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Abstract
It has generally been assumed that the inferences of the induced technical change model
with respect to the direction of technical change could not be expected to hold for the
centrally planned economies. In this paper we test three hypotheses generated from the
induced technical change hypotheses against the experience of centrally planned economies:
(a) if land be.comes increasingly scarce new technology will be biased in a land-saving
direction; (b) if labor becomes increasingly scarce new technology will be biased in a
labor-saving direction; and (c) changes in the land-labor ratio have been induced by
changes in relative factor endowments. The results suggest a bias toward mechanical and
against biological technology regardless of factor endowments. This is consistent with the
well known ideological or policy bias in a number of centrally planned economies toward a
capital-intensive development strategy.