STATUS OF THE ECONOMIC INTELLIGENCE PROGRAM AS OF 30 JUNE 1952

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP75-00662R000300040008-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 9, 2016
• Document Release Date: July 28, 1998
• Sequence Number: 8
• Publication Date: July 16, 1952
• Content Type: REPORT

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GENCE PIG 1W! OF 30 JUNE 1952
A. ce hesearch
In addition to the N there are other basic economic intelligence
research programs underway that are maintained on a current basis. These
procrams are carried out by analysts who are also charged with focusing
this research on national security probleme.
1. Soviet Bloc
Uhile the number of professional personnel working on special
segnts of the economy (e.g. electronics, metals, electric power, etc.)
appears to be relatively adequate, the lack of raw data has made it
extremely difficult to build up satisfactory basic intelligence on
many aspects of Soviet Moe industry. As a general proposition it
can be stated that intelligence on industrial production, 1-,hile far
from complete, is reasonably adequate. On the other hands intelligence
is generally inadequate on such important industrial questions as:
the consumption pattern of industrial items; input requirements of
industry for labor, materials, and equipment; certain details on
important individual plants lich as capacity and productipn); and
the quantities and location of stockpiles ele strategic items.
Data on foreign trade Is relatively plentiful but because of the
large number of man-hours required to put the data in a usefUl fors,
it is usually grouped in broad categories of item. This results
In a lack of specificity and details (such as the description, oriodn,
trade channels and destination) of individual items are usually not
readily available to the researcher. Intelligence on clandestine trade
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is very spotty. Very few analysts are working on the subject of
international finance Alla information on this subject is scarce.
There are, for example, no reasonably current studies of: Soviet
Bloc assets in the United States; Soviet balance of payments; or
Soviet foreign exchange availibilities and despositions.
In the field of transportation then is a sizeable intelligence
research effort, but data is lacking on certain of its important
aspects. On the subject of shipping, for example, while data on ship
movements is relatively goodlinformation on the cargoes carried is
very poor. Intelligence-on rail transportation is relatively adequate
on such general matters as ton-kilometers of freight carried, location
of principal rail lines and production of locomotives and rolling
stock; but complex questions such as the composition of freight traffic
within the USSR and the capacity of the Trans-Siberian railroad must
undergo more intensive research. Intelligence on the automotive
industry is generally better but is of less importance.
Population and manpower intelligence is relatively adequate in
the matter of aggregates but lafannatioLahe composition of these
s
aggregates is much meaker. Important sUltdoesrelating to the
productive efficiency of workers in key munitions industries, for
example, have not been undertaken and would be hampered by a shortage
of information.
On the subject of agriculture, intelligence is relatively good
although some specific aspects -- notably the quantity and location
of stockpiles -- are weak.
aktiet
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Intelligence on the structure and organization of the economy
and the way it works is reasonably adequate.
Until recently the economic intelligence community has been
very limited as to the number of broad integrated studies and special
analytic reports that it might prepare at any one time. General
economists and analysts trained in handliAg broad problems, as
opposed to the specialized analysts such as the commodity expetts
have been relatively mall in number. However, CIA is in the process
of building up a staff of these analysts and within the next year
it is expected that this problem will have
Personnel-vise the economic intelligence community is in a
better position to produce studies on specific segments of the
economy (e.g. transportation, electric power, petroleum, metals
and minerals).
In addition to the continuing basic research effort -0:Ideas-en
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there are certain special projects and programs designed to give
major support to this neseepek effort. kmont the more important
are the following:
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The first report under this program lisa just been
prepared.
(b) Use of
Among the inovations which became established methodology
in CIA in the fiscal year 1952 are the use of input-output analysis,
estimation of future trends by extrapolating index number trends,
the use of ruble prices as an aggregation device and measure-
ment of Bloc economic capabilities by estimating and aralyzIng
national economic accounts.
(c) Analysl,s cf &mist I4e,
There is currently underway a program to analyze in
certain Soviet materials and end it. In one instance
(d) Icon9ain Iptellippee
A. preliminary edition of a statistical handbook
containing data principally production data -- on Soviet-
ecomcmde activity las been prepared. This handbook is being
expanded and within the next year will contain eoncise descriptive
analytical and statistical material on the entire Bloc economy.
(e) Coordination of Sconcmic Beeearch The Bkomomic
lxitelliipnceCcomattee
is BIC in its first year of operation -- Jay 1951 to
June 1952-- completed one
study at the direction
of the IAC two major research contributions to the Office of
National Estimates
other papers of value to the
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intelligence community. The lack of analytic personnel with
general competence in economics was one of the principal causes
for .i ay in the preparation of these studies and this seriously
limited the number of projects that could be umortaken. The
planned increase in the number of professional personnel assigned
to the MC Secretariat anfl=b1241=pre at La semzent
frItinnv will begin to expand the production capability of the
EIC by late 1952.
