Andras Simonovits asks three key questions: Why and how did investment activity fluctuate in the sixties? Why did the growth rate decelerate in the seventies? What was the reason for the stagnation of the eighties?
The author constructs a series of analytic mathematical models of cycles and slowdown to explore these questions. The first part of the book is devoted to the investment cycles of the East European socialist economies and the negative effect of long comletion times and high net import ratios. Part II models the slowdown and stagnation of the post-1973 period and in particular changes in the efficiency of investment and the terms of trade. The results point to the failure of the socialist economices to adapt quickly enough to falling investment effectiveness and rising debt.
Andras Simonovits rigorous and wide-ranging study is an important contribution to the literature on socialist economies and will do much to inform the debate over their transition.