FACTORS OF ECONOMIC GROWTH IN THE LATE USSR FROM A SPATIAL PERSPECTIVE

Abstract

In this paper, the authors propose their estimates of the factors of economic growth in the late USSR, accounting for heterogeneity of its territories. Utilizing panel data for the republics of the former USSR, the authors test the models of endogenous growth expressed by a modified production function with fixed effects. As independent variables the authors select stocks of physical and human capital at their replacement cost; proxy indicators of institutional and technological change; and R&D expenditures as a source of endogenous “Romerian” growth. The institutional quality is proxied by murder rate, an indicator of the most accurately registered type of violent criminal offense, as well as by “white- vs blue-collar wage differential” in industry, an indicator of trade- offs in the policies for production incentives and income distribution. The technological level of the economy is proxied by infant mortality. The authors model and estimate production functions based on both levels of the series and their rates of change. Statistically significant fixed effects are found, which indicate the existence of interrelationships in economic development of the former USSR republics as regions of the unified system. The authors reveal mixed evidence of Soviet economy transition to an endogenous growth model based on R&D and technological progress, which remained undeveloped. They document the increase of investments in intellectual capital in R&D and human capital formation in education. The hypothesis of the significant contribution to the slowdown of economic growth in the USSR on the part of deterioration of the institutional environment receives only partial support. The hypothesis of importance of technological level stagnation has received more support. In theoretical discourse of development economics, the authors discuss issues of human capital accumulation and investments in R&D for an economy at the middle stage of industrial development.