Growth Slowdown in Bureaucratic Economic Systems: An Issue Revisited

January 1, 2001

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Ales Bulir, and Zuzana Brixiova. Growth Slowdown in Bureaucratic Economic Systems: An Issue Revisited, (USA: International Monetary Fund, 2001) accessed December 3, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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.

Subject: Consumption, National accounts, Tax incentives, Technological innovation, Technology

Keywords: Bureaucracy, CEE country, CEE economy, Consumption, Eastern Europe, Economic system, Growth, Output target, Planned economy, Planning, Production function, Technological innovation, Underperformance vis-à-vis, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2001/006
Stock No:

WPIEA0062001
ISBN:

9781451842296
ISSN:

1018-5941

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