Economists, Soviet Growth Slowdown and the Collapse
Year: 2001
Type: article
Abstract: Western forecasters overestimated economic growth in the USSR in the last fifteen years of its existence. They were projecting at least the continuation of the recent growth rates, if not their increase, in the near future, at the time when growth was slowing down. The errors of the forecasts of the late 1970s did not lead the forecasters to abandon this approach, and led to the overestimation of growth in the 1980s. A simple continuation of the 1951-75 trend in growth rates yielded more accurate predictions than those based on the aggregate production function or large-scale econometric models. The paper discusses two likely reasons for Sovietologists ignoring the slowdown trend. Forecasters were using the data that, because of an error of interpretation, overestimated the growth of capital stock and implied declines in the level of total factor productivity. To project continued growth slowdown meant to project the continuation of productivity decline, an implausible development. Also, in a kind of Gresham's Law, less accurate forecasts drove out more accurate ones, as doubt was cast on the motives of the supplier of the latter, the CIA. The faculty club wisdom of the late 1980s-1990s that the CIA in those years was making the USSR appear stronger than it actually was in order to provide a justification for the American military buildup had no foundation. As far as growth forecasting is concerned, the CIA analytic efforts were superior to those of academic Sovietologists.
Source: Europe Asia Studies
Author: Vladimir Kontorovich
Language: English
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3125690486