Why did the Soviet Union's economy grow fast in the 1950's-1960's?

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The USSR growth rate during the 50's was not exceptionally high. The claims of more than 10% growth, although certainly theoretically possible, were simply not true, but Soviet propaganda. Real growth rates during the 50's and 60's were rather 4-7% depending on time period and who is doing the estimation.

This can be compared to average OECD and average global growth during the same period at 4%.

As for the implied question of why they didn't do as badly as they did later (and earlier) the answer is that the 50's and early 60's in the Soviet Union was a period that saw:

  1. Post-war rebuilding.
  2. A focus on building production capacity.
  3. Relative economic freedom.

The last point is always a last resort of communist planners when the socialist theories fail to work in reality, and that seems to have been the case here too under Stalin. But in this case the relative liberalism also continued as a part of the liberal anti-Stalinist reaction following Stalin's death. This is why we see the growth slowing down and finally stagnating completely under Brezjnev.

It is also worth remembering that high growth is easier when you start from a low position. See for example at China's development after they embraced capitalism.

Upvote:-1

Oil.

As you can see the alternative explainations are unnecessarily complicated and vague.

Upvote:0

According to my university lecturer* all those years ago, the main problem was not propaganda, it was accounting errors. In advanced economies, they would use value-addedd accounting. For instance, if one factory assembled a car, this would be recorded as them creating (say) £2000. If they sent it to another factory and they painted the car and increased its value to £2500, this would be counted as £2000 + £500 = £2500. In the USSR this would be counted as £2000 + £2500 = £4500.

*I don't have a reference but the fellow's name was Gareth Pritchard.

Upvote:8

Nearly all countries grew quickly in the 1950s and 1960s for pretty much the same reasons. That applies to the United States, Britain, Germany, Japan, most of the rest of Europe, major parts of Asia, certain (but not all) parts of Africa.

World War II ravaged the industrial and production base of most of its participants (except those in North and South America), while killing a large number of people. At the same time, the "hot house" atmosphere of the war spurred a lot of technological innovation.

So you had a large base of intellectual capital (numerator) applied to an artificially low base of physical capital and people (denominator). The combination of a large numerator and a small denominator made for a high growth rate.

It was a great tragedy for those who were killed. But the survivors (and their Baby Boom children) did very well after the war.

Upvote:8

An excellent example of how the perception of economic growth was created in Khruschev's times is Ryazan miracle. Actually, the Wikipedia article doesn't do justice to the severity of both the negative economic impact and the spread of fraud.

The briefest digest: the governor promised to triple Ryazan's meat production in a year, and in order to meet the target he slaughtered all animals in the regions, including young calfs and milk producing cows, expropriated all private animals, and purchased meat from neighboring regions at market price to sell to the government at wholesale price. The region was devastated; the governor was awarded. Because of widespread fraud and devastation of agriculture across USSR the very next year the whole country was on the brink of hunger and Khruschev had to - for the 1st time in USSR history - purchase grain abroad. Not that it was the 1st food shortage - for example, hunger 1929-1933 was much much much worse - but at that time Stalin refused to import grain and simply let millions starve to death.

Upvote:12

To add to the Lennart's answer, capital investment affects economic growth the most when the current capital level is low (see, e.g., Mankiw, "Macroeconomics", chapter 4, appendix). This is why all economies experience spectacular rates of growth during early stages of industrialization. USSR was devastated by WW2, so its capital investment paid handsomely - the normal communist stagnation was postponed by two decades.

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