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Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 'JIT 25X1 C 25X1 C Journal - Office of Legislative Counsel Page 3 Thursday - 24 September 1970 10. (Confidential - JGO) Attempted to meet with Frank Cummings, Administrative Assistant to Senator Jacob K. Javits (R. , N. Y. ), but Mr. Cummings left the office and will be out of the city with the Senator until Monday. See Journal item of 17 September 1970. 11. (Secret - JGO) Met with Earl Morgan, House Armed Services Committee staff, and brought him up to date on 12. (Internal Use Only - JGO) Received a call from Mr. Roger Majak, Administrative Assistant to Representative Jonathan Bingham (D. , N.Y.), who requested such information as we can make available Mr. Majak told me also that he had contacted the Library o Congress and had been advised that they had no further information on but that further classified information might be available from CIA. 13. (Secret - GLC) In response to her request of yesterday, I hand-carried to Dorothy Fosdick, on the staff of the Senate Subcommittee on National Security and International Operations, a book put together by OCI which contained information drawn from the NISs on the various Arab states. Miss Fosdick was most pleased to receive this material and agreed to observe the strict rules which I laid down with regard to any reference as to the source of this material. 14. (Confidential - GLC) Picked up from the Joint Economic ..Committee advance copies of the Committee's study on the Economic Performance and the Military Burden in the Soviet Union. I talked with the Executive Director, John Stark, later about the Committee's inclusion ? of the Michael Boretsky article in the study. See Memorandum for the Record. :~ECNE o" Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 Approved For Release 20 !61Y'tl ffktLF72-00337ROO0200160004-6 C 24 September 1970 SUBJECT: Conversation with Joint Economic Committee Staff re the Michael Boretsky Article 1. I picked up from the Joint Economic Committee advance copies of the Committee's study on the Economic Performance and the Military Burden in the Soviet Union. The study includes the rather controversial paper by Michael Boretsky on The Technological Base of Soviet Military Power, but statements are included in the forward of the study and in the press release indicating that the studies present different interpreta- tions of such phenomenon as Soviet defense activities due largely to the secrecy surrounding them. 2. As suggested by Dr. Ed Allen, of OER, I offered John Stark, Committee Executive Director, a copy of OER's Memorandum for the Record on the Boretsky article. Stark thanked me for offering this material, but indicated that Chairman Proxmire had given instructions to the Committee staff not to accept any classified material. This was the result of some rather bitter experiences with the Air Force over the C5 -A issue. 3. A copy of the study and press release was sent to OER. Deputy Legislative Counsel Distribution: Orig. - Subj 1 - OER 1 - Chrono OLC/GLC:rw (28 Sep 70) Approved For Release 2c 6 1vl E Al 72-00337R000200160004-6 Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 0 16 September 1970 SUBJECT: "The Technological Base of Soviet Military Power," by Dr. Michael Boretsky, U.S. Department of Commerce 1. This memorandum presents the position of the Office of Economic Research with regard to the subject paper prepared by Dr. Boretsky for publication in the forthcoming JEC study,."Soviet Economic Performance, 1968?69." This paper was forwarded to.CIA for review by the Honorable Maurice H. Stans, Secretary of Commerce, on 6 August 1970. A conference was held on 28 August 1970 between representatives of CIA and the Departmant of Commerce to discuss the differences in their esti- mates of military hardware production. This memorandum presents OER's objections to Dr. Boretsky's estimates under the following subject headings: the "residual" method of estimation, the credibility of the results, the validity of Soviet gross value of output as a reliable measure of growth, and the ruble-dollar ratio problem involved in converting the ruble value of mili- tary hardware expenditures into their dollar equivalent. SECRET BEGET n r; r, a and Approved For Release 2002/01/10: CIA-RDP72-dW1 460004-6 Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 2. The "Residual" Method of Estimation -- Dr. Boretsky's methodology for "residualizing" Soviet .z production of military and space hardware is fraught with problems relating both to the global value from which he starts (see Validity of Gross Value of Output, below) and the values which he deducts for the various nonmilitary components of machine building. 