Academic Journals Database
Disseminating quality controlled scientific knowledge

Industrial Growth Rates and Instability: An Historical Analysis of the Former Centrally Planned Economies of Eastern Europe

Author(s): Evan E. ANDERSON

Journal: Eurasian Journal of Business and Economics
ISSN 1694-5948

Volume: 4;
Issue: 8;
Start page: 51;
Date: 2011;
VIEW PDF   PDF DOWNLOAD PDF   Download PDF Original page

Keywords: Historical analysis | central planning | Eastern Europe | Economic performance | Industrial output and instability

One of the central tenets of socialism and central planning economics, as practiced by the East European countries, was that this organization of employment, production and activity could achieve higher growth rates than market economies. This paper presents an historical analysis of economic performance of seven countries: Bulgaria, Czechoslovakia, GDR, Hungary, Poland, Romania and Yugoslavia during the crucial period of socialism (1960-80). It studies the relationship between industry output growth rates and output instabilities in approximately twenty-five industries. Using empirically estimated models it was found that the instability (volatility) of industry output increased with growth rates and at an increasing rate. Since instability creates substantial costs, these findings imply that the true value of income and product streams in East European countries, after discounting for instability, was lower than otherwise believed. A decomposition of instability into two sources, systemic structure versus operational implementation is suggested.
RPA Switzerland

Robotic Process Automation Switzerland


Tango Rapperswil
Tango Rapperswil