Economic Growth under Extractive Institutions: the Soviet Paradox and Contemporary Events

Abstract

Evgeny Balatsky — Doctor of Science of Economics, Professor, Director of the Centre for Macroeconomic Research, Financial University under the Government of the Russian Federation. Address: room 219, 4, 4th Veshnyakovskij Passage, Moscow, 109456, Russian Federation. E-mail: evbalatsky@inbox.ru

Natalya Pliskevich — Senior Researcher, Institute of Economics, Russian Academy of Sciences. Address: 26, Maronovskij Lane, Moscow, 119049, Russian Federation. E-mail: ons@naukaran.ru

Citation: Balatsky E., Pliskevich N. (2017) Economic Growth under Extractive Institutions: the Soviet Paradox and Contemporary Events. Mir Rossii, vol. 26, no 4, pp. 97–117 (in Russian). DOI: 10.17323/1811-038X-2017-26-4-97-117

This article investigates the economic success of the USSR in terms of the concept of inclusive institutions (CII) developed by Acemoglu and Robinson. It avoids the problem that the original concept is not well suited for offering a systematic explanation of the Soviet paradox, that is, its long and intensive economic growth under conditions of extractive political institutions. The article clarifies and develops some of the problematic aspects of CII to achieve a more precise and consistent explanation of the paradox. In particular, it introduces some missing supplemental concepts, such as social lifts (as the main criterion of inclusive institutions), regimes of catch-up and advanced economic growth; a three-factor economic growth model which includes technological, institutional and cultural factors; the principle of the compatibility between developmental factors; and the principle of dissipating inclusiveness. This more comprehensive conceptual framework allows for a more consistent explanation of the USSR’s history from its formation until its eventual collapse. The framework itself is also well suited for explaining the success of other oil producing countries in the Middle East.