JOINT ECONOMIC COMMITTEE BRIEFING PAPER USSR: ECONOMIC TRENDS AND POLICY DEVELOPMENTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85B00263R000200150027-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 94
• Document Creation Date: December 20, 2016
• Document Release Date: July 12, 2007
• Sequence Number: 27
• Publication Date: September 14, 1983
• Content Type: REPORT

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JOINT ECONOMIC COMMITTEE BRIEFING PAPER
USSR: Economic Trends and Policy Developments
Office of Soviet Analysis
CENTRAL INTELLIGENCE AGENCY
14 September 1983
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Introduction ...................>... 1
Economic Performance in 1981-82..................... ............ 2
Industry .................................................. 2
Energy and Raw Materials..............: ................. 2
Machinery ............................................... 3
Consumer Goods .......................................... 4
Agriculture ............................................... 5
Transport ..................,.....r..._.........,....................... 6
Consumer Well-Being ...................................... ... 6
Defense ................................................... 7
Foreign Trade ............................................. 11
Reasons for the Sluggish'Performance.................... .... 13
External Factors .... .........._.......-...... ................. 13
Policy Errors ............................................. 15
Systemic Problems. ............._......... ...................... 16
Economic Policies Under Andropov............................. 16
Investment ................................................. 17
Defense .................... 18
Agriculture... ... o ........ :.,. .,o . o ... . . . o ...... o ... .... 19
Foreign Trade Polie~_.... ..... _ - 22
Other Initiatives................. ......................... 24
Assessment of Andropov's Policies ................... ........ 26
Outlook for 1983 ............... 29
Long Term Outlook....................... . ....................... 33
Slower Growth of Labor a-nd-F'ixed Capital .................. 34
Imbalances ............................: ..................... 35
Work Incentives ........................................... 38
Prospects for Relief Via Foreign Trade .................... 39
Potential for Better Performance............................ 40
Striking a Balance.. 43
Appendix A - Estimating Soviet Defense Expenditures......... 45
Appendix B - USSR: Selected Economic Statistics............ 50
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Introduction
When Yuri Andropov became General Secretary of the Communist
Party of the USSR, economic growth rates had been falling, the
increase in per-capita consumption had come to a halt, and
resource allocation decisions between military and civilian needs
were becoming more difficult. Externally the Soviet Union was
providing support to the stagnating economies of Eastern Europe
(particularly Poland) and fighting a costly war in Afghanistan.
With the first anniversary of Andropov's rise to power
approaching, we review in this paper his policies and programs
and assess their impact on the economy and on military
spending. The paper first summarizes the performance of the
Soviet economy in 1981-82 and the reasons for the sluggish
economic growth during this period. The economic policies being
pursued by Andropov, insofar as they have been revealed, are then
described, and the effect that these policies have had and are
likely to have on economic growth in the near term is assessed.
In the final section, we turn to the longer term outlook for
Andropov's economic and defense policies and for the economy in
general.
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Economic Performance in 1981-82
In the first two years of the 11th Five-Year Plan period
(1981-85), growth in Soviet gross national product (GNP) averaged
about 2 percent per year, somewhat above that attained during
1979-80 but well below both the rate achieved during the 1970s
and the rate implied by the 1981-85 Plan (figure 1). The 1981-85
Plan depended on a strong turnaround in the rate of growth of the
.combined productivity of labor and capital. Instead, factor
productivity in the economy declined in 1981-82 by about one
percent per year. General Secretary Andropov found almost every
sector of the economy lagging behind plan when he took office in
November 1982.
Industry
The slowdown in the growth of industrial output was
especially worrisome. In 1981-82, average annual growth was less
than 2 1/2 percent, about half the rate called for in the 1981-85
Plan (figure 2). Two developments during this period were
particularly noteworthy: (1) the slowdown was evident in
practically every industrial branch, and (2) the trend in the
productivity of labor and capital employed in industry was down
dramatically. Despite considerable effort, the Soviets were
unable to halt the deterioration in efficiency with which
combined inputs of capital and labor are used in the USSR.
Factor productivity in industry declined at an average annual
rate of roughly' 1 1/2 percent during 1981-82.
Energy and Raw Materials. The growth of energy production
in the USSR has decelerated significantly. After three decades
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Figure 1
USSR$ Average Annual Percentage
Growth of GNP
X,
1966-70 1971-75 1976-80 Y-12 198N85
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PERCENT
? 1 L N O N ? ?
I _ I __ _.l 1 1 _ L l
I-
is
0
i
? /
? /
?
?
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of growth, oil production in the USSR has begun to level off,
although--as explained below--the prospects for the future are
1
considerably better than we once thought. Production of oil
(including gas condensate) has inched forward during the current
five-year planning period and now stands at 12.4 million barrels
per day (b/d). While gas output grew rapidly in 1981 and 198.2,
raw coal output increased in 1982 for the first time since 1978.
