Was Stalin Necessary for Russia's Economic Development?

64 Pages Posted: 14 Sep 2013

See all articles by Anton Cheremukhin

Anton Cheremukhin

Federal Reserve Banks - Federal Reserve Bank of Dallas

Mikhail Golosov

Princeton University - Department of Economics

Sergei Guriev

Sciences Po; Centre for Economic Policy Research (CEPR)

Aleh Tsyvinski

Yale University - Cowles Foundation

Date Written: September 2013

Abstract

This paper studies structural transformation of Soviet Russia in 1928-1940 from an agrarian to an industrial economy through the lens of a two-sector neoclassical growth model. We construct a large dataset that covers Soviet Russia during 1928-1940 and Tsarist Russia during 1885-1913. We use a two-sector growth model to compute sectoral TFPs as well as distortions and wedges in the capital, labor and product markets. We find that most wedges substantially increased in 1928-1935 and then fell in 1936-1940 relative to their 1885-1913 levels, while TFP remained generally below pre-WWI trends. Under the neoclassical growth model, projections of these estimated wedges imply that Stalin's economic policies led to welfare loss of -24 percent of consumption in 1928-1940, but a +16 percent welfare gain after 1941. A representative consumer born at the start of Stalin's policies in 1928 experiences a reduction in welfare of -1 percent of consumption, a number that does not take into account additional costs of political repression during this time period. We provide three additional counterfactuals: comparison with Japan, comparison with the New Economic Policy (NEP), and assuming alternative post-1940 growth scenarios.

Suggested Citation

Cheremukhin, Anton and Golosov, Mikhail and Guriev, Sergei and Tsyvinski, Aleh, Was Stalin Necessary for Russia's Economic Development? (September 2013). NBER Working Paper No. w19425. Available at SSRN: https://ssrn.com/abstract=2325798

Anton Cheremukhin (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Dallas ( email )

No Address Available

Mikhail Golosov

Princeton University - Department of Economics ( email )

111 Fisher Hall
Princeton, NJ 08544-1021
United States

Sergei Guriev

Sciences Po ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France

HOME PAGE: http://econ.sciences-po.fr/staff/sergei-guriev

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Aleh Tsyvinski

Yale University - Cowles Foundation ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States
203-432-9163 (Phone)

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