In connection with thill problem of priority the SIC has
initiated surveys within its subcommittees to determine the most
critical research problems and to decide which problems reqpire
improvement in collection and collation. In addition to these
surveys the subcommittees concerned with various aspects of
research -- electronics, petroleum, etc.
OW.
are engaged in a
process of cross-fertilization and are attempting to informally
rationalize the various Agency programs for basic research in
each field.
2. _ Communist China
,
There are critical deficiencies in the economic research
programs relating to Communist China. Altbsether there are probably
only one or two professional analysts in the US Government engaged
in research on Communist China.on a general area or special-economic
problem basis; and the nuaber of professional analysts wpb ,work on ..,L4 tj-20
various segments (treareipsragsdasSXWooF4sbei)of the eoonosi/
is not large. Mbreover, there is relatively little current economic
information available from the field and as a result the economic
intelligence community is unable to answer adevately such critical
AP Pangeef gardisictiVaeigtrisCIOCFRZwYCARAMPANV?Aanic situation
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in Communist China, What is the degree of economic stability, What is
the extent of Soviet-Communist Chinese economic relations", etc. Nbile
it is not suggested that the intelligence requirements for research on
the Chinese economy demand anything like the effort devoted to
research on the USSR, moreeil;:41S needed on general analysis 'U, trade,
transportation, petroleum, agriculture, and munitions. Appropriate
corrective steps are being taken to improve this situation, although
there will probably be a time lag of three to six months before these
measures become effective.
3. Non.Bioc Countries
(a) General
r1Itk. Port- e c C4S4.11/
-`..1 The degree of adequacy of foreign economic inteil
relating to various economic sectors varies widely. Foreign
agricultural activity, for example, has been reported upon in great
volume for many years by governments, by international organiza-
tions and by trade associations to a lesser degree minerals,
including petroleum, and transport industries have also been
reported upon and analyzed in detail. In contrast, information
on manufacturing industries is inferior. Generally speaking
the commodities 'which can be classified in more or less homo-
geneous categories for statistical purposes are better reported
upon and analyzed than products like chemicals, machinery,
electronic devices, etc. These latter commodities about which
it is conceptus33y most difficult to generalize are just the
ones that are usually reported in large but almost meaningless
categories.
Intelligence on international trade and. finance varies in
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subject. Trade Ttade data is relatively good although there are
important problems. For example, recorded trade movements
frequently do not accurately reflect the ultimate destination
or origin of the goods and there are great differences in the
classification systems. Reporting on non-trade items is
generally poor. In recent years there has been &marked
improvement in the information on national accounts, but,
except for a few countiies, data on which the national accounts are
based are quite unreliable. Labor and population reporting
also is fairly satisfactory with greatest inadequacies in
specific geographic areas, but some subjects, e.g. ndgration,
are poorly reported everywhere.
Existing intelligence materials are not as well utilized
as they should be because they are frequently bard to locate; are
distributed too slowly; and indexing and cataloguing systems are
not sufficiently comprehensive.
Variations in quality of intelligence products may be
blamed chiefly on the fact that there are too few analysts
whose capacities are too widely extended.
(b) Latin America
Mere are no unusual difficulties in securing economic
information fram and about Latin America. The only exception is
Argentina, "there the govefnment loss severely curtailed publication
and dissemination of statistical data. Our weakness in the
Latin American area stens fram the circumstance that Latin
American statistical services are at times faulty and are not as
complete as they are in the United States or in Europe. Moreover,
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intelligence research. This problem is now being remedied.
We have on the whole been able to meet intelligence research
requirements, although at times it has been necessary to operate
with somewbat less than up-to-date information. Utilization of
Latin American statistical data is at times handicapped by a
shortage of trained analysts.
Perhaps the most notable gap in our intelligence potential is
in the area of mpabilities in terns of desirable and attainable
objectives of economic development in Latin America. We do not
know enough about the orientation of "economic thinking" of
those in Latin America who influence and direct economic policies.
This is a particillarly important aspect of the process of
estimating probable developments.
We are reasonably well equipped to deal with economic trends
and changes in Latin America as a whole, although in same respects
and for some regions our information is not very much more than an
educated guess (e.g. national income, rate of accumulation of
capital, etc.). Even these gaps, however, are being gradually
filled out as a result of expansion of improvement in the national
and international statistical services.
(c) Neer Neat South Asia and kAfrica
There are gross deficiencies in our economic knowledge of
almost all countries in this area partly because reporting has
been incomplete and even more because the basic information
simply does not exist.
OMMIPPOOMEM
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Intelligence has generally been able to meet requirements for
some specific or particular studies. For ezemple, over 100
briefing papers were turned out in support of the TCA lavgramin
South Asia when that program was getting underway.
