In this article the degree of returns to scale and the rate of technical progress for six major branches of the European COMECON industry are estimated using orthodox production function specifications and the Verdoorn Law. The results provide no support for the hypothesis of increasing returns to scale. All six branches are subject to either constant or decreasing returns. Estimates of the rate of technical progress obtained suggest the rate differs from one branch to another and that the heavy industry branches are more progressive than the rest. These estimates also confirm the validity of the diffusion hypothesis. They reveal that the less developed COMECON countries experience significantly faster rates of technical progress when compared with the more developed ones.