The Relative Efficiencies of Market and Planned Economies

Ukraine: The Cost of Weak Institutions

“…The results suggest that, during the cold war, the bestpractice technology available to these countries was about 20-35 percent less productive than the technology available to the rest of the world; and given the characteristics of central planning within the Eastern bloc, many of these countries would have been operating well within this (reduced) frontier. The finding is broadly consistent with the results of Moroney and Lovell (1997) who conclude that, over 1978-80, the planned economies were at least 25 percent less efficient than the market economies of the West.…”

“…Moroney and Lovell (1997) were the first to use stochastic frontier techniques to compare the performances of Organization of Economic Cooperation and Development (OECD) members and planned economies over the period 1978-80, with the objective of quantifying the extent to which market economies were more efficient than the planned economies of Eastern Europe. Adkins, Moomaw, and Savides (2002) extend this stochastic-frontier approach by examining the sources of inefficiency across 75 countries and focusing on the role of economic and political institutions.…”

Technical efficiency and productivity analysis in Indonesian provincial economies

“…They noted that this change was due to production atmosphere changes between the two five-year periods. Using stochastic frontier and panel data of seventeen market and seven planned economies between 1978-1980, Moroney and Lovell (1997) claimed that planned economy countries are less efficient than Western countries. For seventeen Spanish regions, Gumbau (1998) estimated regional technical efficiencies using panel data for the period 1986-1991 and concluded that technical efficiency in those regions is between 81 % and 89 % and varies over time.…”

On the inefficiency of European socialist economies

“…Two studies have formerly adopted frontier analysis techniques to compare macroeconomic performance of European socialist economies with Western economies (Moroney and Lovell 1997;Koop et al 2000). These works both use econometric frontier techniques to estimate technical efficiency at the aggregate level.…”

“…Moroney and Lovell (1997) estimate a production frontier on a sample of 24 countries, including 7 European socialist economies for the period 1978-1980. They adopt a variant of the stochastic frontier approach for their estimation, and consider capital, labor, and energy as inputs.…”