Why Did Socialist Economies Fail? The Role of Factor Inputs Reconsidered 

29 Pages Posted: 18 Jan 2019

See all articles by Tamás Vonyó

Tamás Vonyó

Bocconi University

Alexander Klein

University of Kent - Canterbury Campus

Date Written: February 2019

Abstract

This article presents new estimates for investment and new growth accounts for three socialist economies between 1950 and 1989. Government statistics reported distorted measures for both the rate and the trajectory of productivity growth in Czechoslovakia, Hungary, and Poland. Researchers have benefited from revised output data, but have continued to use official statistics on capital input, or estimated capital stock from official investment data. Investment levels and rates of capital accumulation were much lower than officially claimed and over‐reporting worsened over time. A setback in factor accumulation—both investment in equipment and labour input—contributed very significantly to the socialist growth failure of the 1980s.

Suggested Citation

Vonyó, Tamás and Klein, Alexander, Why Did Socialist Economies Fail? The Role of Factor Inputs Reconsidered  (February 2019). The Economic History Review, Vol. 72, Issue 1, pp. 317-345, 2019. Available at SSRN: https://ssrn.com/abstract=3317738 or http://dx.doi.org/10.1111/ehr.12734

Tamás Vonyó (Contact Author)

Bocconi University

Alexander Klein

University of Kent - Canterbury Campus ( email )

Keynes College
Canterbury, Kent CT2 7NP
United Kingdom

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