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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 becomes 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 laborsaving
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.