Widespread shortages of raw materials were a major reason
for the marked, slowdown in industrial production in 1981-82
(fi,gure 3). Declining growth in production of coal and its
deteriorating quality, for example, hurt electric power and
ferrous metallurgy. Shortages of electric power, in turn,
impaired the performance of industrial power customers, and an
Insufficient supply of steel products contributed to the lower
growth in machinery production. Shortages of coke and refinery
byproducts also hindered production of important chemicals,
curtailing production in the interdependent branches of the
chemical industry.
Machinery. Stagnation in the output of rolled steel
products in 1981-82 held back growth in the machinery branch of
industry. Machinebuilding is a pivotal sector, producing
military hardware as well as consumer durables and machinery for
investment. The low rate of growth of machinery output--only 3.2
percent annually during 1981-82--is about half the rate planned
for 1981-85 and-by far the lowest since World War II.
'Even this slower growth of machinery output depended in part
on rising imports of rolled ferrous metals. Imports of steel
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products, for example, totaled $5.3 billion dollars in 1982. The
Soviets also stepped up imports of machinery and equipment from
the West and from Eastern Europe.
The hard choices on resource allocation facing Andropov are
most evident in the machinery sector. The share of machinery and
equipment in total investment has been rising as part of a
strategy that emphasizes increased renovation and modernization
and less new construction. This share, in fact, climbed from
about 33 percent in 1975 to roughly 38 percent in 1981 and is
planned to increase to more than 142 percent in 1983. At current
levels of investment, the use of machinery and equipment for
domestic investment is rising by as much as 7-9 percent per
year. Meanwhile, the regime would like to push production of
consumer durables so as to reduce some of the unsatisfied demand
in consumer markets. But the 3-percent average annual growth of
machinery output achieved in 1981-82 suggests that the
investment-defense-consumer competition for machinery products
will become increasingly fierce.
The pressure on allocations to investment and the consumer
could be eased in the near term in two ways: by holding down the
growth in production of military hardware and by increasing net
imports of machinery. In the longer term, more investment in the
machinery sector and its supporting branches is needed.
Consumer Goods. The growth of output in light industry and
food processing' during 1981-82 paralleled that of industry as a
whole. Despite large imports of grain, sugar, and other farm
products, shortages of agricultural raw materials contributed to
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the weak performance of food processing and (to a much lesser
extent) of light industry in 1981-82--although the impact on
overall industrial performance was not large. Difficulties in
attracting and retaining a qualified work force and low worker
morale also constrained production. Compared with other
industrial. sectors, average wages in these two branches are lower
and working conditions poorer.
Agriculture
The value of agricultural output, almost the same in 1981 as
in 1980, increased by somewhat more than 3 percent in 1982. USDA
estimates grain production at 180 million tons last year--an
increase of about 20 million tons over 1981 but some 55 million
tons short of plan. In the crucial livestock sector, meat output
rose only fractionally in 1982 while milk production turned
upward for the first time since 1977. Production of fruits and
vegetables reached record levels and output of potatoes, sugar
beets, and sunflower seeds increased substantially over the
depressed levels of 1981.
Despite the 1982 upturn, farm output was still nearly 7
percent below the 1978 peak-year level. In fact, the results for
1981-82 have put most of the 11th Five-Year Plan agricultural
production goals beyond reach. To reach the target for grain
output, for example, annual production in 1983-85 would have to
average 285 million tons--nearly 50 million tons greater than the
record crop of 1978.
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Transport
A substantial share of the responsibility for the falloff in
industrial growth must be assigned to bottlenecks in the
transportation of both raw materials and finished products.
Plants were shut down intermittently, production lines were
disrupted as machines and workers stood idle for lack of raw
materials, and finished products piled up on loading docks.
Total freight turnover, which had increased at an annual rate of
3.5 percent during 1976-80, actually fell by 0.2 percent last
year.
The principal culprit has been the railroads, which shoulder
the major part of the transportation burden in the USSR. The
railroads are approaching the limit of their capacity to move
ever more freight on the existing network with existing
technology. Shipping natural resources from extraction areas in
Siberia to processing and production centers in the Western parts
of the USSR, in particular, has increased the strain on the
railroads.
Consumer Well-Being
As Andropov noted in his early speeches, much remained to be
done in the area of consumer welfare when he took office.
According to our estimates, total per capita consumption
increased in 1981 by about one percent--but then declined in 1982
by almost one percent. The official figures released by the
Soviets confirm'that in 1982 the USSR's standard of living at
best .'barely held its own:
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-- "Real per capita income"--a constant-price measure of
consumption minus some services--levelled.off.
-- Per capita retail sales (in constant prices) declined by
more than 1/2 percent.
Meanwhile, the availability of quality foods declined
generally. Per capita meat consumption, for instance, was down
slightly in 1982 from its peak 1979 level.
Because food accounts for the largest share of the Soviet
family budget and shortages must be dealt with on a daily basis,
changes in food supplies are the Soviet citizen's leading
barometer of his standard of living. Fearing widespread consumer
dissatisfaction, the regime took steps to minimize the impact of
food shortages on worker morale and productivity. The system of
special distribution of foodstuffs through the workplace (which
originated in the late 1970s and is considerably more extensive
than the traditional system of special stores for selected
elites) was substantially expanded.
