CONSTRUCTION OF EUROPEAN SATELLITE GROSS NATIONAL PRODUCT ACCOUNTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-01093A000900050001-4
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• Document Creation Date: November 9, 2016
• Document Release Date: March 1, 1999
• Sequence Number: 1
• Publication Date: April 15, 1955
• Content Type: IR

STRU CTION' OF EL?ROPEAN SATELI;IT:E
' SS p NATIONAL PRODUCT -ACCOUNTS
CENTRAL INTELLIGENCE AGENCY
`;' p OFFICE OF RESEARCH ANRESORTS
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NOT RELEASABLE TO
FOREIGN NATIONALS
CONSTRUCTION OF EUROPEAN SATELLITE
GROSS NATIONAL PRODUCT ACCOUNTS
C IA/RR PR 111
(ORR Project 13.117)
The data and conclusions contained in this report
do not necessarily represent the final position of
ORR and should be regarded as provisional only and
subject to revision. Comments and data which may
be available to the user are solicited.
Office of Research and Reports
NOT RELEASABLE TO
FOREIGN NATIONALS
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In recent years the intelligence community has levied increasing
demands upon research staffs for national economic aggregates. This
report explains the construction of the comprehensive estimates of
the principal economic aggregates of individual Satellite countries
published in CIA./RR PR-99, Economic Conditions in the European
Satellites, 11 February 1955? S, US OFFICIALS ONLY. This set of
estimates covers one prewar year, 1938, and the postwar years, 1948-53.
The report describes the problems involved and the methods used in
the estimation of these aggregates. It also makes available (in the
appendixes) a reservoir of basic data, susceptible to continuous re-
vision, which may be drawn upon to extend and to improve the accuracy
of estimates for the subject area.
This report is being issued because of its value to counterpart
analysts concerned with the methodology employed and with the basic
data problems encountered in the construction of aggregate estimates
of the European Satellite economies. Substantially the same methods
are being used in current research, which will result in the
publication of new aggregate estimates.
The estimates of gross national product presented in this report
are the most significant single indicators of the productive ability
of the European Satellite economies. They are given in terms of US
dollars, both for 1938 and for the years 1948-53, in order to permit
comparison among the Satellite economies. They are only roughly
comparable with US figures or with estimates made for the USSR in
terms of dollars, because they have not been adjusted for this
purpose. For analysis and interpretation, readers are referred to
CIA/RR PR-99-
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CONTENTS
Page
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
I. Base-Year Estimates . . . . . . . . . . . . . . . . . . . . 4
II. Method of Computing Industry, Sector, and GNP Indexes . . . 5
A. Introduction . . . . . . . . . . . . . . . . . . . . . 5
B. Industry or Industry Group Indexes . . . . . . . . . . 7
1. Prices Used . . . . . . . . . . . . . . . . . . . .
2. Commodities Used . . . . . . . . . . . . . . . . .
C. Sector Indexes . . . . . . . . . . . . . . . . . . . . 8
1. Industry Sector Indexes . . . . . . . . . . . . . . 8
a. Value-Added Concept . . . . . . . . . . . . . . 8
b. Estimation of Value-Added Weights for the
Industry Sector . . . . . . . . . . . . . . . 9
c. Producer and Consumer Goods Subsector
Weights . . . . . . . . . . . . . . . . . . . 9
d. Reliability of Industry Sector Index . . . . . 10
2. Other Sector Indexes . . . . . . . . . . . . . . . 11
D. GNP Indexes . . . . . . . . . . . . . . . . . . . . . . 12
E. Production and GNP Indexes . . . . . . . . . . . . . . 12
Appendixes
Appendix A. Development of Base-Year GNP Estimates,
by Country . . . . . . . . . . . . . . . . . . . 27
Appendix B. Prices Used as Weights in Computation of
Production Indexes . . . . . . . . . . . . . . . 41
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Page
Appendix C. Industry or Industry Group Value-Added Weights, 4
by Country . . . . . . . . . . . . . . . . . . . . 5
Appendix D. Derivation of Value-Added Weights for the 47
Industry Sectors, by Country . . . . . . . . . .
Appendix E. Value-Added Weights for GNP Sectors, by Country . . 59
Appendix F. Source References . . . . . . . . . . . . . . . . . 65
1. Gross National Product of the European Satellites,
1938 and 1948-53 . . . . . . . . . . . . . . . . . . . . . 3
2. Gross National Product of the European Satellites, 1938 6
3. Sector and Gross National Product Indexes for Bulgaria,
1938 and 1948-53 . . . . . . . . . . . . . . . . . . . . . 13
4. Production Indexes for the Industry Sector in Bulgaria, 14
1938 and 1948 - 5 3 . . . . . . . . . . . . . . . . . . .. . .
5. Sector and Gross National Product Indexes for
Czechoslovakia, 1938 and 1948-53 . . . . . . . . . . ? . . 15
6. Production Indexes for the Industry Sector in 16
Czechoslovakia, 1938 and 1948-53 . . . . . . . . . .
7. Sector and Gross National Product Indexes for East Germany, 17
1938 and 1948-53 . . . . . . . . . . . . . . . . . . . . .
8. Production Indexes for the Industry Sector in East Germany, 18
1938 and 1948-53 . . . . . . . . . . . . . . . . . .
9. Sector and Gross National Product Indexes for Hungary,
1938 and 1948-53 . . . . . . . . . . . . . . . . . . .. . . 19
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10.. Production Indexes for the Industry Sector in Hungary,
1938 and 1948 - 5 3 . . . . . . . . . . . . . . . . . . . . .
20
11. Sector and Gross National Product Indexes for Poland,
1938 and 1948-53 . . . . . . . . . . . . . . . . . . . . .
21
12. Production Indexes for the Industry Sector in Poland,
1938 and 1948 -5 3 . . . . . . . . . . . . . . . . . . . . .
22
13. Sector and Gross National Product Indexes for Rumania,
1938 and 1948-53 . . . . . . . . . . . . . . . . . . . . .
23
14. Production Indexes for the Industry Sector in Rumania,
1938 and 1948-53 . . . . . . . . . . . . . . . . . . . . .
24
15. Sector and Gross National Product Indexes for the
European Satellites, 1938 and 1948-53 . . . . . . . . . .
25
16. Gross National Product and Population Data for Bulgaria,
1938... .......................
28
17. Gross National Product and Population Data for
Czechoslovakia, 1938 . . . . . . . . . . . . . . . . . . .
30
18. Gross National Product and Population Data for East
Germany, 1938 . . . . . . . . . . . . . . . . . . . . . .
