava, signed in 1954, was the first commercial arrangement and enterprise between a Western corporation and a socialist country in the post-war era. The Yugoslav side expected the establishment of the modern automobile industry to have a spin-off effect, helping to modernise the entire industrial sector. However, this ambitious plan failed to materialise, leaving the country with Western-type automobiles, which often fell below even East European quality standards. As it was linked to almost the entire industrial sector, the underperformance of the Yugoslav automobile industry can be understood as both a reason for and indication of a dangerously overstretched political and economic system. In particular, the ‘ethnic key’ policy and so-called workers’ self-management were bottlenecks in reaching successful outcomes, only further fuelling Yugoslav contradictions instead of helping to modernise the Yugoslav economy.