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My understanding is the original Kalashnikovs were milled but after the Soviets started exporting the design to other countries they switched to stamped receivers because they were cheaper and easier to manufacture. I have shot milled AK's like the Bulgarian SLR-95 and they are very accurate but also quite a bit heavier than stamped ones. My Bulgarian SSR-85C has a 1.6mm stamped receiver that feels and shoots a lot like milled but not quite as heavy... a good compromise in my opinion.
 

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If it wasn't a good method then why is the AK the most produced rifle in the world?
Because they are cheap and easy to mass produce, they do not require a lot of training to shoot and maintain, and they are rugged and reliable. That is why it is the most widely produced and distributed assault rifle in the world, but mostly in poorer third world countries.
 
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