3
19. Gross National Product and Population Data for Hungary,
1938 ................... .......
34
20. Gross National Product and Population Data for Poland,
1938 ...........................
36
21. Gross National Product and Population Data for Rumania,
1938 ...........................
39
22. Prices Used as Weights in Computation of Production
Indexes . . . . . . . . . . . . . . . . . . . . . . . . .
41
23. Industry or Industry Group Value-Added Weights by
Country . . . . . . . . . . . . . . . . . . . . . . . . .
45
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24. Reconciliation of Value-Added Weights with Employment
Data in Industry in Bulgaria, 1952 . . . . . . . . . .
25. Reconciliation of Value-Added Weights with Employment
Data in Industry in Czechoslovakia, 1952 . . . . . . .
26. Reconciliation of Value-Added Weights in Industry in
East Germany, 1936 and 1950 . . . . . . . . . . . . .
27. Reconciliation of Value-Added Weights with Employment
Data in Industry in Hungary, 1952 . . . . . . . . . .
28. Reconciliation of Value-Added Weights with Employment
Data in Industry in Poland, 1952 . . . . . . . . . . .
29. Reconciliation of Value-Added Weights with. Employment
Data in Industry in Rumania, 1952 . . . . . . . . . .
30. Sector Weights Used in Constructing GNP Indexes for
Bulgaria . . . . . . . . . . . . . . . . . . . . . .
31. Sector Weights Used in Constructing GNP Indexes for
Czechoslovakia . . . . . . . . . . . . . . . . . . . .
32. Sector Weights Used in Constructing GNP Indexes for
East Germany . . . . . . . . . . . . . . . . . . . . .
33. Sector Weights Used in Constructing GNP Indexes for
Hungary . . . . . . . . . . . . . . . . . . . . . . .
34. Sector Weights Used in Constructing GNP Indexes for
Poland . . . . . . . . . . . . . . . . . . . . . . . .
35. Sector Weights Used in Constructing GNP Indexes for
Rumania . . . . . . . . . . . . . . . . . . . . . . .
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CIA/RR PR-111 S-E-C-R-E-T
(ORR Project 13.117)
CONSTRUCTION OF EUROPEAN SATELLITE
GROSS NATIONAL PRODUCT ACCOUNTS*
Summary
National accounts series are designed to measure national.economic
achievement through time. The annual gross national product is the
principal aggregate used for this purpose. The gross national product
(GNP) is the sum of the values, at market prices, of all goods and
services produced by an economy, including the value of the capital
goods partially consumed in the production process. It thus measures
the totality of economic effort and constitutes the principal current
measure of the productive capability of an economy. GNP estimates
should be used, however, with appreciation of their limitations,
especially in comparing the achievements or productive capabilities of
different economies or in developing intertemporal comparisons over a
long period within a given economy.
The postwar national accounts estimates developed in this report
rest upon prewar figures for the Eastern European countries, which have
been manipulated to serve as base-year estimates. Accounts for at
least 1 prewar year for each country have been analyzed carefully and
adjusted to US national accounting practices. The local currency
estimates thus obtained have been converted to a common value unit
(1925-31. US dollars). These estimates, in turn, have been converted
to 1951 US dollars in order to facilitate international comparisons
for recent years. Finally, in order to use these estimates as base-
year figures in developing postwar estimates, they have been adjusted
to postwar national boundaries.
For the purpose of constructing indexes of GNP with which to move
the base-year estimates, production indexes have been developed from
estimates of physical output. Estimates of output for a representa-
tive series of goods and services have been aggregated at progressively
more inclusive levels, the final level of aggregation being GNP. In
* The estimates and conclusions contained in this report represent the
best judgment of ORR as of 1 April 1955. The production data, however,
are those used for CIA/RR PR-99 (cut-off date, 30 September 195+).
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aggregating production indexes to higher levels, use has been made of
the concept of "value added" to eliminate multiple counting.
This procedure is believed to offer the most reliable basis avail-
able at the present time for estimating the growth of GNP in the
Satellite economies. Satellite output data appear to be generally
reliable. In any event, they are presumably no more likely to have
been falsified, and they are more complete and are much less liable to
m:Lsinterpretation,than the official data available on Satellite
national accounts.
The procedure used results in further advantage for the study of
the Satellite economies. Production indexes have been aggregated at
varied levels, resulting in a wide range of indexes below the GNP
level of aggregation. These fractional indexes permit more minute
examination of the structure of production (frequently required. for
specific intelligence problems) than is possible by the simple com-
parison of GNP estimates.
The immediate result of the analysis described above is a series
of estimates of GNP in 1951 US dollars for the European Satellites.
These are given in Table l,* together with the roughly comparable
figures for the USSR and the US.
* Table 1 follows on p. 3.
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Table 1
Gross National Product
of the European Satellites J
1938 and 1948-53
Billion 1951
Country
1938
1948
1949
1950
1951
1952
1953
Bulgaria
1.0
1.1
1.1
1.2
1.3
1.3
1.4
Czechoslovakia
7.3
7.1
7.6
7.9
8.0
8.2
8.4
East Germany
16.1
8.5
9.3
10.6
11.9
13.0
14.0
Hungary
2.5
2.3
2.6
2.8
3.1
3.2
3.4
Poland J
.14.5
11.6
12.6
13.6
13.8
14.1
14.6
Rumania b/
3.1
2.6
2.6
2.7
3.0
2.9
3.0
European Satellites c/
Total
44.5
33.2
35.8
38.8
41.1
42.7
44.8
USSR J
71.9
78.5
86.7
96.0
102.5
113.6
117.0
US /
166.5
277.9
276.9
307.2
329.8
339.9
350.2
a. The GNP concept employed in this table is that employed in US
national accounts published by the Department of Commerce. All data
are computed on the basis of present international boundaries.
b. The figures for Poland and Rumania are slightly different from
those given in CIA/RR PR-99. The changes reflect small corrections in
the base-year figures.
c. Not including Albania. Albanian GNP is negligible, probably in
the neighborhood of $200,000,000 (1951 US $). Thus its total magnitude
would be subsumed in the rounding error of the total Satellite GNP.
d. The figures given for the USSR and the US are only roughly com-
parable with those for the European Satellites. The figures for the
USSR are estimates; those for the US are based on US official figures.
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I. Base-Year Estimates.
The first step taken in the construction of the present series
of estimates of the European Satellite GNP is the development of base-
year estimates. These are estimates of GNP for 1938 in 1951 US
dollars for each of the Satellites, adjusted to a postwar territorial
basis.
