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Why Did Socialism Fail? The Role of Factor Inputs Reconsidered

Author

Listed:
  • Vonyo, Tamas

    (Bocconi University)

  • Klein, Alexander

    (University of Kent)

Abstract

We present revised growth accounts for three socialist economies between 1950 and 1989. Government statistics reported distorted measures for both the rate and trajectory of productivity growth in Czechoslovakia, Hungary, and Poland. Researchers have benefited from revised output data, but continued to use official statistics on capital input, or estimated capital stock from official investment data. Investment levels and rates of capital accumulations were, in fact, much lower than officially claimed and over-reporting worsened over time. Sluggish factor accumulation, specifically declining equipment investment and labor input, contributed much more to the socialist growth failure of the 1980s than previously thought.

Suggested Citation

  • Vonyo, Tamas & Klein, Alexander, 2016. "Why Did Socialism Fail? The Role of Factor Inputs Reconsidered," CAGE Online Working Paper Series 276, Competitive Advantage in the Global Economy (CAGE).
    • Handle: RePEc:cge:wacage:276
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    File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/276-2016_klein.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    growth accounting; capital accumulation; Socialism; Eastern Europe JEL Classification: N14; N64; O47; P27;
    All these keywords.

    JEL classification:

    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • N64 - Economic History - - Manufacturing and Construction - - - Europe: 1913-
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects

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