Socialist growth revisited: insights from Yugoslavia

We know little about the performance of socialist European economies. This paper fills the knowledge void by analyzing Yugoslavia using a diagnostic tool that identifies the mechanisms that drive economic growth¿business cycle accounting. The analysis provides novel findings. During the "Golden Age" of economic growth, total factor productivity became gradually more important in sustaining economic growth. Distorted labor incentives were a major constraint on growth since the mid-1960s, and explain the slowdown of the economy during the 1980s. In turn, labor incentives were distorted by the greater devolution of power to labor-managed firms.

Socialist growth revisited: insights from Yugoslavia Articles