Some signs of unrest--such as short-lived work stoppages--
occurred during 1981-82, but expressions of discontent generally,
were contained or averted. Faced with long lines at state
outlets, consumers dealt with the shortages in ways that did not
threaten the regime--by buying higher-priced foods in the
officially sanctioned free markets, for example, and through
barter and black-market activity.
The discussion above centered on the general performance of
the Soviet economy during the last two years. The issue of
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Soviet military expenditures requires a longer-term focus. Our
approach to defense-spending estimates yields much more
confidence in medium- and long-term trends than year-to-year
movements. In addition, we have recently revised our estimates
in this area..
Our latest estimate of Soviet military expenditures
indicates that defense spending in constant 1970 ruble prices
continues to increase.* Unlike our past estimates, however, the
new evidence incorporated in our present estimate indicates that
in at least one major area, procurement of military hardware,
Soviet expenditures have leveled off since 1976.
Total Soviet defense costs, measured in constant 1970
rubles, grew at an average annual rate of 4-5 percent during
1966-76 (about the same as reported in earlier estimates). Our
new estimate, however, shows that like overall economic growth
the rise in the total cost of defense since 1976 has been slower-
-about 2 percent a year. The rate of growth of overall defense
costs is lower because procurement of military hardware--the
largest category of defense spending--was almost flat in 1976-
81.
New information indicates that the Soviets did not field
weapons as rapidly after 1976 as before. Practically all major
categories of Soviet weapons were affected--missiles, aircraft,
and ships. This phenomenon was only partially offset by the
* We estimate Soviet defense spending annually in rubles to gain an
appreciation of the Soviet defense "burden". See appendix A for a discussion
of the methodology used.
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tendency of newer, more sophisticated weapon systems to cost
more. Costs in all other categories of Soviet defense continued
to grow at historic rates over the entire 1972-81 period.
Operations and maintenance costs, for example, grew by 3-4
percent annually; personnel costs increased by slightly less than
2 percent a year.*
We have only very preliminary estimates available for
1982. They indicate, however, that the trends in both total
defense expenditures and procurement costs that we have observed
since 1976 are continuing. The growth in total expenditures
still appears to be considerably below the long-term average, and
procurement spending remains roughly unchanged although at a high
level, when measured in constant 1970 prices.
It should be stressed that trends in Soviet military
spending are not a sufficient basis to form judgments about
Soviet military capabilities, which are a complex function of
weapons stocks, doctrine, training, generalship, and other
factors important in a potential conflict. The cost estimates
are best used to identify shifts in priorities and trends in
resource commitments to military programs over an extended period
of time. Moreover, the spending estimates do not give an
appreciation of the large stocks of strategic and conventional
* Our latest dollar estimates show the same trends since they are based on
the same estimates of quantities of Soviet weapons. The estimated dollar
costs of Soviet defense activities grew at slightly less than 2 percent over
the 1976-81 period, a percentage point below the long-term average.
Procurement costs in dollar terms did not grow during the.1976-81 period. We
estimate Soviet defense spending in dollars to make comparisons with
corresponding US outlays. See appendix B for a discussion of our dollar
estimates.
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weapon systems already deployed. Indeed, current levels of
spending are so high that despite the procurement plateau noted,
the Soviet forces have received since 1975 about 2,000 ICBMs and
SLBMs, over 5,000 tactical combat and interceptor aircraft,
15,000 tanks and substantial numbers of major surface combatants,
SSBNs, and attack submarines.
The impressive dimensions of the Soviet resource commitment
to military activities also are very visible in comparisons with
US defense costs. Our latest comparisons of US and Soviet
defense programs show that despite somewhat slower growth in
recent years the costs of Soviet defense activities still exceed
those of the United States by a large margin. In 1981 the dollar
costs of Soviet defense activities were 45 percent greater than
US outlays; procurement costs alone were also 45 percent
larger. A comparison in ruble prices shows that Soviet defense
costs were 25 percent higher than those of the United States.
The slowdown in the growth of military procurement cannot be
explained by any single factor. Initially, at least, the absence
of growth in military procurement might have been attributed to
natural lulls in production as older weapon programs were phased
out before new ones began. The extended nature of the slowdown,
however, goes far beyond normal dips in procurement cycles.
The continued slow growth since the late 1970s seems related
to a combination of complex factors including technological
problems, industrial bottlenecks, and policy decisions. Some
funds budgeted for procurement may have been directed instead to
research, development, testing, and evaluation (RDT&E) during
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this period because of the increasing complexity of weapon
systems being researched.
The burden of defense in the USSR--the share of GNP devoted
to defense--remained roughly constant at 13-114 percent through
the 1970s because defense and GNP have grown at about the same
rate. We had previously forecast that the defense share would
increase by one-percentage point in the early 1980s.
