Capital formation and economic growth under central planning and transition: A theoretical and empirical analysis, ca. 1920–2008

when 2015
who Péter Földvári
Bas van Leeuwen
Dmitry Didenko
what journal Acta Oeconomica
what paper Capital formation and economic growth under central planning and transition: A theoretical and empirical analysis, ca. 1920–2008
language English

involved project member(s)

Bas van Leeuwen Peter Foldvari
   

abstract

According to the consensus view, it was primarily physical capital accumulation that drove economic growth during the early years of state socialism. Growth models incorporating both human and physical capital accumulation led to the conclusion that a high physical/human capital ratio can cause a lower economic growth in the long run, hence offering an explanation for the failure of socialist economies. 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 the system of national accounts.

keywords

Central planning, capital accumulation, human capital, Soviet Union, national accounts, E01, E22, O11, O21

citation format

MLA
Földvári, Péter, Bas van Leeuwen, and Dmitry Didenko. “Capital formation and economic growth under central planning and transition: A theoretical and empirical analysis, ca. 1920–2008.” Acta Oeconomica 65.1 (2015): 27-50.
APA Földvári, P., van Leeuwen, B., & Didenko, D. (2015). Capital formation and economic growth under central planning and transition: A theoretical and empirical analysis, ca. 1920–2008. Acta Oeconomica, 65(1), 27-50.
Chicago Földvári, Péter, Bas van Leeuwen, and Dmitry Didenko. “Capital formation and economic growth under central planning and transition: A theoretical and empirical analysis, ca. 1920–2008.” Acta Oeconomica 65, no. 1 (2015): 27-50.
Harvard Földvári, P., van Leeuwen, B. and Didenko, D., 2015. Capital formation and economic growth under central planning and transition: A theoretical and empirical analysis, ca. 1920–2008. Acta Oeconomica, 65(1), pp.27-50.
Vancouver Földvári P, van Leeuwen B, Didenko D. Capital formation and economic growth under central planning and transition: A theoretical and empirical analysis, ca. 1920–2008. Acta Oeconomica. 2015 Mar 1;65(1):27-50.