9 Given the number of uncertainties surrounding the basic Soviet data, the residual method of estimating such a critical magnitude as Soviet production of military and space hardware can not be relied upon to give sound results. Even if conceptually sound,- the methodology can yield reliable results only when the initial magnitude and the items to be deducted from it are more solidly based than in the'present case. Dr.. Boretsky's results suffer from his necessarily heavy reliance on unverifiable data and assumptions. Unfortunately there is no way of ascertaining the degree of success in breaching the smokescreen sur- rounding Soviet statistics that contain classified data on military production.* *In the 25 years that have elapsed since the end of World War II the Soviets have been completely successful in preventing Western "penetration" of their statistical accounts with respect to military expenditures, despite the publication;-of statistical abstracts, input-output tables, and scholarly research. It is clear that the government takes great care to prevent published statis- tics from fitting together into a coherent whole. - 2 - Approved For Release 2002/01/1 EE'2P72-00337R000200160004-6 Approved For Release 2002/01/12 ? Q DP72-00337R000200160004-6 f"tj of 3. Even if it were conceded (which it -is not) that Dr. Boretsky's starting point for the residua lization process -?- the Soviet gross value of output for machine building were an appropriate measure of economic growth for determining military expenditures, the opportunities for cumulative error in the residualization process are enormous. The result at each step of residualization is directly dependent on all the pre- ceding steps. To illustrate the sensitivity of this methodology to variations in the basic data the fol-- lowing examples are offered. If the "suspect" aggre- gate (the gross value of output) were to increase by 9.7a per year during 1959-68 instead of by 13.3%, as officially claimed, then, given the parameters used by Dr. Boretsky, there would be no increase at all in the residual. Or again, if the Soviet 1-0 tables are taken to reflect with a fair amount of accuracy the increase of deliveries of machinery to final demand in constant prices as well as current prices, then the military machinery residual increased between 1959 and 1966 by only 64% as compared with some 185% estimated by Mr. Boretsky. The absolute amount and growth of the residual are also sensitive to various assumptions about whether or how much to lag investment and sales of consumer durables (neither of which Dr. Boretsky does). Approved For Release 2002/01/10: CIA-RDP72-00337R000200160004-6 Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 4. The residual method has been explored by this agency as well. as by organizations working under contract to it. We have never felt that the results were good enough to warrant reliance on the residual technique as a means of obtaining a realistic series on production of military and space hardware. 5. Using his residual method, Dr. Boretsky esti- mates a level and trend of Soviet expenditures on military-space machinery that is vastly different from CIA estimates. Whereas, according to the CIA estimate, Billion 1955 rubles I3orets ___,__~T ~.-CIA 1968 1.0.7 13.4 expenditures or-military-space. hardware increased by 740 in the ten years after 1958, Boretsky finds the increase 4 Approved For Release 2002/01/10: CIA-R 72-00337R000200160004-6 Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 r1r to be 478%. Stressing the enormity of this percentage increase, he concludes, "The story conveyed by these /stimates7 could hardly be more dramatic." Because of the divergence in the CIA and I3oretsky estimates, the serious weaknesses in the residual approach, and the "headline" potential of Boretsky's commentary, we cannot be sanguine about the publication of his estimate. 6. Credibility of the Results --- We believe that Dr. Boretsky's calculation of the production of military and space hardware in his base year (1958) is far too low and contributes to a sizeable overstate- ment of growth in 1959-68. It is simply incredible that in 1958 the USSR could support its large and ex- panding military hardware programs as well as an exten- sive space program with an expenditure of 1.9 billion rubles less than the sums invested in the coal and petroleum industries in, that year. His calculations further imply that production of civilian machinery during 1959-62 did not share in the vigorous growth of military machinery (although the latter is very depen- dent on some types of civilian production for parts and components). CIA's Soviet Production Index, (SPIOER), which includes in its sample a very large number of final products, shows no such lag in the civilian Approved For Release 2002/01/10 : CIA5RDP72-00337R000200160004-6 P1 ET Approved For Release 2002/01/ t DP72-00337R000200160004-6 (see Table 1), machinery sector. Therefore we feel that Dr. Boretsky's series on the value of military machinery production is not consistent with other available evidence on trends in Soviet machine building during 1959-62. 