Foreign Trade
After coping successfully with an earlier runup of hard
currency debt, the USSR was hit in 1981 by a rising agricultural
import bill and the need to provide hard currency assistance to
Poland. The volume of grain purchases jumped by more than one-
third, to 39 million tons. The deficit on merchandise trade rose
to $4 billion, compared with $2.5 billion in 1980. The gap would
have been even higher had Moscow not pushed exports (mainly oil)
and trimmed imports (mainly machinery and equipment) in the last
half of 1981. For the year as a whole, the Soviets managed to
maintain the value of oil exports at the 1980 level as a 5-
percent oil price rise offset the drop in volume.
The Soviets improved their hard currency payments position
in 1982. By strongly.pushing oil exports and holding down
imports, the USSR slashed its hard currency trade deficit to $1.3
billion, or one-third of the deficit incurred in 1981. Exports
were up 10 percent, with all of the rise coming from the sharp
jump in oil sales. Moscow reduced the value of imports slightly
by cutting purchases of Western grain (down 3 million tons),
chemicals, and nontubular steel. Imports of machinery and
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equipment and of steel pipe rose sharply, however, largely as a
result of deliveries for the Siberia-to-Western Europe gas
pipeline.
The easing of its hard currency payments position, coupled
with a probable fall in hard currency assistance to Poland,
allowed Moscow to reduce its hard currency debt in 1982. By the
end of the year, gross debt had fallen by an estimated $800
million and totaled $20.1 billion. Assets in Western banks were
a record-high $10 billion at the end of last year.
Moscow's foreign trade policy for 1981-85 calls for an
increasing share of its trade to be conducted with Communist
countries. This policy probably reflects several factors: (1) a
desire to hold down hard currency debt; (2) a long-standing
policy of self-sufficiency, particularly an aversion to becoming
too dependent on the West; and (3) a reaction to US trade
embargoes that were imposed following the USSR's invasion of
Afghanistan.
USSR: Percentage Growth in Foreign Tradea
1981-85
1981
1982
Plan b
Total trade
4.2
8.2
4.0
With Communist
countries 2.3
.5.3
5.6
With non-Communist
countries
7.8
10.8
2.3
Calculated from Soviet data expressed in constant prices.
Average annual rate of increase.
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In point of fact, Soviet trade turnover grew more rapidly
with the non-Communist countries in both 1981 and 1982.
Paradoxically, however, Soviet net gains from trade with
Communist countries (measured by net imports in constant prices)
rose substantially--because of a leveling off of real exports--
while gains from trade with the West declined. The Soviet
surplus on trade with all non-Communist countries rose from 1.9
billion rubles in 1980 to 3.2 billion rubles in 1982 (including
major weapons exports to LDCs). At the same time, Moscow's 1980
surplus of 3.2 billion rubles with the Communist countries
decreased to a 400-million ruble deficit (in 1980 prices) in
1982. All categories of Soviet exports to Communist countries
except machinery and equipment leveled off in real terms in
1982. Sales of machinery and equipment declined because of a
sharp reduction in sales to Poland; Warsaw cut back drastically
on investment programs and could not absorb the machinery.
Reasons for the Sluggish Performance
The sluggish performance of the Soviet economy in 1981-82
partly reflected circumstances that were beyond the leadership's
control. It stemmed mainly, however, from resource-allocation
decisions made earlier by the regime and from long standing flaws
in the USSR's system of planning and administration.
External Factors
Agricultural production in the USSR is hostage to weather
conditions to afar greater degree than in most developed
economies. Poor weather, drought in particular, continued to
plague the farm sector during 1981-82.as the. USSR suffered its
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third and fourth consecutive poor grain harvests. To a lesser
extent, harsh weather also hindered construction, transportation,
and industry, especially the production of electric power--a
input critical to all sectors of the economy.
Economic performance was affected also by a reduction in the
number of people entering the labor force. Increments to the
working-age population have been declining since the mid-1970s
because of the lower birth rates of the 1960s, an increase in the
number of workers reaching retirement age, and a rising mortality
rate among males in the 25-to-44 age range. The falloff became
pronounced in 1980, and increments will remain very low
throughout the decade.
A third limiting factor beyond the leadership's control was
the continued escalation of the cost of extracting, refining, and
transporting fuels and raw materials. Even though the Soviet
Union is endowed with enormous quantities and a wide variety of
raw materials, these materials in many instances have become
increasingly inaccessible and the cost of exploiting them has
risen sharply:
-- The economy has become increasingly dependent on the
Siberian areas of the country for fuels and other raw
materials. Developing these new areas requires large
capital investments, particularly in construction.
-- Most of the new areas require social overhead capital--
roads, housing, cultural, and service facilities--in
addition to the basic facilities for exploration and
exploitation.
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-- The declining quality of readily available raw materials
has pushed up capital requirements because of the cost of
enriching poor-grade minerals and ores.
Policy Errors
Some of the difficulties of the Soviet economy in 1981-82
were the result of deliberate policy choices, as the earlier
discussion of developments in industry and transportation
suggests. At a time when investment needs were rising rapidly,
the 1981-85 Plan called for investment spending to grow on
average by less than 2 percent per year. This was by far the
lowest planned increase in the post-World War II period. The
marked slowdown, while partly forced upon the leadership by
production constraints in the capital goods industries, also
reflects a conscious attempt to switch to a more intensive
pattern of growth--that is, growth through more efficient use of
resources and more rapid technological progress.
