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Regional development under socialism: evidence from Yugoslavia

Kukić, Leonard (2017) Regional development under socialism: evidence from Yugoslavia. Economic History working papers (267/2017). The London School of Economics and Political Science, London, UK.

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Abstract

This paper analyses the patterns of regional growth and development in Yugoslavia, under the most decentralised socialist system that ever existed. My analysis reveals that despite government efforts to the contrary, socialist economic development in Yugoslavia resulted in divergence rather than in convergence between the constituent regions. I find that regional income divergence was caused by the failure of the less developed regions to converge towards the employment rates and total factor productivities of the more developed regions. I interpret these failures as symptoms of a single underlying problem: a capital intensity bias inherent to the governing objective of labour-managed firms. Socialist Yugoslavia moved from having one central plan, to having many mutually competitive plans. While on aggregate this may have created a net positive productivity outcome compared to other socialist economies, it created unique distortions. The decentralisation policies were implemented with the aim of enhancing regional cohesion and social stability. They led, however, to exactly opposite outcomes

Item Type: Monograph (Working Paper)
Official URL: http://www.lse.ac.uk/economicHistory/home.aspx
Additional Information: © 2017 The Author
Divisions: Economic History
Subjects: D History General and Old World > DR Balkan Peninsula
H Social Sciences > HC Economic History and Conditions
JEL classification: N - Economic History > N1 - Macroeconomics and Monetary Economics; Growth and Fluctuations > N14 - Europe: 1913-
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output (Income) Convergence
P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P27 - Performance and Prospects
Sets: Departments > Economic History
Date Deposited: 07 Nov 2017 09:47
Last Modified: 20 Feb 2019 04:02
URI: http://eprints.lse.ac.uk/id/eprint/85078

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