The prewar GNP estimates have been used in determining the 3atel-
lites' postwar national accounts because published postwar official
national accounts data are incomplete and the methods of calculation
used in developing them are dubious. Although some aggregates are
published by the individual European Satellites, these data app=ax
irregularly, and there is not a complete set for any year or for any
country. Where constant prices are used, some countries use postwar
prices; others, prewar prices. Where "national income" aggregates
are published, the Satellites use the Communist "net material product"
concept, which omits a large amount of services not directly con-
nE:cted with material production. The published announcements do not
explain in detail how these aggregates are constructed, and there is
no assurance that methodology is consistent either as among the: various
Satellites or as among different time periods. Thus use of officially
published aggregative data is not feasible for making the inter-
national and intertemporal comparisons that are needed for intelligence
purposes.
The procedure for making the base-year estimates falls into three
phases: (1) an estimate of 1938 GNP in local currency, (2) an esti-
mate of 1938 GNP in 1951 US dollars, and (3) the adjustment of both
figures to a postwar territorial basis.
Prewar national accounts data for the European Satellites are
available from various sources. These have been manipulated so as to
conform to the US concept of GNP, by the addition of omitted services,
the conversion from a factor-price to a market-price basis, and the
adjustment from a net to a gross product basis (including an al_-owance
for capital consumption) as required. The development of dollar esti-
mates depends heavily on the work of Colin. Clark, who estimated the
national accounts of most of the countries in the world in 1925?-3)+
US dollars, which he called International Units (I.U.). These dol-
lar estimates have been converted, to 1951 dollars by the US retail
price index and then adjusted for postwar boundary changes, usually
on the basis of prewar population and per capita production date,.
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In the conversion of GNP from local currencies to dollars, no use
has been made of official or other foreign exchange rates except for
Bulgaria. For the other countries the method used by Colin Clark is
based on a direct comparison of internal prices of consumption goods
and services in the US with those of each of the other countries for
the year 1929. Since comparative price data for investment goods
and government services were generally unavailable, Clark assumed
that conversion rates for these would be approximately the same as for
consumption goods. He obtained over-all conversion ratios of each
currency to dollars by weighting the individual commodity and service
price ratios by quantities of commodities and services consumed, both
in the US and in the other country. These two weighted averages are
typically different, since the consumption patterns are different.
The geometric mean of these two is the conversion ratio finally
adopted.
The price data available to Clark varied in coverage from country
to country. Of the Central and Eastern European countries, only
Germany had data showing the distribution of consumption expenditure
as a whole (for the period 1927-28). For Czechoslovakia, data were
available on consumption expenditures in the early 1930's for various
income levels of wage and salary earners. For other countries, price
data were available on only food, rent, and fuel. Price ratios
(dollar to local currency) on these items were adjusted by Clark to
total consumption coverage by applying factors (the relationship of
the sample of price ratios, the over-all price ratio, and income per
head) which he obtained for those countries on which more data were
available. For Bulgaria, no price data were available, and Clark
employed the foreign exchange rate between the dollar and the leva.
The calculations of base-year estimates for individual countries
are presented in Appendix A. Table 2* summarizes the results.
II. Method of Computing Industry, Sector, and GNP Indexes.
A. Introduction.
The second step in constructing the present estimates of
European Satellite GNP is the construction of an index with which to
move the base-year estimates. This has been done in several stages.
* Table 2 follows on p. 6.
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Gross National Product
of the European Satellites a/
1938
Local Currency
(Billion Units)
Billion
1951
Country
Unit
Amount
US
Bulgaria
1938 leva
62.9
1.J
Czechoslovakia
1938 koruna
65.5
7.3
East Germany
1938 RM
25.0
16.L
Hungary
1938 pengoes
6.6
2.5
Poland
1938 zloty
26.7
14.5
Rumania
1929 lei
224.0
3.1
European Satellites
44.5
a. Not including Albania.
First, production indexes for about 100 commodities have been
constructed and grouped into 22 industry or industry groups. Aggrega-
tion at this level involves the valuation of production in terms of
constant prices, so that the resulting values can be summed and. com-
pared over time.
After industry indexes are computed, there is an aggregation
problem involved in grouping related indexes into six income-originating
sectors of GNP. The methodology of aggregation varies from very
simple, as for the agriculture sector -- where the aggregation simply
involves summing values, as for a single industry index -- to the
rather complicated technique for the industry sector, where value-added
weights have been derived for the component industry groups from em-
ployment data.
The final level of aggregation involves the computation of a
series of weights. These permit the aggregation of the sectors inter
GNP indexes, which then are used to move the base-year estimates (see
under I, above).
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In the present section the general methodology for the three
levels of aggregation -- industry or industry group, sector, and
GNP -- will be discussed in turn.
B. Industry or Industry Group Indexes.
The building block of the industry index is the production
index for a commodity. The industry index consists of one or more
production indexes. The production indexes measure changes in
physical production of the subject commodities through time.
1. Prices Used.
Since it is not possible to aggregate physical units of
different commodities, some common system of value must be used for
weighting. A set of constant prices has been used in order to elimi-
nate the impact of general price changes.
Use of constant money prices (in this case prices used
for planning purposes) creates certain inaccuracies which should be
understood by the reader. Maintenance of constant price relation-
ships through time tends to eliminate the impact of technological.
change. Constant prices also tend to eliminate changes in the
structure of demand for final goods. It should be noted, however,
that sufficient changes to distort the index in any statistically
significant sense occur at irregular intervals and usually develop
gradually. Periodic revision of the price series through time will
usually eliminate this problem. It is not believed that the impact
of technological changes in the Satellite countries from 1938 to 1949
is such as to preclude the use of the planning prices for the Satel-
lites (usually 191.8-50 prices) as value weights.
Relatively complete lists of local planning prices are
available in usable form only for Czechoslovakia, East Germany and
Hungary. Reflecting as they do the postwar and post-Communist
scarcity relationships and the price basis used for current planning,
these prices represent the best measure for recent years which is
currently available. Hungarian prices have been used for the other
Satellites (Poland, Rumania, and Bulgaria), on the grounds that the
Hungarian product relationships would offer a closer approximation
to these mixed agricultural and industrial economies than would the
prices of highly industrialized Czechoslovakia and East Germany.
(See Appendix B for a list of the prices used.)
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2. Commodities Used.