In essence, the planned growth in GNP and its component
sectors was predicated largely on increases in productivity.
Increasing the efficiency of new plant and equipment, for
example, is one of the central goals of the plan. But the
assumption that slower growth in investment would be consistent
with rising productivity did not prove out. Capital productivity
in industry continued to decline at the same annual rate of 4-5
percent experienced in the last half of the 1970s.
Soviet planners also have made costly errors in allocating
investment resources. In some cases, investment in large-scale
capacities for improving the quality of raw materials such as
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iron ore has been emphasized at the cost of modernizing
capacities for finished products. In other cases, the planners
have increased the Soviet capacity for manufacturing intermediate
and finished products while neglecting to develop the raw
material supplies essential to ensuring full use of that
capacity. Many of the domestic bottlenecks experienced in 1981-
82 were the result of such planning mistakes.
Systemic Problems
Economic growth is also held back by the USSR's system of
planning and managing the economy. Economic planning and
management are highly centralized, with key resources allocated
by administrative fiat. As the economy has grown in size and
complexity, it has become more difficult to manage. Moreover, as
in previous plans, many of the key 1981-85 goals are unrealistic,
based on projected productivity increases that cannot possibly be
met. The result is to intensify the pressure on lower level
managers to protect themselves through such practices as the
hoarding of material and labor resources--and thus to aggravate
already serious bottlenecks.
Economic Policies Under Andropov
As the first two years of the 1981-85 Plan neared
completion, it must have become clear to Soviet leaders that
their economic strategy was not working. The formulation of the
1983 Plan, undertaken before Brezhnev's death, provided an
opportunity to make midcourse corrections in Soviet economic
policies. Even as late as November 1982, Andropov's sudden
assumption of power offered a chance for change. Nonetheless, on
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the basis of information published on the 1983 plan and what has
happened since, we conclude that Andropov is still holding mainly
to the course set by Brezhnev. The possible exception is
investment policy.
Investment
Because capital formation is so important in determining the
directions of economic development, investment plans provide
particularly useful clues to Soviet economic policy. Although
information for 1983 is sparse, mid-year reported results do
raise the possibility that the original five-year plan for total
investment has been changed.
The investment policy laid down in the 1981-85 Plan called
for the lowest rate of investment growth in the post-World War II
era--about 1 1/2 percent per year on average. Actual investment
expenditures, however, have grown somewhat faster than planned--
by roughly 3 percent in 1981 and 1982, respectively (figure 4).
Investment was scheduled to rise by nearly 21/2 percent in 1983,
again slightly above plan. But results for the first six months
indicate that investment may be growing at a much faster rate.
State capital investment, which makes up about nine-tenths of
total capital investment, increased by 6 percent compared with
first-half 1982.
The step-up in investment could signify a change in economic
policy. Indeed, the premise that increases in productivity
required by components called for in the 1981-85 Plan are
compatible with a slowing rate of investment has been challenged
vigorously and publicly in the Soviet Union over the last two
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years. The sharp increase in investment growth in first-half
1983 could mean that the proponents of higher investment spending
are winning out. In any case, much of the acceleration has been
made possible by the industrial recovery (discussed below), which
permitted increased production of machinery and equipment and
construction materials. Some of the growth in investment is also
the result of an increase in net imports of machinery and
equipment in 1982 that are just now being assimilated into
industry. The volume of imports of machinery jumped by about
one-third in 1982.
Defense
Andropov's position on the share of resources that should go
to the military is unclear. In his November 1982 plenum speech,
he stated only that "defense requirements as usual have been
sufficiently taken into account." During a highly-publicized
visit to a Moscow machine-tool factory, however, he implied that
a healthy economy is a precondition of military power--suggesting
that defense could no longer count on retaining unquestionable
priority in the distribution of resources.
The little evidence that is available indicates Andropov has
not accelerated Soviet military spending. For example, the
leveling off of weapons procurement in recent years has been
accompanied by an increase in the share of machinery alloted to
civilian uses. That trend, as noted above, appears to have
continued in both 1982 and 1983. While we cannot be sure what
Andropov's policy is, or will be, Soviet military capabilities
will, still increase substantially over the next several years
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even if the rate of growth of procurement of military hardware
does not increase. The USSR is already investing so much in
military hardware that merely continuing procurement at the
existing level would provide very large annual increments in
holdings of military equipment.
Agriculture
There also are no indications of significant change in
agricultural policy since Andropov took power. Plans for crop
production in 1983 have been set largely at the levels indicated
originally in the 1981-85 Plan, and the General Secretary also
appears to have thrown his full support to Brezhnev's Food
Program.
Mikhail Gorbachev, the Soviet agricultural czar, has been
lobbying hard for the more rapid and effective implementation of
the part of the program dealing with structural reorganization--
the so-called RAPOs.* Soviet press reports and conversations of
Soviet officials with Westerners indicate that the RAPOs have
been resisted by the ministries and state committees involved.
