Technical change and the postwar slowdown in Soviet economic growth

The existing studies usually find that technical change was very important in constraining the economic growth of the Soviet Union. While these studies have been successful in quantifying the extent of technical change, they have been less successful in quantifying its nature. This paper probes the essence of technical change by analysing its direction and bias. I find that the Soviet Union achieved strong increases in labour efficiency until the 1960s. Although the labour efficiency growth subsequently slowed down, it is capital efficiency that drove the postwar slowdown in economic growth. I argue that labour shortages, combined with an inadequate investment policy, retarded the Soviet capital efficiency.