No attempt has been made to-cover exhaustively the
commodities within each industry or industry group. It has been
assumed that detailed reporting of the principal products for each
industry yields a satisfactory level of accuracy, since a few key
commodities usually constitute a preponderance of the value of cut-
put within an industry. (See Appendix B for a list of the com-
modities used.)
Development of production indexes by the procedure of
analyzing commodity outputs appears to offer the firmest entry to
the European Satellite economies currently available. The data
published on national aggregates are fragmentary and cannot be
interpreted with certainty. On the other hand, the physical output
estimates used in this report rest on extensive data, which may be
checked for internal consistency.
C. Sector Indexes.
For the purposes of this report, GNP is divided into the
following income-originating sectors: industry, agriculture, trans-
port and communications, construction, services, and trade. Discussion
of the aggregation of indexes for these sectors follows.
1. Industry Sector Indexes.
a. Value-Added Concept.
The industry indexes, which are constructed with the
use of price weights, measure changes in gross value of output. In
a complex modern economy a substantial part of the gross value of
output; of each industry is produced by other industries from wh'.Lch
materials and services are purchased:` for example, gross value of
output of the automobile industry includes some of the value of out-
put produced by the steel industry. Overlapping relationships of
this sort must be allowed for if an accurate measure of the con',ribu-
tion of the industry to the economy is to be computed. Since individual
industries or industry groups contribute only a portion of the final
value of industrial output, it is necessary to weight the industry in-
dexes by the contributions each industry makes to the final industrial
product. The latter concept is "value-added." This measure eliminates
multiple counting in the development of the industry sector indexes.
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Value added may be defined as a measure of the net addi-
tion to the value of the product contributed by a specific producing
entity. The usual measure of value added is the sum of the wage bill,
the capital consumption allowance, and the profits in the industry in
question. Data in this detail have not been developed yet for the
Satellite countries.
b. Estimation of Value-Added Weights for the Industry
Sector.
The value-added weights employed herein are derived
primarily from estimated industrial manpower allocations. Employment
estimates by major industrial groups are available for the recent
years 1952-53. Production data have been used to perform detailed
breakdowns for the major industries. This technique permits the de-
velopment of a series of value-added weights, which make possible in
turn the development of a credible industry sector index.
Use of employment data involves the assumption that
the productivity of labor in industrial employments is uniform. As
a matter of practice, labor productivity increases as the concentra-
tion of capital per unit of labor increases. More than this, the
technique more or less implicitly assumes that the labor cost imputed
in the preceding manner constitutes the sole measure of value added.
Thus there is the added implicit assumption that the covariation of
depreciation (capital consumption allowances) and profits is identical
with the variation in the labor force employed in the industry. The
acceptability of employment data as a basis for computing for value-
added weights is attested to by such independent checks as have be-
come available thus far. The East German and Hungarian estimates
of value added appear to coincide in general with the weights which
have been developed from crude employment data. The present lack of
information on wage payments, depreciation, and profits in the Satel-
lites, however, would make it necessary to use the above technique
even if it were less reliable than it appears to be. Appendix C
summarizes the value-added weights derived for each European Satel-
lite, and Appendix D explains the derivation of these weights.
c. Producer and Consumer Goods Subsector Weights.
The industry sector has been divided into two sub-
sectors -- producer goods and consumer goods. Indexes of producer
goods and consumer goods activity generally reflect fairly closely
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the proclivity of the economy to spend for capital goods or for con-
sumption. Allocations of industry weights to capital goods or consump-
tion goods involves a certain amount of arbitrary judgment. The out-
put of certain industry groups -- for example, chemicals, and so-Lid
fuels -- is purchased by industrial users and by consumers as final
products, but these goods are purchased in such relatively small quanti-
ties by consumers as final products that quantification of this 2onsump-
tion has not been attempted, because the cost of developing accurate
estimates would be excessive in comparison with the gain achieved.
The consumer goods index is built on a relatively small
sample of output because of the limited reporting in this area. The
producer goods subsector index probably is more representative of the
change in production and capital goods industries, although the esti-
mated margin of error for data on the producer goods area generally
exceeds that for data on the consumer goods area. The grouping of
the industry sector weights into consumer goods and producer goods
subsectors for each European Satellite is shown in Appendix C.
d. Reliability of Industr
The reliability of the sector index is essentially a
function of the reliability of its constituents. The principal con-
stituents of the index are three: physical production reports for
commodities and services, prices employed to value these commodities
and services, and value-added weights developed to control multiple
counting.
It is believed that the physical production estimates
are broad enough in scope and sufficiently accurate to permit the
development of a useful production index. In general, in industries
or industry groups where the value-added weights are 5 or less there
is a maximum margin of error of plus or minus 10 percent. In the
highest value-added weight categories (10 and above), the margin of
error usually lies within plus or minus 5 percent of the absolute
production figure.*
* Many of the individual estimates upon which this report is based
are believed to err only on the positive or on the negative side, but
the margin of error expressed in the text, if accepted as an average
of the individual estimates' margins of error, does not do violence to
the facts. The estimates with these margins of error have a 95--per-
cent confidence limit.
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The price structure employed to value output is
believed to be representative of scarcity relationships for the
countries for which specific prices are available and reasonably re-
liable for the other countries, to which the Hungarian price structure
is imputed.
Value-added weights seem to have a reasonable level of
reliability. The weights seem to stand up well in terms of what in-
formation is available from East Germany, the, only Satellite country
for which an independent check is available. J*
The value-added weight employed herein for food was
derived from the Soviet Bloc average, due note being taken of the net
import status of the East German economy.
2. Other Sector Indexes.
The agricultural sector is simply a summation of the
values of various agricultural products, in constant prices, and its
formulation involves the computation of an index of production similar
to the industry group indexes. The same is true of the transport and
communications sector index. For the construction sector, also, a
production index has been used, employing selected building materials.
(The commodities, services, and prices used are shown in Appendix B.)
The services sector index is assumed to move in accordance
with population changes. In the absence of specific data for services,
it is assumed that per capita increases in government services,
(health, education, and the like) roughly offset'declines in the area
of personal or private services in the Satellite countries.
The trade sector index has been obtained by means of
employment in the retail and wholesale trade establishments. This
technique has been checked against specific pronouncements about the
share of trade in GNP in the early postwar period, during which time
many of the European Satellites kept national accounts in a framework
roughly comparable to that employed in this report.
* For serially numbered source references, see Appendix F.
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D. GNP Indexes.
The GNP indexes, like the industry sector indexes, must measure
the real change in production of all final goods and services over time.
The sector weights therefore should represent gross value added by
each sector.