As a result, lack of control over service organizations that
supply equipment, repair services, agricultural chemicals, and
construction services has severely hampered the effectiveness of
the RAPOs. To rectify the situation, the Andropov regime issued
a decree in late July which attempts to merge the interests of
farms and service organizations by tying rewards for service
A RAPO is a self-financing organization that includes all farms, service
agencies (e. g. repair centers), and processing enterprises in a given
district.
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organizations to growth in the output and productivity of the
farms that they serve.
As a means of providing better incentives for agricultural
workers, Gorbachev also is actively promoting the collective
contract system--an aspect of the Food Program that received
relatively little attention before Brezhnev's death. In this
system, farm workers are-rewarded according to the size of the
harvest rather than receiving hourly or piece work rates.
Andropov's support of the Food Program is also indicated by
the continued large share of investment allocated to agriculture
and the sectors supporting'it in 1983. Although some Soviet
officials believe that agriculture is already receiving a
disproportionate share of the economy's resources, investment for
farms and supporting industries is slated to rise by nearly 4 1/2
percent this year--a higher growth rate than that scheduled for
total investment--and will amount to about one-third of total
investment. This is the share of investment resources that
Brezhnev promised in the 1980s at the special Central Committee
plenum on agriculture in May 1982.
One aspect of the Food Program that Andropov has been slow
to embrace is the call for increased private plot production--
which now accounts for about one-fourth of total Soviet
agricultural output. Little has been done, for instance, either
since Andropov took over or before, to assure private farmers
supplies of much needed feedstuffs, seeds, fertilizers and
pesticides, and small machinery and farm implements. Still, in
an April speech to regional party leaders, the General Secretary
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implied that every rural family ought to raise livestock.
Because agriculture will have difficulty in meeting its goals
over the next decade, Andropov is not likely to curtail private
agricultural activity, despite his apparent lack of enthusiasm
for it on ideological grounds.
Consumer Goods and Services
The new regime has shown concern for the welfare of the
population in a variety of ways. First, a flurry of decrees has.
been published this year calling for improvements in the level of
daily services and in the supply of consumer goods provided to
the population:
-- A resolution was adopted by the Central Committee in
February demanding that ministry, department, and union
republic officials perform better in constructing housing
and consumer service facilities.
-- A joint Central Committee-Council of Ministers resolution
was published in March calling for an expansion of the
number of repair and cleaning shops; more personal
services such as hairdressing, film developing, and the
rental of consumer durables; and the establishment of more
convenient working hours in the service sector.
-- A joint Central Committee-Council of Ministers decree
passed in late April discusses "the additional production"
of consumer goods, contains unusually blunt warnings to
consumer,ministries to shape up, and instructs several
state committees to prepare new measures to improve
planning, incentives, and price-setting in the consumer
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goods sector.
The priority the leadership has given the Food Program in
part also mirrors high level preoccupation with living
standards. Judging from Soviet press reporting on Politburo
meetings, for instance, the Andropov government has devoted more
time to agriculture than any other domestic issue. The recent
reorganization of the Central Committee to include a separate
Department of Light Industry and Consumer Goods also suggests
that consumer interests are being given greater attention.
Finally, the regime is continuing the campaign initiated under
Brezhnev to increase the production of consumer goods in heavy
industry and may intend to import more machinery for use in
consumer industries.
Nonetheless, the regime has little room for maneuver on
consumer issues until the Food Program pays some return and until
more investment can be spared for the production of soft goods
and consumer durables. In his June plenum speech, in fact,
.Andropov stressed that improvement in`the standard of living will
be slow. Increases in income, he has maintained on several
occasions, must be closely linked to increases in labor
productivity.
Foreign Trade Policy
The foreign trade plan for 1983 suggests that Moscow still
is bent on increasing trade with its Warsaw Pact partners and
other Communist' countries at the expense of trade with the
West. In his annual report to the Supreme Soviet, Nikolay
Baybakov, Chairman of Gosplan, said that trade with Socialist
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countries would increase nearly 8 percent--more than double the
annual rate of the past two years--and would reach 58 percent of
total Soviet trade turnover. He implied that trade with
capitalist countries would drop about 4 percent. Aside from the
desire to reduce the reliance of CEMA countries on the West, a
likely explanation for this objective is that Moscow is planning
on some decline in its hard currency earnings capacity this year
(perhaps because it expects reduced earnings from exports of oil
and arms, both of which hit record highs in 1982) and is
purchasing less grain.
Reductions in Soviet shipments of oil to Eastern Europe
suggest that East European countries may not receive increases in
deliveries of raw materials from the USSR. It also appears that
the Soviet Union will pressure its Warsaw Pact allies to reduce
their deficits on bilateral trade with the USSR, and
boost their exports, especially those of higher quality goods, to
the USSR. But the East Europeans--facing critical economic and
financial problems of their own--will be neither willing nor able
to provide Moscow much assistance in providing substitutes for
imports from the West. The East European countries would be hard
pressed to increase their exports of machinery and equipment and
of manufactured consumer goods even more than now planned.