7. Another of Dr. Boretsky's results that is extremely hard to accept, simply on the grounds of credibility is the implied average annual increase of 32% in the production of Soviet military and space hardware in the 4-year period between 1958 and 1962. If one is to believe the figures in his Appendix Table 3, which shows the derivation of his residual Soviet ruble-value series for military and space hardware (Row II, 5) than this category increased from 12-12% of the gross value of output of machine building (MB) net of intraindustry sales (Row I, F) in 1958 to 22% in 1962. Such a phenomenal increase in such a short period would certainly have caused a great dislocation in the productive resources of the machine building industry, but there is no evidence that dislocation of this magnitude took place in 1959?-62. Instead, the CIA estimates of the growth of civilian machinery slump especially in 1963-68, when the average rate of increase of Boretsky's military machinery falls from 32% to 11% a year. Approved For Release 2002/01/10 : CIA6 -RDP72-00337R000200160004-6 EC1ET Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 Average Annual Growth Rates of Soviet Machinery Pro- duction, 1959-68 1959-68 1959-62 2/ 1963-68b/ Percent Official Soviet Gross value of output of machine building 13.3 15.8 t 11.7 Boretsky Gross value of output of machine building net of intraindustry sales Military machinery Civilian machinery CIA Estimates 11.8 14.5 1001 Total machinery 10.3 6.6 Military machinery 9.8 4.2 Civilian machinery 10.6 8.1 a. The base year for this calculation was 1958. b. The base year for this calculation was 1962. Approved For Release 2002/01/10e Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 "C ET 8. Although the Boretsky and SPIOER growth rates for 1963-68 are at some variance, the difference is nowhere as extreme as in 1959-62, and a drop in the growth rate of military machinery production is evi- dent in both. Given the lack of understanding in the West concerning the precise manner in which Soviet GVO indexes are` computed (and what factors account for growth rates that are so much higher than anything that can. be calculated by conventional methods) it is fruitless to push the comparison between Dr. Boretsky's estimates and those of CIA any further. Acceptance of Dr. Boretsky's results (even if corrected for the apparent aberration in 1959-62) rests on the credi- bility which the West attaches to Soviet GVO indexes as meaningful measures of real growth and on the applicability of the parameters that Dr. Boretsky uses to derive his results. 9. Vali_dit of the Soviet Index of Gross Value of Output -- Western economists who have specialized in the study of the Soviet economy (Bergson,'Greenslade, Grossman, Po-,.,,ell, Wiles, etc.) have reached a common conclusion after.independent investigation of the Soviet "gross value of output (GVO)" -- namely that it overstates real growth. It is our experience that the overstatement is nowhere greater than in the case of machine building. Soviet indexes of GVO for MBMW Approved For Release 2002/01/10 :-CIA-RDP72-00337R000200160004-6 Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 tend to overstate growth relative not only to com- parable indexes constructed independently in the West but even to other official Soviet production data (see Table 2). The growth in gross output of machine building as reflected in the two Soviet I?-?0 tables for 1959 and 1966, for example, averaged 10.6% annually between those two years, whereas the comparable offi- cial GVO index indicates a growth of 13.3%, nearly 3 percentage points higher. Similarly, for individual branches of machine building, the GVO indexes have indicated growth rates significantly above those derived from officially published ruble-value production series. 10. No one in the West precisely for the inflated growth rates registered by Soviet GVO indexes. We do, however, know some of the things wrong with the indexes: inclusion of secondary products, multiple counting of intermediate goods and components, use of artificially high "temporary" prices for new and nonstandard products. Dr. Boretsky has tried to deal with two of these problems -- inclusion of secondary products and multiple counting of intermediate goods (primarily intraindustry sales). Comparison of the 1959 and 1966 I-O tables seems to show about the same increase in intraindustry sales as Dr. Boretsky estimates. With respect to other aspects 9 - Approved For Release 2002/01/10 : CIA-RQ72-00337R000200160004-6 DP72-00337R000200160004-6 Approved For Release 2002/01/WMET Comparison of Machinery Growth Rates: Official Gross Value of Output Versus Other Soviet Measures of Production, Selected Years, 1958-68 Average Annual Percentage Rate Index Numbers of Growth working . 