The usual method of measuring real changes in GNP is to con-
struct GNP in current prices for various years and to reduce the series
to a constant price measure by the use of appropriate price indexes.
This method requires reliable current value aggregates and comprehensive
price information, both of which are unavailable for the European Satel-
lites. In the absence of these, the method of aggregation of praduc-
tion information into GNP indexes has been used.
Value-added weights for sectors of GNP have been developed by
various means. For Poland, Czechoslovakia, and Hungary, official pub-
lished estimates have been adjusted to fit the classification of
sectors used in this report. For East Germany, employment data have
been used. For Rumania, sector weights have been'developed by analogy
with those for other Satellites. For Bulgaria, weights published by
the UN have been used. The detailed calculations are presented in
Appendix E.
E. Production and GNP Indexes.
The results of the above aggregation process are summarized in
Tables 3-15.*
T -Tables 3-15 follow on pp. 13 through 25.
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T n m
APPENDIX A
DEVELOPMENT OF BASE-YEAR GNP ESTIMATES, BY COUNTRY
Summarized below are the detailed calculations made to obtain
base-year GNP estimates in dollars and local currency. It will be
noted that the methodology follows the course of taking a published
aggregate for a prewar year -- usually an estimate by Colin Clark or
by the UN -- and adjusting it to conform with the US concept of GNP.
Estimates have been adjusted where necessary (especially for capital
consumption) by analogy with US experience. It is recognized that
the European Satellite economies are hardly comparable to the US
economy and that this procedure introduces some error into the final
result.
In general, the base-year estimates as they stand are subject to
correction, and further study of the base-year data probably will re-
sult in changes in the case of some countries. The estimate of the
GNP for the European Satellites as a whole, however, is not likely to
change significantly as a result of further study of the base-year
data.
The following relationships are used throughout this appendix:
Net material product plus adjustment for omitted services
equals net national product (NNP) at factor cost.
NNP at factor cost equals national income (NI).
NNP at factor cost plus an adjustment to allow for indirect
taxes plus profits of government-owned enterprises minus
subsidies equals NNP at market prices.
NNP at market prices plus capital consumption allowance
(the amount of investment necessary to keep capital in-
tact) equals gross national product (GNP) at market
prices.
One I.U. (International Unit) equals one 1925-31+ US.dollar
(quantity of commodities exchangeable for $1 in the US
over the average period 1925-34). J
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Factors for converting estimates in I.U.'s and 1938 US
dollars to 1951 US dollars are based on US retail
price indexes, as follows: a factor of 1.861+ has been
used to convert I.U.'s (1925-31+ average prices) and a
factor of 2.06 to convert 1938 dollars.
1. Bulgaria.
The base-year estimates of GNP for Bulgaria, together with popula-
tion data, are presented in Table 16, both for the prewar ter:ritory
of Bulgaria and as adjusted for territorial changes resulting from
World War II. The methods of derivation are explained below.
Table 16
Gross National Product and Population Data for Bulgaria
1938
Gross National Product
(Billion
1938 Lever) J
(Billion
1951
Population
Millioi)
Prewar territory
58.8
0.96
6.2
Postwar territory
62.9
1.03
6.6
a. Local Currency Estimate.
The territorially unadjusted local currency estimate of the
GNP of Bulgaria in 1938 -- 58.8 billion leva (at factor cost) -- is
based on a UN estimate of 55.5 billion leva for NNP at factor cost
in 1938. J This estimate has been converted to GNP at factor cost
by assuming the same rate of capital consumption attributed to Hungary
and Rumania (6 percent of NNP at factor cost). Thus 55.5 billion
levy x 1.06 = 58.8 billion leva (1938 GNP at factor cost, terri-
torially unadjusted). Information is not available to convert this
estimate to a market price basis.
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The territorially unadjusted dollar estimate ($0.96 billion)
is based on the 55.5-billion-leva estimate used above, which has been
converted into dollars at an adjusted leva-dollar exchange rate in
1938. This rate was derived by adjusting the 1939 exchange value im-
plicit in Clark's calculations (145 leva = $1) 4 by indexes of whole-
sale prices for the US and Bulgaria between 193 and 1939. The result
was a rate for 1938 of 149 leva = $1. Employing this ratio, 55.5 bil-
lion leva + 149 = $373 million (NNP at factor cost, 1938 prices)..
$373 million x 2.06 = $768 million (NNP at factor cost, 1951 prices).
Computation of the 1938 Bulgarian GNP from these data was accomplished
by the use of the ratio of NINP (at factor cost) to GNP (at market
prices) which obtained for the US, which was 25.5 percent. Thus
$768 million x 1.255 = $0.96 billion (1938 GNP, 1951 prices, terri-
torially unadjusted).
c. Adjustment for Postwar Territorial Changes.
The adjustment for postwar territorial changes ($0.07 bil-
lion) reflects the addition of Southern Dobruja. The computation of
the addition for Southern Dobruja is described in 6, c, below, which
deals with Rumania. The Bulgarian GNP estimate in 1951 dollars for
1938 thus becomes $0.96 billion + $0.07 billion = $1.03 billion
(7 percent higher than the territorially unadjusted estimate). On
the same basis, the local currency estimate becomes 58.8 billion
leva x 1.07 = 62.9 billion leva (GNP at factor cost).
The base-year estimates of GNP for Czechoslovakia, together with
population data, are presented in Table 17,* both for the prewar
territories of Czechoslovakia and as adjusted for territorial changes
resulting from World War II. The methods of derivation are explained
below.
a. Local Currency Estimate.
The GNP estimate of 69.6 billion 1938 koruna has been
developed from Milos Stadnik's estimate of NNP for Czechoslovakia in
1938 at factor cost, 56.7 billion koruna. J An upward adjustment
* Table 17 follows on p.30.
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Table 17
Gross National Product and Population Data for Czechoslovakia
1938
Gross National Product
(Billion 1938 (Billion Population
Koruna) 1951 (Million)
Prewar territory 69.6 7.7
15.4
Postwar territory 65.5 7.3
14.6
of 10 percent has been made to allow for indirect taxes.
This per-
centage is based on proportions implicit in Clark's calculation: for
the year 1937. 6/ Thus 56.7 billion x 1.10 = 62.4 billion koruna
(1-938 NNP at 1938 market prices).