If the East Europeans cannot boost their exports to the
Soviet Union enough to eliminate the deficits, Moscow could help
itself by scaling back its deliveries to Eastern Europe of goods
marketable in the West. Because further cutbacks in raw
materials deliveries would be a serious blow to Eastern Europe,
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we have thought that the Soviets would be reluctant to take such
action. On the other hand, Moscow may be more willing now than
in the past to squeeze Eastern Europe. Martial law appears to
have controlled tensions effectively in Poland, and there has
been little overt discontent in any of the other East European
countries despite harder economic times.
Other Initiatives
The major new element of economic policy this year is the
"discipline campaign." Andropov does not believe that greater
discipline alone will cure the economy's ills, but he sees it as
a necessary beginning. He apparently is confident that coercion
or the threat of coercion can increase worker discipline and that
greater discipline will raise productivity.
The campaign is designed to tighten discipline all around,
including management discipline. Andropov has, in fact, fired
some allegedly corrupt or incompetent officials. The Minister of
Railways, for instance, was fired shortly after Brezhnev's
death. Minister of Internal Affairs Nikolay Shchelokov also was
removed from his post at the plenary session of the Central
Committee in June, reportedly because of-i-nvolvement in,corrupt
activities. In their places, Andropov has brought in some
younger, better-educated, and perhaps more innovative
officials. To date, however, the campaign appears to have been
directed primarily against blue-collar workers. In particular,
the regime has sought to compel workers to put in a full day's
work.: Both internal security forces and militia teams are being
used to search for workers absent from their jobs without
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permission.
A second phase in the campaign was introduced this August.
A new decree introduced sanctions (loss of vacation, loss of pay,
and even dismissal) against workers AWOL or drunk on the job and
offered financial rewards to more productive laborers. Judging
from leadership statements, additional measures to reinforce
labor's commitment to better job performance are likely to be
forthcoming.
In the more ideologically sensitive area of reforming the
planning and management of the economy, the new regime has
introduced some limited measures designed to decentralize
decisionmaking in both industry and agriculture. A mid-July
joint party-government decree is the most comprehensive step in
this direction to date. This "economic experiment" involves five
industrial ministries and will begin in January 1984. The decree
gives enterprise management more latitude in using investment and
wage funds, largely in an effort to spur technological change and
innovation. It also ties worker and management benefits more
closely to enterprise performance, with contract fulfillment as a
key success indicator.
Andropov's endorsement of small labor teams in industry,
construction,. and agriculture also qualifies as an attempt to
increase local initiative in the decisionmaking process, this
time at the lowest production level. The brigade organization of
industrial labor and collective contract system for farm workers
allow the enterprises increased flexibility but at the same time
make profits and wages more dependent upon final results.
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The Andropov leadership has also instituted a new law on
labor collectives--the first nation-wide labor code. Adopted by
the Supreme Soviet session in June, it calls for increased worker
participation in management. It does not, however, materially
expand workers' rights or give them a significant managerial
role. Mainly, it increases labor obligation to help implement
plans and campaigns imposed from above. The attempt to represent
the law as giving workers a voice in economic management suggests
an effort to improve worker morale--and productivity--by creating
the illusion of greater power for labor.
Assessment of Andropov's Policies
Has the Soviet economic game plan changed in any essential
way since Yuri Andropov replaced Leonid Brezhnev? The answer is
no. Continuity has been far more pronounced than change. Soviet
planners, for instance, are not trying to put the economy back on
the five-year plan track with the possible exception of
agriculture. The growth target for industrial production in the
1983 plan (3.2 percent), for example, is well below the average
annual rate of growth implied by the 1981-85 Five-Year Plan (4.7
percent). Although there may be new emphasis on some of the
economic policies inherited from the previous regime, the central
core of policies laid down by the new leadership is within the
bounds of those established during the Brezhnev years.
-- One feature of Andropov's investment policy--more
renovation and modernization and less new construction--is
an intensified version of an investment strategy that has
been followed for seven years with little success. There
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is nothing new in it; it was a main feature of the 1976-80
Plan and a central part of the current five-year plan.
-- In one area, the priority given to overall investment,
Andropov's policy may be different from Brezhnev's.
Investment has been stepped up in 1983, although we cannot
be certain that its priority will be sustained.
-- Andropov has stuck with the Food Program as the answer to
agricultural problems.
-- In consumer affairs, there has been no real change or
innovation. Andropov has exhibited solicitude for
consumers, but has not backed up that concern with new
programs or more resources for consumer industries.
-- Nor has Moscow's trade policy or the structure of trade
changed much under Andropov. More trade with the West
would seem helpful in easing Soviet economic strain since
East European products are, for the most part, not viable
substitutes for Western goods.
-- The changes in planning and management announced so far
all have roots in the Brezhnev era if not earlier.
Andropov's has retained strong central control over the
key economic decisions--for example, price formation--
while tolerating some devolution in day-to-day
decisions.
