The Soviet Union's total product grew by 5.1 percent yearly, 1928–40 (Gregory and Stuart 1986:119), mainly from increased educated labor and capital. From 1971–85, total factor productivity (TFP) or output per combined factor input fell by almost 1 percent yearly (Chapter 3).

The fact that President Mikhail Gorbachev could not turn productivity growth around contributed to the Soviet collapse in 1991. Paul Krugman (1994a:69–72) contends that East Asia's “miracle growth” was, like the Soviet Union, based only on the growth of inputs. Thus, because of physical limits on continuing input growth, Singapore and Korea were “paper tigers.” Their subsequent growth (save for the 1997–8 Asian financial crisis) indicates that Krugman was wrong when he suggested that previous East Asian productivity growth had been understated.

Krugman states (1999): ???Productivity isn???t everything, but in the long run it is almost everything. . . . A country???s ability to improve its standard of living over time depends on its ability to raise its output per worker.??? History bears him out. The rapid growth in productivity of Japan and a few Western countries since the mid-nineteenth century has not been equaled by other countries. Since then, the United States, Canada, Japan, and most Western European countries experienced real growth rates in gross national product (GNP) per capita in excess of 1 percent yearly, a rate that increases initial value fourfold by 2000 (Chapter 3). The most important sources of this growth were capital formation and increased knowledge and technology.