NNP at market prices has been adjusted by the allowance of
1:L.5 percent for depreciation to yield GNP at market prices. This
allowance is based on the allowance for depreciation in prewar
Poland., which is 10 percent. This figure has been adjusted to apply
to Czechoslovakia.by multiplying by 1.644 = 1.115, which represents
~T"
the following: ratio of Polish to Czechoslovak NNP at market prices
ratio of Polish to Czechoslovak stocks of capital goods
Thus 62.4 billion koruna x 1.115 = 69.6 billion koruna (1938 GNP at 1938
market prices). J
The dollar estimate also has-been derived from StadnikIE
1938 estimate for NNP at factor cost (56.7 billion koruna), J as ad-
justed by Clark's allowance of 10 percent for indirect taxes. This
sum (62.4 billion koruna) has been revalued to 1929 prices. They
following procedure has been used: Clark estimated that the general
level of prices in 1937 stood at 94.4
(1929 =
100). 1 The general
price level rose in 1938 to 105 (1937
= 100).
10 Thus in 1938 the
price level may be indicated as follows: 94.4 x 1.05 = 99.1
(1929 = 100), and 62.4 billion koruna + 0.991 = 63 billion korur.a
(NNP for Czechoslovakia in 1938, 1929 market prices).
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This sum has been converted to I.U. by means of Clark's
data, which indicated that 1 koruna in 1929 w 0.0602 I.U., or
16.6 koruna = 1 I.U. The conversion of the Czechoslovak NNP to I.U.
may then be-expressed as follows: 63.0 = 3.8 billion I.U. (1938 NNP).
16.7
Revalued to 1951 prices, 3.8 billion I.U. x 1.864 = $7.08 billion. An
adjustment for capital consumption of 9.3 percent (based on the, ratio
of GNP to NNP in the US for 1929) then has been made. Thus $7.08 bil-
lion x 1.093 = $7.74 billion (GNP for Czechoslovakia in 1938, 1951
prices, prewar territory).
c. Adjustment for Postwar Territorial Changes.
The only territorial adjustment required for Czechoslovakia is
to subtract Sub-Carpathian Ruthenia (not incorporated into the
Ukrainian SSR) from the totals for Czechoslovakia. Sub-Carpathian
Ruthenia had a prewar population of some 0.8 million. 11/ Assuming
an average gross product per capita of about $540 (the unadjusted
average for prewar Czechoslovakia), the total product of the area
is estimated at $0.43 billion. Thus the adjusted GNP estimates may
be expressed as follows: $7.74 - $0.43 billion = $7.3 billion (the
1938 GNP for Czechoslovakia) 1951 prices, postwar territory). The
adjusted product is 94.3 percent of the previous total. The local
currency estimate then may be expressed as follows: 69.5 billion
koruna x 0.943 = 65.5 billion koruna (1938 GNP for Czechoslovakia,
1938 prices, postwar territory).
3. East Germany.
The base-year estimates of GNP for East Germany, together with
population data, are presented in Table 18.* The methods of deriva-
tion are explained below.
a. Local Currency Estimate.
The local currency estimate for GNP at market prices for East
Germany in 1938 is based on the work of Colin Clark, who in turn
derived his estimate from the thorough study of the US Strategic
Bombing Survey (USSBS).** 12
* Table 18 follows on p.32.
** The USSBS work also has been used by Professor A.J. Brown of Oxford
in his studies on German rearmament. It is the opinion of Brown that
corrected Statistisches Reichsamt estimates agree fairly well with
USSBS data adjusted to a factor cost basis.
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Table 18
Gross National Product and Population Data for East Germany
1938
Gross National Product
(Billion (Billion Population
1938 RM) 1951 ) Million)
East Germany including
East Berlin 25.0 16.1 16.6 a/
a 13
The USSBS estimate, which is considered the best estimate
of the GNP for greater Germany in 1938, is 112 billion Reichsmark (RM)
(after deducting interest payments on the national debt). The studies
of Clark and Dr. Ferdinand Grunig have been used to calculate the por-
tion contributed by East Germany. Clark estimated that 10.66 percent
of the GNP of greater Germany (in 1936 and 1937) must be deducted in
order to exclude the contributions of Austria, the Sudetenland, and
Memel, leaving 89.34 percent for prewar Germany (including East
Prussia) plus the Polish-occupied territories. 14 Grunig estimated
that 88.4 percent of the GNP of this area represented the GNP of the
area constituting postwar East and West Germany, of which East
Germany (including East Berlin) contributed 28.4 percent.* 15 Thus
RM 112 billion x 0.8934 x 0.884 x 0.284 = RM 25 billion (193 GNP of
East Germany, including East Berlin, 1938 prices).
b. Dollar Estimate.
The East German dollar estimate ($16.1 billion, 1951 prices)
also is based on USSBS data, as converted by Clark, who applied
purchasing power parities to the local currency figures for various
sectors. Clark's basic estimate for 1938 (35.2 billion I.U.) re-
presents NNP at market prices for greater Germany (excluding an
* Professor A.J. Brown uses approximately the same factor.
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allowance for the retail valuation of farm consumption, as in the case
of Poland). L6/ This figure has been converted to 1951 dollars as
follows: 35.2 billion I.U. x 1.864 = $65.6 billion (NNP for prewar
Germany, 1951 market prices). Using Grunig's percentages, the con-
tribution of East Germany is computed as follows: $65.6 billion
x 0.8934 = $58.6 billion. $58.6 x 0.884 x 0.284 = $14.7 billion
(1938 NNP of East Germany) 1951 market prices). NNP is converted. to
GNP by applying a fixed capital consumption allowance of 9.8 percent.*
Thus $14.7 billion x 1.098 = $16.1 billion 17 (1938 GNP for East
Germany, including East Berlin, 1951 prices
c. Adjustment for Postwar Territorial Changes.
The adjustments for territorial changes used above were
developed originally for slightly different purposes. Clark's allow-
ance for Austria, the Sudetenland, and Memel (10.66 percent of the
total for greater Germany) reflected data for 1936 and 1937 and was
applied to his figure for NNP at market prices in 1938. Grunig's
breakdown of the GNP of the area of postwar East and West Germany
plus East Prussia and the Polish-occupied territories applied to
German NI (with a slightly different concept) in 1936. The combined
use of these factors to obtain both a local currency estimate and a
dollar estimate is believed, however, to give a somewhat better re-
sult than the application of simple per capita figures (though the
difference is small).
Grunig's percentages have been used also to break out the
contribution of East Prussia and the Polish-occupied territories (see
under 5, c, below, where these are taken up in connection with the
GNP of Poland).
