ABSTRACT
This chapter provides an evaluation of recent developments in the Soviet debate on, and official instructions concerning, the criteria for allocation of investment. The coefficient of absolute effectiveness (CAE) at national level is not, as claimed by Abouchar, the benchmark for evaluation of all possible investments in the economy and has nothing to do with neoclassical notions of the marginal efficiency of capital. The CAEs at different levels of the economy are only one part of the series of performance indicators; they are empirically derived and are to be used along with other criteria in judgements about investments. The 1980 SM includes a new section on the calculation of efficiency of capital investment in the modernization of existing plant, in the nonproductive sphere and in the sphere of circulation. The problems of efficiency of capital investment are also seen as part of the problem of implementing planned projects.
