Growth Slowdown in Bureaucratic Economic Systems: An Issue Revisited

Author/Editor:

Ales Bulir ; Zuzana Brixiova

Publication Date:

January 1, 2001

Electronic Access:

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Summary:

Bureaucratically organized systems tend to be less efficient than economies in which agents are free to choose their output targets, as well as the means to meet them. This paper presents a simple model of planner-manager interactions and shows how bureaucratic economies can end up in a low-effort, low-growth equilibrium even though they may have started in high-effort , high-growth equilibrium. The empirical evidence from eight Central and Eastern European countries during 1948-49 is consistent with our model results, namely, that the growth decline was systemic in nature. The results are applicable to countries in other regions with heavy bureaucratic involvement in the economy.

Series:

Working Paper No. 2001/006

Subject:

Consumption National accounts Tax incentives Technological innovation Technology

English

Publication Date:

January 1, 2001

ISBN/ISSN:

9781451842296/1018-5941

Stock No:

WPIEA0062001

Pages:

36

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