1966 (1959 - 100) Official index of gross value of output a/ . 1.2. 7 Gross output from 1959 and 1966 1-0 tables b/ 202 10 6 . 2. Machine building only Official. index of gaross value of output 239 13.3 Gross output from 1959 and 1966 1-0 tables/ 202 10.6 3. Selected branches of machine building a. Instrument building ( rib t 2 oros royeniye ) (1959 = 100) Official index of gross value of output 338 Reported ruble value of production 269 13.2 b. Equipment for the food 1964 processing industry (1958 -100) Official index of gross value of out- put 226 14.6 Reported ruble value of production 154 7.5 a. Calculated in enterprise wholesale prices of 1 July 1.955. Out- put is computed on an establishment basis, including secondary products. b. Calculated in current prices to the purchaser (including turn- over tax where applicable, freight charges, and trade mark-up). Output is computed on a commodity basis consisting of primary products only and regardless of where produced. Approved For Release 2002/01/10: 5 -RDP72-00337R000200160004-6 T Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 T.T of these two problems, however, it is difficult to judge the success of Dr. Boretsky's adjustments, given the self-interest of Soviet enterprises in maximizing"their GVO's. Also there is little that one can do about the pricing problem. Reputable Soviet economists claim that machinery prices have actually increased since 1958 despite the publication of an official index of machine building prices that shows a.decline of 11% in enter- prise wholesale prices. Acceptance of the official index of GVO as a reliable constant price index is very much in question due to the numerous problems inherent in Soviet price formation and pricing practices. Soviet practice tends to allow the introduction into the report- ing of GVO of artificially high "temporary" prices for new and nonstandard products as if they were bona fide constant 1955 prices. 11. Soviet sources are themselves in disagreement over the absolute value of the gross output of machine building and metalworking. This value is crucial be- cause it is the starting point for Dr. Boretsky's entire calculation of Soviet military machinery production. Dr. Boretsky places the value of MBMW in 1959 at 27.6 .billion rubles (Table A-3, Row I,B). We believe that he is in error 'in this regard. Certainly a strong case can be made that this figure should be 29.6 billion - 11 - Approved For Release 2002/01/10p: $DP72-00337R000200160004-6 Approved For Release 2QO2101/10 : CIA-RDP72-00337R000200160004-6 u.bles. Substitution of this number alone reduces the average annual growth-rate of Dr. Boretsky's military and space hardware series during 1959-62 from 32%'to 23%, thus indicating how susceptible his results are to modifications in the underlying Soviet data. 12. Finally the use of GVO as a basis for dis- aggregating the various components of machine building is.a risky business because of the lack of common know- ledge as to its precise contents and how the ratios of its components change over time. In 1962 OER attempted to.estimate for the purpose of deriving weights for use in SPIOFR the division between the civilian and military components of MBMW. Using statements and co- efficients culled from the Soviet press, it was esti- mated that the military component was 40% to 50o?of the total in 1955. Dr. Boretsky, also relying on statements and coefficients appearing in the Soviet press, arrives at a military share of machine building (net of intraindustry sales) of only 12.6% in 1959, * The GVO of MBMW in 1960 was officially reported to be 34 billion rubles in enterprise wholesale prices of 1 July 1955 (SSSR v tsifrakh v 1961 crodu p. 108-9). Moved by the offxcia~T-'inzi TOf GVO~=o I~l3i~I[ - , = 87, when 1960 - 100) results in a 1959 value of 29.6 billion rubles. of this Office.has written a memorandum, 25X1A ross a ue o-- utput of Machine Building and Metalworking, I l i - dated 30 April 1970, in which he details the conflicting evidence concerning the correct value of MBMW. A copy of this memorandum was presented to Dr. Boretsky at the conference on 28 August. Approved For Release 2002/01/10': G11 1-RDP72-00337R000200160004-6 Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 SEC ET rising to 22% in 1962, and to 24% in 1968. Clearly the selection of data and the interpretation of Russian Interestingly h enough, this method led to a military share in 1960 that was not far from the one calculated by OER for 1955, but greatly at variance with Dr. Boretsky's 1958 rela- tive share. Since 1960 military machinery has grown more slowly than civilian machinery in the CIA index and its share has correspondingly declined from 40% to 35%. In particular, Dr. Boretsky's method of esti-- mating sales of intermediate products and inventories seems somewhat arbitrary. 