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Plans, prices, and corruption : the Soviet firm under partial\ud centralization, 1930 to 1990

By Mark Harrison and Byung-Yeon Kim

Abstract

The level of corruption in an economy is generally thought to influence\ud economic growth adversely. We show that the performance of the Soviet\ud economy was affected not only by the level of corruption but also by its\ud quality, that is, how corrupt incomes were used. In the context of a partially\ud centralized economy, changes in a government control mechanism influenced\ud the quality of corruption and thus economic performance. On the basis of new\ud historical research on the Soviet command system we analyse the choices of a\ud plan-setter and an effort-setter who interacted with each other and an external\ud market to determine real output, hidden inflation, and the level and quality of\ud corruption simultaneously. Our results explain rapid Soviet economic growth\ud despite high corruption levels, and why slower economic growth in the 1970s\ud was accompanied by increased privatization of rents

Topics: HC
Publisher: Cambridge University Press
OAI identifier: oai:wrap.warwick.ac.uk:210

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