Nationalization and collectivization

After the Communists were able to liquidate their allies, the reforms were passed at a faster pace.^[3] In June 1948, the Great National Assembly passed a nationalization law which resulted in the nationalization of virtually all of Romania's industrial means of production.^[3] Together with the nationalization, central planning was introduced, first using one-year-plans (in 1949 and 1950), then using five-year plans (starting in 1951).^[3]

In the countryside, all large holdings were nationalized in March 1949, being either converted into state-owned farms or handed over to collective farms. The small farmers were encouraged to join these collective farms, but the brutality with which this program was implemented led to resistance which was, occasionally, even violent.^[5] According to a 1961 report given to Gheorghe Gheorghiu-Dej, around 80,000 peasants were arrested, of which around 30,000 were prosecuted.^[5]

However, Romania did not have the material means (such as tractors), nor the skilled people to run large-scale exploitations. The Central Committee admitted the mistakes and retreated temporarily, allowing individual property, with mandatory quotas of the production. The pressure from these quotas, combined to the attractiveness of industrial jobs in the cities led to a decline of agriculture's share of the labor force from 74.1% in 1950 to 69.5% in 1955.^[5] It was only in 1958 that a new campaign begun: the number of households engaged in private agriculture went down from 88.5% in 1955 to around 7% in 1962, when the socialization of agriculture was considered complete.^[6]

Industrialization

A large investment plan was started: between 1950 and 1953, the ratio of investment to national income grew from 19% to 34%.^[3] It focused on industrialization, which received 48% of the investment funds, as well as construction.^[3] Most of the investment was in electrification, metallurgy, machine building and chemical industries.^[3] However, few investments were made in the countryside (less than 10%).^[3]

In 1953, the pace of industrialization was slowed, more resources being redirected to consumption and housing. Retail sales were increased and steps were made to end rationing in order to gain the favors of the working class.^[7] The second five-year plan (1956–1960) was supposed to accelerate the pace of industrialization again, but, in the context of the Hungarian Revolution of 1956, the Romanian Communist Party cautiously reduced the investment to half of the original amount and, instead, increased the workers' wages by 15%.^[7] After the leadership was sure that they had the control in the country, the government resumed its policy of industrialization, growing investment by 10.92% in 1958 and 16.23% in 1959.^[7]

Over this period, industrialization proceeded at a faster rate than any other Eastern European country.^[8] The labor force increased from 12% to 19.2% between 1950 and 1965 and, according to official figures, its industrial production increased by 649%.^[8] While the real figures are expected to have been lower, most sources agree that there was a massive growth.^[8]

The industrialization had an important social impact. The cities grew as new jobs were created in factories, but the inhabitants of these urban areas suffered overcrowding and lack of services, as not enough funds were allocated to building housing.^[9] The high level investment in industry meant that, although consumption increased in absolute terms, it was the lowest among the Eastern Bloc countries.^[9]