TY  - JOUR
AU  - Easterly,William
AU  - Fischer,Stanley
TI  - The Soviet Economic Decline: Historical and Republican Data
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4735
PY  - 1994
Y2  - May 1994
UR  - http://www.nber.org/papers/w4735
L1  - http://www.nber.org/papers/w4735.pdf
N1  - Author contact info:
William Easterly
New York University
Department of Economics
19 W. 4th Street, 6th floor
New York NY 10012
Tel: 212/992-8684
Fax: 212/995-4186
E-Mail: william.easterly@nyu.edu

Stanley Fischer
Governor
Bank of Israel
One Kaplan Street
Jerusalem 91007
ISRAEL
Tel: 9722-655-2701
Fax: 9722-652-8419
E-Mail: sfischer@bankisrael.gov.il
AB  - Soviet growth over 1960-89 was the worst in the world after we control for investment and human capital; the relative performance worsens over time.  The declining Soviet growth rate over 1950-87 is explained by the declining marginal product of capital; the rate of TFP growth is roughly constant over that period.  While the Soviet slowdown has conventionally been attributed to extensive growth (rising capital to output ratios), extensive growth is also a feature of market-oriented economies like Japan and Korea.  What led to the relative Soviet decline was a low elasticity of substitution between capital and labor, which caused diminishing returns to capital to be especially acute.  Tentative evidence indicates that the burden of defense spending also contributed to the Soviet debacle.  Differences in growth performance between the Soviet republics are explained well by some of the same factors that figure in the empirical cross-section growth literature: initial income, human capital, population growth, and the degree of sectoral distortions.
ER  -