The contributions of East Prussia and the Polish-occupied
territories to the GNP for prewar Germany, based on Grunig's figure,
are 1.7 percent and 9.9 percent, respectively (or, together, 11.6 per-
cent). These percentages, applied to the NNP of prewar Germany, re-
sult as follows: $58.6 billion x 0.017 = $0.97 (East Prussia), and
$58.6 x 0.099 = $5.83 (Polish-occupied territories), a total figure
of $6.8 billion. By applying the same capital consumption allowance
(9.8 percent) to convert to GNP, the results are as follows:
$0.97 billion x 1.098 = $1.06 billion (East Prussia); $5.83 bil-
* An average of the capital consumption for the US in 1929 and
1938.
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lion x 1.098 = $6.38 billion (Polish-occupied territories); and $6.8
billion x 1.098 = $7.44 billion (total GNP for both territories).
4. Hungary.
The base-year estimates of GNP for Hungary, together with popula-
tion data, are presented in Table 19.
Gross National Product
and Population Data for Hungary a/
1938
Gross National Product
(Billion (Billion Population
1938 Pengoes) 1951 ) (Million)
6.62 2.45
9.2
a. There were no significant territorial
changes in Hungary as a result of World War II.
a. Local Currency Estimate.
The local currency estimate of the GNP of Hungary for 1938 --
6.62 billion pengoes, 1938 prices -- has been obtained by manipulation
of Clark's estimate of the NNP at market prices in 1938/39, 6.44 bil-
lion pengoes. To raise NNP to GNP, the following calculations have
been made.
The UN estimated that the increment necessary to raise NNP to
GNP was 6 percent of the NNP at factor cost. The 6-percent factor
was.applied to the UN estimate of the NNP (4.94 billion pengoes). 18
4.94 billion pengoes x 0.06 = 0.3 billion pengoes for capital con-
sumption. Clark's estimate of 6.44 billion pengoes was derived from
an estimate of 5.19 billion pengoes at factor cost, which excluded
public services and indirect taxes. 19 If the capital consumption
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adjustment (0.3 billion pengoes) is applied to 5.19 billion pengoes
(NNP at factor cost), the application of this figure to Clark's esti-
mate gives a result as follows: the rate of capital consumption be-
comes 0.3 billion + 5.19 billion, or 5.78 percent. 6.44 billion
pengoes x 1.0578 = 6.81 billion pengoes (GNP for Hungary, 1938/39)?
This estimate has been deflated to a 1938 base by using Clark's studies
of income for the period July 1937 to July 1939. During this period
real income rose about 11.5 percent, LO/ or about 5.6 percent per year
(compounded). The dollar estimate for 1938/39 has been converted to
1938 by a rough 6 months' average rate (2.8 percent). Thus 6.82 bil-
lion pengoes + 1.028 = 6.62 billion 1938 pengoes (1938 GNP at market
prices).
b. Dollar Estimate.
The estimate of the GNP of Hungary-in 1938 -- $2.45 billion,
1951 US prices -- also has been constructed from Clark's estimate of
6.44 billion pengoes for the 1938/39 Hungarian NNP at current market
prices. 21 The Clark estimate includes an adjustment to cover certain
income from services, obtained by reference to Hungarian national in-
come data. Clark's adjustments involving the balance of payments have
been omitted because the original data appeared to include net income
from abroad. The estimate has been converted to 1929 prices by using
the index of general price change in Hungary implicit in Clark's
figures; namely, 1938/39 = 87.5 (1929 = 100). The conversion to 1929
prices is as follows: 6.44 billion pengoes + 87.5 = 7.36 billion
pengoes (NNP for 1938/39, at 1929 market prices). This result has
been converted to I.U.'s at the rate indicated by Clark, that is,
5.914 pengoes = 1 I.U. L2/ Thus 7.36 billion pengoes + 5.914 = 1.24
billion I.U. The I.U. estimate has been converted to 1951 prices as
follows: 1.24 billion I.U. x 1.864 = $2.31 billion (Hungarian NNP at
market prices in 1938/39, 1951 prices). NNP has been adjusted for
capital consumption at the rate of 9.3 percent of NNP, the rate
obtained when a 1929 rate of exchange is involved in establishing the
value of national currency in terms of I.U. The adjustment for capital
consumption allowances may be expressed as follows: $2.31 billion
x 1.093 = $2.52 billion, Hungarian GNP in 1938/39, 1951 US prices.
This figure is deflated to a 1938 base by using the same adjustment as
for the local currency estimate above. Thus $2.52 billion + 1.028
= $2.45 billion (1938 GNP, 1951 prices).
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5. Poland.
The base-year estimates of GNP for Poland, together with population
data, are presented in Table 20, both for the prewar territory of
Poland and as adjusted for territorial changes resulting from World
War II. The methods of derivation are explained below.
Gross National Product and Population Data for Poland
1938
Gross National Product
(Billion
1938 Zloty)
(Billion
1951 $ )
Population
Million;_
Prewar territory
23.0
12.5
34.7 J
Postwar territory
26.7
14.5
31.2 b
a. 23
b. This figure is derived by adding to 34.7 million,
8.6 million from territories added to Poland after the ww.ar,
and subtracting from the resultant sum, 12.13 million from
territories lost by Poland after the war. 24 The estimate
of 8.6 million does not include East Prussia.
a. Local Currency Estimate.
The GNP estimate of 23 billion zloty for 1938 rests on the
UN estimate of 19.8 billion zloty of NNP at factor cost, adjusted
for international comparability. 25 In order to achieve a market
price estimate, the UN estimate has been adjusted by a net increase
of 5 percent, to reflect the impact of indirect taxes (plus profits
of government-owned enterprises minus subsidies). 26 Thus 19.8 bil-
lion zloty x 1.05 = 20.8 billion zloty (NNP at market prices). NNP
at market prices in turn has been adjusted for an estimated 2.2 bil-
lion zloty allocated to capital consumption in order to arrive at
GNP at market prices. The estimate of 2.2 billion zloty represents
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an average of ratios of GNP at market prices based on official fig-
ures 27 and of NNP at market prices, as estimated by the University
of Birmingham, 28/ for the years 1929 and 1933. Finally, 20.8 bil-
lion zloty + 2.2 billion zloty = 23 billion zloty (GNP at market
prices).
The dollar estimate for the GNP of Poland in 1938 --
$12.5 billion, 1951 prices, prewar territory -- is the result of
applying a series of adjustments to an estimate of NNP by Clark.
Clark's basic estimate of NNP is 5.59 billion I.U. for 1938. Sub-
tracting 0.57 billion I.U., which represents the imputed write-up to
retail prices of the value of home-produced goods consumed on
farms, 29 leaves 5.02 billion I.U.
