48 SOCIAL SCIENTIST adjustments'have also been made for development of the priority branches. Thus, many a time the enterprises are not allowed to pass on increased input cost to the production price. This, then, involves an elaborate scheme of subsidies. There has also been a search for finding an appropriate pricing principle for new and improved products. The price performance principle was introduced in 1976. The price of a product fixed according to this principle, takes into acount the use-value parameters as well as the cost parameters. For various reasons the principle was abolished in the 1980s and cost-based pricing was re-introduced. In 1986, a new principle was announced, which again aimed at including use-value of the product while fixing the prices. Besides, provision is also made to allow flexibility in the product price. Finally it must be mentioned that the model of combine management is still not perfect. It is being improved and extensive experimentation is going on. The GDR leadership, however, feels that the combines have great potential for improving allocative as well as innovative efficiency. To conclude, after having experimented with market instruments in the 1960s, the GDR economy has reverted to direct quantitative planing, with detailed specific instructions. The reorganisation of intermediate level authority, by introducing new units, viz. combines, has been done to minimise branch-external coordination, and facilitate efficient and direct supply of material and technology inputs to the enterprises. In addition, it is hoped that the immense opportunities for information storage and processing, offered by the computer revolution, wil make it possible to increase greatly the efficiency of direct quantitative planning and management. The overall performance of the GDR economy is undoubtedly more satisfactory than that of any other economy in the socialist bloc. Comparative figures for the annual percentage changes in the Net Material Product of Hungary and GDR are given in Table 1. The comparison is made with Hungary, because Hungary has progressed furthest in the market-oriented economic reforms. Table 1 Annual percentage changes in NMP 1981 1982 1983 1984 1985 1986 1987 GDR 4.8 2.6 4.6 5.5 5.2 4.3 3.6 Hungary 2.5 2.6 0.3 2.5 -1.4 '0.9 2.3 Technologically, GDR is the most advanced country in the CMEA group. It fails to lead only in the case of electrotechnology and electronics. With regard to machine building and chemical industry the GDR compares well with world standards. GDR's population, however, compares itself more with FRG than any other country. GDR*s technological backwardness vis-a-vis FRG, and particularly its