We also find that the capital market continues to be distorted by the government interventions, leading to inefficient allocations in the sense that investment is not going to the most efficient industries.

On the contrary, there is a negative relationship between the capital growth rate and the TFP growth rate in manufacturing industries.

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Recession for Belarus’ main trading partner and the decline of oil prices has aggravated the long-run problems.

We perform growth diagnostics to separate the effects of total factor productivity (TFP) growth from capital accumulation over the recession.

These mechanisms amplified structural recession by a cyclical component.

Out of all the manufacturing industries, only one – manufacturing of electrical, electronic and optical equipment – had positive TFP growth in 2011-2015.

While comparing the TFPs of Belarusian industries to each other makes little sense (like comparing apples and oranges), comparing them to the TFPs of corresponding industries in other countries might shed some light on the comparative efficiency and competitiveness of the Belarusian economy.

Table 1 lists the industries and sectors of the Belarusian economy that are the most and least competitive in a relative TFP sense.In Kruk and Bornukova (2014) we show that the growth was extensive in its nature, and mainly driven by capital accumulation.The total factor productivity (TFP) contribution to growth was low.Indeed, a TFP decline could accompany capital accumulation due to expanding allocation and technical inefficiencies.This explains the meltdown of economic growth in Belarus by 2013-2014 and its transition to the negative spectrum later on.While the TFP performance of the manufacturing of transport vehicles, machinery and other equipment was also reported as low in 2010 (Kruk and Bornukova, 2014), the woodworking industry reached high levels of inefficiency after 2010, when the “modernization” program of this industry received a huge influx of capital.