Capital formation and economic growth under central planning and transition: a theoretical and empirical analysis, ca. 1920-2008
AbstractAccording to the consensus view it was physical capital accumulation that primarily drove economic growth during the early socialist period. Growth models incorporating both human and physical capital accumulation (Caballe and Santos 1993, Barro and Sala-i-Martin 2004) lead to the conclusion that a high physical/human capital ratio can cause a lower economic growth in the long-run. In this paper we show theoretically and empirically that according to the logic of the socialist planner, it was optimal to achieve a higher physical to human capital ratio in socialist countries than in the West. Using a VAR analysis, we find empirical confirmation that within the Material Product System of national accounting the relative dominance of investment in physical capital accumulation relative to human capital was indeed more efficient than under an SNA system of national accounts.
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Bibliographic InfoPaper provided by Utrecht University, Centre for Global Economic History in its series Working Papers with number 0048.
Length: 22 pages
Date of creation: Nov 2013
Date of revision:
central planning; capital accumulation; human capital; Soviet Union; national accounts.;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-29 (All new papers)
- NEP-HIS-2013-11-29 (Business, Economic & Financial History)
- NEP-HRM-2013-11-29 (Human Capital & Human Resource Management)
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