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Again, the underperformance in the postwar period, relative to a naive Solow model, is very modest. Certainly less than two sigma. The gap between the Soviet Union and Western Europe is largely if not totally explained by their relative starting positions. And any residual is largely or wholly explained by the the Soviet Union being in the smaller trade bloc, and the trade bloc that started out poorer.

The Soviet political system just isn't visible in the gross GDP and growth data.

Of course, having a police state and fighting unprofitable colonial wars in Central Asia tends to divert industrial output from consumer goods into military hardware and man-hours from industry into the army and political police. A point the Americans may want to keep in mind.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Dec 14th, 2011 at 10:59:53 AM EST
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