The economic cost of socialism

Ein Vortrag von Michal Brzezinski (Univesity of Warsaw) im Rahmen der Seminarreihe des AB Ökonomie am IOS (joint seminar with the Leibniz ScienceCampus).

We estimate the growth consequences of adopting socialism in Russia and four Central and Eastern European countries (Bulgaria, Czechoslovakia, Hungary and Yugoslavia) in the first half of the 20th century. We exploit historical GDP statistics from The Maddison Project for the period 1885- 1988 and apply recent advances in Synthetic Control Method to estimate the synthetic counterfactual per capita GDP trends of socialist economies in the 20th century. Our results suggest that there was economically sub-stantive and statistically significant negative effect of socialism on long-run Russian/Soviet economic growth. On the other hand, we do not find statistically significant effects for other socialist countries. The results are robust to the use of extensive sensitivity checks.