Capital formation and economic growth under central planning and transition: a theoretical and empirical analysis, ca. 1920-2008
According 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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- Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766, July.
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- Bas van Leeuwen & Peter Földvari, 2011.
"Capital accumulation and growth in Central Europe, 1920-2006,"
0023, Utrecht University, Centre for Global Economic History.
- Bas van Leeuwen & Peter Földvári, 2013. "Capital Accumulation and Growth in Central Europe, 1920-2006," Eastern European Economics, M.E. Sharpe, Inc., vol. 51(5), pages 69-93, September.
- Peter Duczynski, 2003. "On the Empirics of the Imbalance Effect," International Journal of Business and Economics, College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 2(2), pages 121-128, August.
- B. Leeuwen & P. Földvári, 2011. "Capital accumulation and growth in Hungary, 1924–2006," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 61(2), pages 143-164, June.
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