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Old Capital vs. New Investment in Post-Soviet Economies: Conceptual Issues and Estimates

Author

Listed:
  • Alexei Izyumov

    (Department of Economics, College of Business, University of Louisville, Louisville, KY 40292, USA.)

  • John Vahaly

    (Department of Economics, College of Business, University of Louisville, Louisville, KY 40292, USA.)

Abstract

The paper evaluates levels and trends in capital accumulation in countries of the Commonwealth of Independent States (CIS) since the start of market reforms. Based on certain assumptions about the survival rate of the old Soviet era capital and perpetual inventory method to account for new investments, we estimate the amount of ‘market-quality’ capital accumulated in the CIS economies in the 1992–2005 period. Over the period of observation, in Russia the losses of the 1990s were largely restored while most other countries saw a decline in capital stock. Russia remains the highest capitalised CIS country with capital–labour ratio (K/L) of about $40,000 per worker. The lowest capitalised countries have K/L's from $10 to $13,000. Growth accounting using market-quality capital stock shows that the key factor of GDP changes was the dynamics of total factor productivity. Comparative Economic Studies (2008) 50, 79–110. doi:10.1057/palgrave.ces.8100237

Suggested Citation

  • Alexei Izyumov & John Vahaly, 2008. "Old Capital vs. New Investment in Post-Soviet Economies: Conceptual Issues and Estimates," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 50(1), pages 79-110, March.
    • Handle: RePEc:pal:compes:v:50:y:2008:i:1:p:79-110
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    Citations

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    Cited by:

    1. Voskoboynikov, Ilya B., 2012. "New measures of output, labour and capital in industries of the Russian economy," GGDC Research Memorandum GD-123, Groningen Growth and Development Centre, University of Groningen.
    2. Ilya B. Voskoboynikov, 2021. "Accounting for growth in the USSR and Russia, 1950–2012," Journal of Economic Surveys, Wiley Blackwell, vol. 35(3), pages 870-894, July.
    3. Suparna Chakraborty & Keisuke Otsu, 2012. "Deconstructing Growth - A Business Cycle Accounting Approach with application to BRICs," Studies in Economics 1212, School of Economics, University of Kent.
    4. Voskoboynikov, Ilya & Solanko, Laura, 2014. "When high growth is not enough: Rethinking Russia's pre-crisis economic performance," BOFIT Policy Briefs 6/2014, Bank of Finland Institute for Emerging Economies (BOFIT).
    5. Ville Kaitila, 2016. "GDP growth in Russia: different capital stock series and the terms of trade," Post-Communist Economies, Taylor & Francis Journals, vol. 28(2), pages 129-145, April.
    6. Marcel P. Timmer & Ilya B. Voskoboynikov, 2014. "Is Mining Fuelling Long-Run Growth in Russia? Industry Productivity Growth Trends Since 1995," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(S2), pages 398-422, November.
    7. Gabriel Di Bella & Rafael Romeu & Andy Wolfe, 2012. "Cuba: Economic Growth, Aging, and Long-Term Fiscal Sustainability," Annual Proceedings, The Association for the Study of the Cuban Economy, vol. 22.
    8. Josef Brada & Ali Kutan & Goran Vukšić, 2011. "The costs of moving money across borders and the volume of capital flight: the case of Russia and other CIS countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(4), pages 717-744, November.
    9. Mika Kortelainen & Simo Leppänen, 2013. "Public and private capital productivity in Russia: a non-parametric investigation," Empirical Economics, Springer, vol. 45(1), pages 193-216, August.
    10. repec:dgr:rugggd:gd-123 is not listed on IDEAS
    11. Mirzobobo Yormirzoev, 2022. "Economic Growth and Productivity Performance in Central Asia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 64(3), pages 520-539, September.
    12. El-hadj Bah & Josef C. Brada, 2014. "Labor Markets in the Transition Economies: An Overview," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 11(1), pages 3-53, June.
    13. McDonald Bruce D & Eger Robert J, 2010. "The Defense-Growth Relationship: An Economic Investigation into Post-Soviet States," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 16(1), pages 1-28, September.
    14. Raushan Bokusheva & Irina Bezlepkina & Alfons Oude Lansink, 2009. "Exploring Farm Investment Behaviour in Transition: The Case of Russian Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(2), pages 436-464, June.
    15. repec:dgr:rugggd:gd-137 is not listed on IDEAS
    16. Gregory Brock, 2010. "Growth in Russia's federal districts, 1994-2003," Post-Communist Economies, Taylor & Francis Journals, vol. 22(1), pages 19-31.
    17. Andrey V. Belov, 2018. "Tax Revenues, public investments and economic growth rates: evidence from Russia," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 4(1), pages 45-56.

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