Utilization of Fixed Capital and Soviet Industrial Growth.

Growth rates of output and factor productivity in Soviet industry fluctuate around a long-term downward trend. These fluctuations can be partially explained by fluctuations in the growth of services of capital. The capacity utilization rate is taken as a proxy for the extent of utilization of capital stock. Variations in the capacity utilization rate explain a significant part of the changes in the rate of growth of total factor productivity between 1970-83. Declines in the capacity utilization rate are caused by errors in the allocation of investment, which create an imbalance of capacities between raw-materials and manufacturing sectors. Copyright 1990 by Kluwer Academic Publishers