TAMAS VONYO

‘Why did socialist economies fail: the role of factor inputs reconsidered’ (with Alexander Klein), CAGE Working Paper Series, No. 276.

We present new investment data and revised growth accounts for three socialist economies from 1950 to 1989. Government statistics reported distorted measures for both the rate and trajectory of productivity growth in Czechoslovakia, Hungary, and Poland. Researchers have benefited from revised output data, but continued to use official statistics on capital input, or estimated capital stock from official investment data. Investment levels and rates of capital accumulations were, in fact, much lower than officially claimed and over-reporting worsened over time. Sluggish factor accumulation, declining equipment investment and labour input, contributed much more to the socialist growth failure of the 1980s than  previously thought.

‘Growth under Socialism: economies of scale and returns to investment’, in progress.

The paper constructs unique panel-data set of industrial value-added, the stock of equipment, labour input, and labour quality in 19 branches of mining and manufacturing in Hungary between 1950 and 1989, in order to test econometrically returns to scale and investment in both productive capacity and labour skills. Up until now, researchers have used standard production functions to measure growth dynamics in centrally planned economies, but these imply critical assumptions about resource and technology use, which have not yet been confirmed empirically.