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Capital accumulation, the soft budget constraint and Soviet industrialisation

Published online by Cambridge University Press:  07 September 2006

Robert C. Allen
Robert C. Allen
Affiliation:
Department of Economics, University of British Columbia, Vancouver, BC, V6T 1Z1, Canada
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Abstract

The article analyses the rapid development of the Soviet economy during the first three Five Year Plans. A simulation model is used to determine the importance of three distinctive Soviet institutions/policies – the concentration of investment on heavy industry, the collectivisation of agriculture, and the use of ambitious output targets in conjunction with soft budget constraints to guide business activity. It is shown that the investment strategy and the planning system were responsible for rapid industrialisation, including a significant rise in the standard of living. Collectivisation did increase the rate of growth over the 1930s but by only a small amount.

Type
Articles
Information
European Review of Economic History , Volume 2 , Issue 1 , April 1998 , pp. 1 - 24
Copyright
Cambridge University Press 1998

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