13. The Ruble-Dollar Ratio Problem -- In addition to the question of the meaningfulness of Dr. Boretsky's ruble-value series, his paper poses a serious problem with regard to the valuation of military machinery in dollars. In converting his ruble series on Soviet mili- tary machinery production into dollars for purposes of comparison with US military machinery, he come: to the conclusion that Soviet production in 1968 exceeded US production by some 3% to 19%. (The range reflects the - 13 - Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 EPU P, ET Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 use of alternative ruble/dollar ratios.). Dr. Boretsky seems to favor use of the lower ratio of .315 rubles to 1 US dollar, and for purposes of exposition we will confine our comments to this ratio and its effect on his dollar-value series. 14. First, we question the realism of the .315-to?-1 ratio. It is based on a sample of investment goods, not military goods. We believe that this ratio is much too low and leads to an inflated dollar valuation of Soviet military hardware production. In our estmates of Soviet.military hardware production individual cate- gories are converted at different ruble.-dollar ratios. When these categories arc aggregated, a weighted average ratio is derived. This ratio tended to rise'between 1958 and 1962, but levelled off thereafter. The rise reflected the introduction on the Soviet side of more exotic types of weaponry (nuclear warheads, radio- electronic equipment, etc.) that are relatively more costly for the USSR to produce vis-a-vis the US than are conventional series-produced items. 15. If our ruble-dollar ratios are substituted for Dr. Boretsky's, the level- of his dollar series for Soviet military hardware production drops by one-third, and the ratio of the value of Soviet military hardware production to the value of US procurement of military-space hardware declines correspondingly: Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 Boretsky's Comparison Machinery component of Soviet defense and space programs 1955 Rubles (million) 1,864 5,642 6,337 9,318 10,733 (Boretsky) .315 .315 .315 .315 .315 1964 Dollars (million) 5,872 17,772 19,962 ,29,352 33,809 Machinery component of US.defense and space programs (million 1964 dollars). 1958 1962 1965 1967 1968 16,517 19,738 19,430 26,060 28,530 Soviet programs as a percent of US programs 36. 90 103 113 119 Alternative Comparison (employing CIA ruble/dollar ratios) Machinery component of Soviet defense and space programs 1958 1962 1965 1967 1968 1955 Rubles (million) 1,864 5,642 6,337 9,318 10,733 Ruble--dollar ratio (CIA) .48 .52 .51 .51 .51 1964 Dollars (million) 3,883 10,850 12,425 18,271 21,045 Machinery component of US defense and space programs (million 1964 dollars) Soviet programs as a 16,517 19,738 19,430 26,060 28,530 percent of US.programs 24 55 64 70 74 Approved For Release 2002/01/10 : P72-00337R000200160004-6 Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 nEPI1ET 1.6. In the alternative series the Soviet program reaches only 74% of the US program in 1.968 instead of 119%. Even if Dr. Boretsky's 1958 base -year figure were adjusted upward as we believe it should be (see above), then the Soviet programs would still equal only 33% of the US progralisin 1958 but would rise to 90% in 1968. CIA estimates that the Soviet programs equalled about 97% of the US programs in 1958 and about 93% in 1968. 25X1A Approved For Release 2002/01/10 : t 72-00337R000200160004-6 Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 McHUGH - 5171 FOR RELEASE FRIDAY A.M. SEPTEMBER 25, 1970 CONGRESS OF THE UNITED STATES JOINT ECONOMIC COMMITTEE Representative Hale Boggs Announces Release of Study of Soviet Union Representative Hale Boggs (D-La.), Chairman of the Foreign Economic Policy Subcommittee of the Joint Economic Committee announced today the publication of a new study, Economic Performance and the Military Burden in the Soviet Union. In announcing the publication, Chairman Boggs noted that the Joint Economic Committee has had a long-standing interest in the study of the economic performance of the Soviet Union and has made available periodic studies going back to 1955, Representative Boggs cited two important features in connection with this publication. "First, the Soviet leadership is now preparing a blueprint for their next Five Year Plan for 1971-1975 to be aired at the forthcoming Twenty-Fourth Party Congress. The new study is therefore a timely assessment of Soviet economic achievement and will provide the U.S. Congress