Courses

Topic 13. Cooperation between Socialist and Capitalist Enterprises

Read: Gatejel, Luminita. “A Socialist–Capitalist Joint Venture: Citroën in Romania during the 1980s.” The Journal of Transport History 38, no. 1 (2017): 70-87.

The paper explores cooperation between the French automobile manufacturer Citroën and the Romanian government to build an automotive plant Oltcit in Craiova, Romania, from 1976 to 1988. The factory produced the car Citroën Axel, branded in Romania by Oltcit and marketed in Socialists and Capitalist countries. Romanian leaders expected that the project would help them facilitate industrial modernization and create a modern society, while Citroën was interested in reducing production costs by outsourcing work to low-income countries. Despite the patronage of Romanian leader Nicolae Ceaușescu, the project failed to develop as planned: the construction was significantly delayed, and then the production numbers were much smaller than expected.

Moreover, the car’s low price caused suspicion among Western buyers. Citroën’s promotional campaign could not convince them that the car was of “French” quality. The author argues that the project failed to turn into the success the politicians and managers on both sides hoped for. In 1988 Citroën withdrew from the agreement. The paper presents the story of the Socialist-Capitalist joint venture in Romania in the context of dynamic East-West relations. Therefore, this case study reflects on controversial processes in economic cooperation between the two geopolitical groups.

Questions for preparation:

1. The author states that the cooperation between Citroën and Oltcit ultimately failed. What are her arguments?
2. Romania gained a reputation of an “autonomous” player inside the Eastern Bloc. What were the advantages and disadvantages of such a position? How did Romanian leadership try to benefit from this situation?
3. The paper compares the Oltcit-Citroën joint venture with the earlier French-Romanian project producing Renault 8 and Renault 12. Why was the latter a relative success while the former failed?
4. This case includes a brief comparison of the Romanian and GDR automobile industries. Which government got it right?
5. Romanian leader Nicolae Ceaușescu personally supervised the project. However, even with his extraordinary power, he could not avoid delays in the plant construction. What was the problem? What does this story tell us about the shortcomings of the Romanian economy?