Evolution of GDP per capita in USSR versus over developed countries

Every now and then I will get in a debate with colleagues and others about economic performance in USSR versus other developed ‘liberal’ economies. From my development economics training, I am well aware that the USSR was not a particularly sustainable nor desirable development model, but also that on GDP alone it performed pretty well. This latter point has been challenged in discussions so many times that I started to doubt it myself, so I thought I would check it again and post it so as to direct people to this post in the future!

Now I’m not an apologist for Soviet communism as a political nor economic system, but I’m often puzzled to find such a systematic reluctance among a wide variety of people to acknowledge that on GDP figures alone (and there are many shortcomings to these figures – which may or may not make them useful to compare economic performance across very different systems in long time periods) the USSR did perform fairly well, especially when compared to Western European countries.

Comparative economic performance over time is not among my main research interests (and hence I make no claims to particular expertise on this issue) but a cursory look at GDP per capita (in 1990 dollars – from Maddison’s database) from 1920 (ie a couple of years after the end of WWI) to 1988 (a few years before the USSR dissolved), reveals the USSR’s GDP per capita was multiplied by 12 compared to 4 in the USA, 5.2 in France, 5.78 in Germany, about the  same in Sweden, and Central and North Italy by 7.19 (see the table below).

One can (perhaps even should) argue that the soviet system was cruel, inefficient in many respects, unjust, etc, and it might that by cherry picking other time periods the results are different, but over the whole – relevant in my opinion – time period the USSR’s GDP per capita prima facie has increased much more than in its capitalist competitors. Of course this is the rate of growht in GDP per capita, but in terms of levels the USSR was still massively behind the US. But the difference between the USSR and US in terms of GDP per capita was about 1 to 10 in 1920 and had fallen to less than 1 to 4 in 1988.

Selected years and countries from the Maddison-Project, http://www.ggdc.net/maddison/maddison-project/home.htm, 2013 version.

GDP per capita (1990 Int. GK$)
Country 1920 1988 1988/1920
Austria 2,412 15,754 6.53
Belgium 3,962 16,252 4.10
Denmark 3,992 18,224 4.57
France 3,227 16,790 5.20
Germany 2,796 16,160 5.78
(Centre-   North) Italy 2,153 15,485 7.19
Holland/     Netherlands 4,220 16,044 3.80
Norway 2,739 18,059 6.59
Sweden 3,004 17,232 5.74
Switzerland 6,568 20,243 3.08
England/GB/UK 4,548 16,110 3.54
12 W. Europe 3,333 16,307 4.89
USA 5,552 22,499 4.05
F. USSR 575 7,043 12.25

Addendum 1

Of course in terms of basic growth theory, this faster growth rate of the USSR makes sense: with higher returns to capital and a lower capital base, the USSR was able to grow by building its capital base much faster and drawing on reserve labour (ie extensive growth). In some ways, communist was more efficient at containing consumption than capitalist systems and hence at mobilising the resources for investment. But as it caught up and had to rely on innovations and technological progress (intensive growth), growth started slowing down in the USSR as its economic system was not conducive to innovation.

P.s. Janos Kornai has written extensively on this topic.

Addendum 2

If one focuses purely on the post-WW2 experience, the picture is more mixed with the USSR performing less well than Austria, Germany, north Italy and Norway but about the same as Belgium, Denmark, the Netherlands, and better than the US and the UK. I suspect this difference is partly the result of Addendum 1 and partly the different experience with the recession of the late 1920s and early 1930s.

Country 1946 1988 1988/1946
Austria 1,956 15,754 8.05
Belgium 4,574 16,252 3.55
Denmark 5,777 18,224 3.15
France 3,855 16,790 4.36
Germany 2,217 16,160 7.29
(Centre-     North) Italy 2,162 15,485 7.16
Holland/Netherlands 4,457 16,044 3.60
Norway 4,335 18,059 4.17
Sweden 5,646 17,232 3.05
Switzerland 8,997 20,243 2.25
England/GB/UK 6,745 16,110 2.39
12 W. Europe 3,925 16,307 4.15
USA 9,197 22,499 2.45
F. USSR 1,913 7,043 3.68