Intelligence has been much less successful in preparing
broader studies and. estimates. Here the problem is not so much
a lack of material as it is the acute lack of trained personnel
capable of sophisticated econcatic analysis.
(d.) Western Europe
State contribution to be in Friday, 18 July 1952.
-ram&
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B. Adequacy of Economic Intelligence to Support Activities and Progirams
Relating to the National Security.
By and large one group of analysts within each department or agency
is usuAlay charged with providing economic research contributions to the
various programa and major intelligence papers requiring economic intel-
ligence support. These programs and papers include Notional Estimates,
the Economic Warfare Program, Economic Intelligence Committee Studies, and
Military Studies including Target Research. In addition, these same analysts
provide intelligence to net the operating needs of their particular depart-
ments or agencies. As noted in section A above this has put a strain not
only on the research specialist but particularly on the limited number of
top personnel who have general analytic competence and. on whom the main
burden falls. This has been a key factor in limiting the volume of
Intelligence output.
1. National Estimates
While it is possible to prepare economic intelligence contributions
to National Estimates which are adequate for most broad generalizations
and concluaions it often is not possible to prepare these studies with
the degree of accuracy and the amount of detail that is required to
meke certain critical points in an estimate or that might be required to
make an estimate more precise and meaningful. This is evident from the
intelligence deficiencies cited in section A above. As an example, while
there is same reliable intelligence on the Soviet electronics industry
it is not sufficient to provide a thorough understanding of the
industry as it relates to Soviet air defense capabilities. Intelligence
is better able to answer this kind of question now than it was a year
ago, however, and it is expected that certain measures and developments
now underway -- a fag of 1040
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noted in section A -- will result
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in considerable improvement in our research base within the next year.
Nevertheless there must continue to be a careful designation of
priorities on prepared projects in order to insure that the limited
research potential is focused on projects of major importance to
US security.
2. Economic Warfare
Intelligence in support of BSC 104/2 and certain special programs
such as the Battle Act will require increased economic intelligence
support. The resources devoted to this effort, however, must bear
some reasonable relation to other hie priority tasks on which our
resources are focused. Due regard must be given to the question of
priorities and the inherent difficulty of securing information from
within the Soviet Orbit. In the light of this and in view of the
limitations of intelligence noted in section A much of the needed
Intelligence will often not be available in the quantity and depth
of detail desired. It is expected, however, that the newly established
coordinating committee will insure that the available intelligence is
brought more fully and immediately to bear on questions arising under
this program.
3. Soviet Bloc Capability Studies
Among the highest priority tasks of the economic intelligence
cammultty is the continuing study of Soviet Bloc economic capabilities
for war. This study currently employs for the first time a modified
form of input-output analysis and in addition uses certain index
number techniques. Though it is not expected that the first effort
will be entirely adequate or reliable it is expected that it will
lead to more accurate and meaningful estimates. Certain major
intelligence deficiencies hepe, y been identified in the process
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of preparing this study and knowledge of these will be of assistance in
directing future research programs. The basis data derived from the
study will, of course, be useful for many other intelligence purposes
including support of economic warfare measures.
4. Target Research
The intelligence deficiencies described earlier in section A
are particularly applicable to an analysis of the problems of air
target research. This is discussed in greater detail in section .
5. Vulnerability Studies
In addition to the assesment of Soviet Bloc vulnerability to
air attack many other vulnerability studies are undertaken from time
to time. These include analyses of the vulnerability of the Soviet
Bloc to economic warfare, its vulnerability to biological warfare and
so on. As on other studies it can be stated that economic intelligence
permits reasonably accurate general conclusions but often is not
adequate to permit a comprehensive and detailed analysis of the problem.
As the research base become broader and deeper these questions can be
answered more completely. In the interim one solution is to allow
time for an intensive research effort. A recent intelligence research
paper of considerable depth on the vulnerability of Soviet crops to
biological warfare proved the value of allowing time for research
preparation.
P
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C. Stwii=2? IntentiOne
Economic intelliesnoe regularly contributes to the Vetch Committee
Reports which are dasUned to reveal future courses of action by the Soviet
Bloc. Contributions on this subject are spotty and by their very nature
inconclusive, though in context with other intelligence they are uful.
For the most pert this kind of report calls for the sort of intelligence
details that are generally scarce. For example, a particular major tractor
plant has converted to the production of tanks; or the railroad moving
into point X are carrying items largely of a military and logistical nature.
In addition to current spot contributions to the We*Ch Committee Reports
occasionally a research paper is prepared on such topics aa the general
sdhject of conversion to armament production or the level of military
expenditures in the Soviet bildget, though the latter is never very
=sane' ul.
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