02.05.2024 Ende der Sowjetunion#

Ch. 10 After Stalin#

  1. WW: loss of pop and GDP

after 2WW - 1980

  • exceptional growth capital stocl

  • big increase employment

  • some expansion cultivated acreage

after 1980 = slowdown

classical explanation = extensive growht / intensive growth

  • institutions not made for efficient combination of output

  • system was good for shifting of underused labor surplus

  • after full employment = useless

Weitzman Analysis#

  • Soviet Model = Cobb Douglas with elasticity of substitution = 0.4 (not one as normal)

  • missing technological growth = no longer problem

  • but shrinking labor supply

  • rapid growth => abrupt slowdown

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  • Soviet Union Isoquant Figure:

    • in 1928: 1% more capital = 0.97 more output (=capital constrained)

    • in 1960 = labor and capital both efficient

    • in 1980: 1% more labor = 0.8% more output (=labor constrained)

  • with better elasticity of substitution = grwoth would go on (similar to Japan)

Allen analysis#

  • not EOS problem, but investment

Reconstruction Investment

  • e.g refitting old factories

  • high input needed

  • less output growth

  • wasteful

Politcal Reasons for reconstruction investment

  • employment protection

  • provision of housing was trough employer

  • believe to be more economic

Resource Depletion

  • 1970s: western russian resources depleted

  • shift to siberia = wasteful + espensive

  • resource course

  • example: energy (coal)

    • coal in west (donezk) depelted

    • shift to siberia = more expensive

  • solution would have been trade

  • but focus in self-suffiency in SU

  • no conservation of energy

    • soft budget constraint = not rising prices

    • lacking monitoring

    • no agreement

  • no politicaln will for long run investment

poor incentives => not efficient resource use

Technology

classical analysis: conservative towards new technology

  • no in house research, but in institutes

  • benefits of technology = only to consumers, not enterprises

  • output target = no incetinve to innovate

Allen analyisis

  • significant research on site (ex. cement industry)

  • external factor = arms race

  • reallocation to military sector (esp. R&D)

  • military-industrial secotr = take all bright heads

  • plans did not make sense generally

=> market driven technological change needed

  • not one person has to solve problems (like Gorbachev)

  • but the market in general