Why did socialist economies fail? The role of factor inputs reconsidered

We re-estimate investment and present revised growth accounts for three socialist economies between 1950 and 1989. Government statistics reported distorted measures for both the rate and trajectory of productivity growth in Czechoslovakia, Hungary, and Poland. Researchers have benefited from revised output data, but continued to use official statistics on capital input, or estimated capital stock from official investment data. Investment levels and rates of capital accumulations were much lower than officially claimed and over-reporting worsened over time. A setback in factor accumulation, both equipment investment and labor input, contributed very significantly to the socialist growth failure of the 1980s.