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Economic Rent And Estimation Of Soviet Gnp Growth

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  • William M. Liefert

Abstract

The extraction of fuels and metals and production of agricultural goods in the USSR involve increasing marginal cost, which generates economic rent. In computing Soviet GNP accounts, though, the CIA excludes economic rent in measuring value added. The effect is to value output at average, as opposed to marginal, cost. The exclusion of rent understates the shares of fuels, metals, and agriculture in Soviet GNP, which adversely affects the CIA's calculations of Soviet growth. In this paper, the author estimates the economic rent generated by Soviet extraction of fuels and metals and agricultural production. He then uses the estimates to recompute the shares of these sectors in Soviet GNP, and GNP growth. The results suggest that inclusion of economic rent in value added (or alternatively, marginal cost valuation of output) more than doubles the share in GNP of mining (fuels and metals extraction), and increases agriculture's share during the 1980s from 20 percent to about 25 percent. The reestimates of Soviet GNP growth also differ from those of the CIA by 10–30 percent.

Suggested Citation

  • William M. Liefert, 1991. "Economic Rent And Estimation Of Soviet Gnp Growth," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(2), pages 159-176, June.
    • Handle: RePEc:bla:revinw:v:37:y:1991:i:2:p:159-176
    DOI: 10.1111/j.1475-4991.1991.tb00352.x
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    Cited by:

    1. Liefert, William & Liefert, Olga, 2015. "Russia's Potential to Increase Grain Production by Expanding Area," 2015 Conference, August 9-14, 2015, Milan, Italy 212045, International Association of Agricultural Economists.
    2. Koopman, Robert B., 1990. "Potential Impact on World Agricultural Markets of Policy Reform in Central and Eastern Europe and the Soviet Union," 1990: The Environment, Government Policies, and International Trade Meeting, December 1990, San Diego, CA 50881, International Agricultural Trade Research Consortium.

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