Kornai János: “Application of an Aggregate Programming Model in Five Year Planning“, co-author: Zsuzsa Ujlaki. Acta Oeconomica, 1967, Vol. 2, No. 4, pp. 327-344. Original: 5.37, in Hungarian, 1967.

328 J. KORNAI—L. ÚJLAKI: APPLICATION OF AN AGGREGATE PROGRAMMING MODEL Description of the model In constructing the model we started from the given endowments of the country. The Hungarian economy7 is highly “extrovert”. On the one hand, for a great number of basic raw materials we have to fall back on imports. On the other hand, as a small country we cannot undertake to develop every branch of manufacturing industry and have to aim at a reasonable division of labour with other countries. As a consequence, every investment problem in Hungary is inseparably connected with questions of foreign trade: the development pro­jects of a sector always “compete” with the alternative of meeting the addi­tional requirements by imports and it will always be expedient to take into ac­count the export aspects when planning the extent of development. Howto enter most advantageously into the international division of labour, is a ques­tion underlying almost every planning problem. Moreover, the country is now faced with considerable difficulties in its foreign trade and these bring the foreign-trading aspects of plan decisions even more to the fore. It was our en­deavour to construct the. model in a manner that the results of the computa­tions provide an answer to questions of this type. As regards its mathematical form, the model represents a standard prob­lem of linear programming. The program yields the production and foreign­­trade estimates for 1970, the last year of the five-year plan period. The national economy was divided into 18 productive sectors and the majority of the model’s variables is linked with this division. The variables are of the following types: 1. Production of the *'-th sector, with the capacities existing already at the beginning of the plan period; 2. Production of the i-th sector, with the additional capacities brought into being in the course of the plan period; 3. Exports of products of the i-th sector to socialist markets; 4. Exports of products of the i-th sector to capitalist markets; 5. Competitive imports from socialist markets to replace the products of the i-th sector; 6. Competitive imports from capitalist markets to replace the products of the i-th sector.* In addition to the above, a further seventh type of variables also figured in the model, that of the so-called indicator variables. 7.1. The volume of additional consumption attainable in 1970, over and above the private consumption compulsorily prescribed in the model. The pattern of this additional private consumption has been fixed in a breakdown * In actual practice, not all of the six types of variables could be interpreted for each sector. The number of the variables representing the economic activities is therefore less than 6 times 18. Acta Occonomia Academiae Scientiarum Hvmgaiicat 2, 1997

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