ECONOMIC GROWTH, EXTENSIVE

In the quantitative analysis of aggregate economic development, modern economists commonly distinguish extensive from intensive growth. Extensive economic growth comes from the expansion of ordinary inputs of labor, reproducible capital(i.e., machines and livestock) and natural resources. Intensive growth, by contrast, involves increased effectiveness, quality, or efficiency of these inputs— usually measured as a growth of total factor productivity.

The early development of the USSR was primarily of the extensive sort. Increased application of labor inputs came from reduced unemployment, use of women previously engaged within the household, diminished leisure (e.g., communist sabbaticals or subotniki ), and forced or prison labor. Increased capital investments were a result of forced savings of the population, taxes and compulsory loans, deferred consumption, and a small and varying amount of foreign investment in the country. Natural resources were expanded by new mines and arable acreage, most notably the "virgin lands" opened up in semiarid zones of Kazakhstan during the 1950s. But shifting resources from the backward peasant sector to modern industry, as well as to borrowed technology, also accounted for some intensive growth.

During the 1950s total growth of gross domestic product (GDP) was an impressive 5.7 percent annually, adjusted for inflation, of which approximately 3.3 percent came from increased inputs and only about 2.4 percent from increased productivity. Growth rates declined to 5.1 percent during the 1960s, 3.2 percent during the 1970s, and a mere 1.9 percent during the 1980s. Less than 1 percent of these growth rates came from intensive sources. The increased share of extensive sources meant that growth could not be sustained for several reasons. Population growth was slowing in Russia. Most of the increased labor supplies came from the less educated populations of Soviet Central Asia, where industrial productivity was considerably lower than in the traditional heart-land of Russia and Ukraine. These Muslim populations did not move readily to, or were not welcome in, the most productive areas of the USSR, such as the Baltic states. Some economists, including Martin Weitzman and Stanley Fischer, attributed the slowdown to the difficulty of substituting new investments for labor, as well. Depletion of oil and ore fields also played a role in reduced growth.

For systemic reasons, the Soviet command economy could not develop the new goods, higher quality, and innovative processes that increasingly characterized the economies of the developed West. Nor could it keep up with the newly industrializing economies of southeast Asia, which by the 1980s displayed higher growth rates, predominantly from intensive sources.

See also: economic growth, imperial; economic growth, intensive; economic growth, soviet

bibliography

Gregory, Paul R., and Stuart, Robert C. (1986). Soviet Economic Structure and Performance, 3rd rev. ed. New York: Harper & Row.

Gregory, Paul R., and Stuart, Robert C. (1999). Comparative Economics Systems, 6th ed. Boston: Houghton Mifflin.

Martin C. Spechler