and the American people an opportunity to place in perspective whatever plans will be announced by the Soviet leadership. "Second, the latest publication has been oriented, more so than past publications, to the analysis of the role of the military requirements on the overall performance of the Soviet economy. This analysis is especially pertinent as the American people, the President, and the Congress reappraise and shape their priorities for the years ahead." "The Subcommittee's study," Chairman Boggs noted, "presents a telling case of the relatively poor Soviet economic performance in the last several years, with not only agricultural but industrial production lagged -- agricultural performance was particularly low in 1969 due principally to bad weather. However, there were also pressing bottlenecks in fuel, labor and construction. In the short run, these problems directly impinge on defense production. For the longer term, it is evident that unless there is 1970-26 Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 further substantial economic reform, Soviet efforts to raise living standards, which are roughly about one-third that of the United States, will depend on the priorities given to military production and services. "It is stressed throughout the study" Representative Boggs asserted "that the defense effort share (which accounts for over one-tenth of Soviet output), might be maintained indefinitely or even increased if present wfkrld tensions continue. Such an eventuality would unfortunately mean that the military would continue to have the strong voice it now has in determining priorities. On the other hand, a diminution of world tensions would afford the Soviet leaders an opportunity to meet many pressing civilian demands which are much more acute than in this country." Other major findings of the study are summarized in the attached The Chairman indicated that some of these studies present different interpretations of such uhenomeno as Soviet defense activities. For the most part, this is due to the high degree of secrecy surrounding such activities in the Soviet Union. The Chairman expressed hope that the publication of these data will permit fuller exploration of the subject matter by the experts with a view-rfgnimizin discrepancies and arriving at close approximations of the truth. This subcommittee plans to examine the more prominent areas of controversy through public hearings to aid in this process of achieving a fuller understanding of Copies of this study are available on request frrm the Joint Economic Committee, Room G-133, NSOB, Ext. 5321. Members of the Subcommittee on Foreign Economic Policy are: HOUSE OF REPRESENTATIVES Hale Boggs (D-La.), Chairman Henry S. Reuss ?Wis.) William S. Moorhead (D-Pa.) William B. Widnal,l (R-N.J.) W. E. Brook III (R-Tenn. ) Barber B. Conable, Jr. (R-N.Y.) SENATE John Sparkman (D-Ala.) J. W. Fulbright (D-Ark.) Herman E. Talmadge (D-Ga.) Stuart Symington (D-Mo.) Abraham Ribicoff (D-Conn.) Jacob K. Javits (R-N.Y.) Jack Miller (R-Iowa) Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 Approved For Release 2002/01/10 : CIA-RDP72-00337R000200160004-6 Attachment to Joint Economic Committee Press Release 1970-26, September 22, 1970 Representative Hale Boggs (D-La.)2 Chairman of the Foreign Economic Policy Subcommittee of the Joint Economic Committee of the U.S. (3ongress, announced the publication of another in their series of assessments of Soviet economic performance. This publication entitled "Economic Performance and the Military Burden in the USSR" represents not only an updating of the periodic annual indicators (Soviet Economic Performance 1966-67 published in 1968 being the most recent) but an initial survey of the role of military claims on resources in the performance of the Soviet economy. prov:i.ded .a general assessment of Soviet performance in the following: " For the Soviet Union, 1969 was it year of slower aroivt.h and generally unsatisfactory ecorion.lic I)erformo-ulee. Nevertheless, the USSR easily niaintluned its second place position anion-Y the worl(I's ceo- nomtc? powers, producing 'only half as much as the United States but almost 2) times as much as third ranking Japan or fourth ranking West Germany. \Iensure(1 on it per capita basis, however, Soviet gross national product (G\P) is only about 40 percent of the American or % of the northwest European and is comparable to the Italian or Japanese. ' 11 During 1969, Soviet GNP increased only 2.3 percent, that, is, at less than half the rate tuaiiitaille-cl (hiring the preceding several years and the lowest rate posted since the (lisastrous agricultural Year of 1963, Over the years, the rapid growth of factor (i.e., capital and labor) ` r ? 11. .. f .. 1 1[11ntS I [ a l 5 WC'('II [ a u l e I \ L e 1 1 , - 1 1 101 r ?1 l[IC fr[uu ,"