Clark's analysis also must be adjusted for "omitted services,"
since it is based on the official estimate for 1938 and thus is
fundamentally a "net material product" estimate. The mean of two
estimates was used in conversion from the Soviet GNP concept to the
US concept. One estimate is based on the UN data, which imply an in-
crease of 27 percent over the Soviet concept. 30 The other,
developed by Bergson in the construction of similar calculations for
the USSR for 1937, 31 indicates an increase of 18 percent. The mean
of these two estimates is calculated as follows: 5.02 billion I.U.
x 1.18 = 5.92 billion I.U., and 5.02 billion I.U. x 1.27 = 6.38 bil-
lion I.U. These estimates are converted to US 1951 prices as follows:
5.92 billion I.U. x 1.864 = $11 billion, and 6.38 billion I.U.
x 1.864 = $11.9 billion. The simple mean of these estimates is
$11.4 billion (a measure of the NNP of Poland in 1938, 1951 market
prices). The NNP has been expanded to cover the capital consumption
allowance estimated at 9.8 percent of NNP. Thus, $11.4 billion
x 1.098 = $12.5 billion (GNP in 1938, territorially unadjusted).
c. Adjustment for Postwar Territorial Changes.
The GNP estimates for 1938 -- $12.5 billion and 23 billion
zloty -- represent GNP for the prewar territory of Poland. This
territory was altered radically in the course of the provisional
boundary settlements at Yalta. Two steps are required to adjust the
prewar GNP to reflect these territorial changes.
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The first step is to adjust for the territory acquired by
Poland from Germany. This adjustment has been made on the basis of
figures developed in 3, c, above, in connection with the GNP of East
Germany. Prewar Germany lost $7.44 billion as a result of the loss
of the Polish-occupied territories plus East Prussia. Since the
economically most significant part of the latter was ceded tc the
USSR, GNP generated therein, $1.06 billion, was subtracted from
$7.44 billion. Thus $7.44 billion - $1.06 billion = $6.4 billion
(net gain in Polish GNP).
The second step is to adjust for the territory lost by Poland
to the USSR. Average per capita gross product estimates based upon
prewar per capita production generated in this area have been multi-
plied by the 1938 population of this area to approximate the loss in
GNP resulting from the boundary changes. A prewar population. of
12.13 million was estimated for the area which Poland lost tc the
USSR. 32 This population, multiplied by an average per capita pro-
duct for Poland (prewar territory), $360 per capita, indicates a loss
of territory producing about $4.4 billion. The net result of these
gains and losses -- $6.4 billion minus $4.4 billion -- is a net gain
of $2 billion. The addition of this amount to the previous GNP esti-
mate of $12.5 billion yields a 1938 territorially adjusted estimate
of $14.5 billion.
Upward adjustment accounted for by territorial change is thus
about 16 percent of the unadjusted total. The local currency esti-
mate is increased by the same proportion, as follows: 23 billion
zloty x 1.16 = 26.7 billion zloty, to obtain the territorially ad-
justed estimate in 1938 Polish currency.
6. Rumania.
The base-year estimates of GNP for Rumania, together with popula-
tion data, are presented in Table 21,* both for the prewar territory
of Rumania and as adjusted for territorial changes resulting from
World War II. The methods of derivation are explained below.
a. Local Currency Estimate.
The territorially unadjusted local currency estimate of the
GNP of Rumania in 1938 -- 276 billion lei, 1929 prices -- is obtained
* Table 21 follows on p. 39-
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Table 21
Gross National Product and Population Data for Rumania
1938
Gross National Product
(Billion
1929 Lei
(Billion
1951 )
Population
(Million)
Prewar territory
276.0
3.77
20.0
Postwar territory
224.0
3.07
15.9
by using Clark's procedures, which have been applied to a 1929 esti-
mate of Rumanian national income at factor cost, 195.9 billion lei.
(Clark used almost the same figure -- 201-billion lei.) 33/ This
estimate was then adjusted in the same proportion in which Clark ad-
justed his figures for 1929. This manipulation yields 232.5 billion
lei as the 1929 NNP, at 1929 market prices. To get an estimate of
NNP at market prices in 1938, the population ratio of the respective
years has been applied to the 1929 NNP. Thus 232.5 billion lei
x 1.119 percent = 260 billion lei (NNP at prices in 1938, 1929 market
prices). This sum has been adjusted to a GNP basis by assuming the
rate of capital consumption previously applied to Hungary, 6 percent
of NNP at factor cost. The result attained in this fashion is
276 billion lei, the Rumanian GNP in 1938, 1929 prices, territorially
unadjusted. (See Table 21, above, for summary of estimates.)
The territorially unadjusted dollar estimate for 1938 of
$3.77 billion was derived from the 1929 estimate of 232.5 billion lei
for NNP at market prices, indicated in the local currency estimate
above. This estimate has been converted to 1.64 billion I.U., 34
which is converted to 1951 dollars as follows: 1.64 billion
I.U. x 1.864 = $3.06 billion (NNP at market prices in 1929, 1951
prices). The 1929 population figure is given by Clark as 17.6 mil-
lion. 35/ The per capita 1929 figure is thus taken to be about
$174. The total population in 1938 was 19.8 million. 36/ The 1929
per capita estimate is multiplied by the 1938 total population
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figure as follows: $174 x 19.8 million = $3.45 billion (NNP in
1938, 1951 market prices). By applying the US capital consumption
allowance for 1929, 9.3 percent, GNP would be $3.45 billion
x 1.093 = $3.77 billion.
c. Adjustment for Postwar Territorial Changes.
Between 1938 and 1946, Bessarabia and Northern BukovirLa, with
a total prewar population of 3.7 million, were ceded to the USSR, 37
and Southern Dobruja with a prewar population of 0.4 million was
ceded to Bulgaria. Thus Rumania sustained a net loss of 4.1 Brillion
of 1938 population. At an average gross per capita product of $170,
the adjustment required would be the following: $170 x 3.7 million
= 0.63 billion for the area ceded to the USSR, and $170 x 0.4 mil-
lion = $0.7 billion for the area ceded to Bulgaria. The total. adjust-
ment to the Rumanian GNP of $3.77 billion, calculated above, is
$0.74 billion, leaving $3.07 billion as the territorially adjusted
Rumanian GNP for 1938, about 81.4 percent of the unadjusted amount.
Applying the same factor to the local currency estimate results as
follows: 275.6 billion lei x 0.814 = 224 billion lei, 1929 prices,
the territorially adjusted local currency estimate of the GNP of
Rumania in 1938.
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