The new trend we have observed in military procurement,
together with continuing domestic economic problems and the
recent political succession, does raise important questions about
the future of the Soviet defense effort. We previously had
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estimated that defense spending would continue to grow in real
terms through at least 1985. We still consider that likely. The
question is whether the Soviets will rebound from the procurement
slowdown, so that defense spending will return to (or even
exceed) the 4 to 5 -percent average annual growth rate of 1966-
76, or whether little or no growth in procurement will slow the
increase in overall expenditures for some time. Because we do
not fully understand the causes of the slowdown, we cannot
provide a reliable answer.
The new regime, which apparently came to power with the
support of the military, may well be under pressure to speed up
defense spending. For example, in the first three years of this
decade we believe the Soviets have already had as many systems
under development as in each of the previous two decades. Steady
expansion of production floorspace has occurred since the mid-
1970s providing the Soviets with the potential to translate the
new systems into deployments in the field. Any major effort to
sharply accelerate the level of military procurement, however,
could make it even more difficult to solve the fundamental
economic problems facing the Soviets. It would require lower
civilian investment and slower growth or even a fall in per
capita consumption and could, over the long run, erode the
economic base of the military-industrial complex itself.
Moreover, we do not know how quickly the Soviets will be able to
overcome the problems that may have contributed to the recent
procurement slowdown: some appear .to be pervasive and will be
difficult for the Soviet system to correct. Regardless of how
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the leadership decides to approach the resource allocation issue,
it will not be able to avoid it for long. The planning cycle for
the 12th Five-Year Plan--1986-90--is already under way.
Outlook for 1983
This year some of the economic pressures on the Andropov
leadership should ease slightly. After two years of low growth
in 1981 and 1982, the economy seems poised for a rebound in
economic performance. Based on statistics available for the
first seven months of 1983, we estimate that GNP will rise by 3 1/2
to 4 percent--well above the approximately 2 percent rate of
growth achieved in both 1981 and 1982 and close to the 4 percent
annual rate of growth implicit in the 1981-85 Plan.
All major sectors of the economy are doing better this
year. After several years of steady decline, for example,
industrial performance has begun to improve. Industrial
production was almost 4 percent higher in the first seven months
of 1983 than in the comparable period of 1982. The rebound in
industry probably owes much to the better than normal winter and
spring weather conditions, which permitted some rebuilding of
stocks of fuels and other inputs less in demand when the weather
is mild. Most important, better weather appears to have eased
transportation difficulties, thus relieving bottlenecks
generally.
Other factors that have contributed to improved industrial
performance include recent additions to capacity, notably in
steel and chemicals; managerial personnel changes; and perhaps
greater effort reflecting a sense that, with the change of
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leadership, a period of drift had ended. In this connection, the
discipline campaign probably played a part in the recovery from
the poor performance in 1981-82 by eliciting greater effort from
the work force and putting some managers in fear for their
jobs.
The role of the Andropov administration in the industrial
recovery seems to be minor, however. The production gains
reported thus far reflect in large part recovery from the poor
performance at the beginning of 1982. Output of most industrial
commodities actually began to pick up on a seasonally-adjusted
basis in mid-1982, so that the overall contrast between the two
years will not be so favorable to 1983 by yearend (figure 5). We
estimate that industrial production will grow about 3 percent
this year, somewhat higher than the 2.4 percent annual rate of
growth achieved in 1981-82. Under Andropov, industrial
production has returned to the growth path characteristic of
1978-82, not to the higher rates of earlier periods.
Following four consecutive years of poor agricultural
performance a substantial recovery is in the cards for Soviet
agriculture in 1983. We expect total farm output to increase by
7-8 percent compared with somewhat more than 3 percent in 1982
and almost no growth in 1981. Total production of farm products
this year, in fact, could be roughly 1 percent above the previous
high of 1978. Barring a major deterioration in weather
conditions, according to USDA, a grain harvest of 200 million
tons`is likely, well above the estimated 158-million ton crop
informally reported by the Soviets for 1981 and the 180 million
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USSR: Deviation of Industrial Production
From Recent Trend*
Civilian Industry
F -7 or OX W Or-.01 OW #W
Fuels and Power
Industrial Materials
WN-I2
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Figure 5 (cont.)
Civilian Machinery
Consumer Goods
* The monthly production indexes are calculated from a smaller
sample of commodities than those represented in the annual
production indexes. The average trend rate of growth shown for
1978-82 in this figure will therefore differ from those based on
full-year'data. Nevertheless, we believe that the samples used
in extending the monthly indexes are comprehensive enough to
signal changes in growth rates over time, or--as in this figure--
to compare performance pre-Andropov and post-Andropov.
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ton harvest estimated by USDA for 1982. Both of these estimates
are well below the 1978 record of 237 million tons. The outlook
for other major crops is also good. Production of sunflower
seeds, sugar beets, vegetables, potatoes, and cotton is expected
to exceed the average of recent years.
In the crucial livestock sector, meat output from state and
collective farms--which produce about two-thirds of total Soviet
meat--reached a record level during the first seven months of
1983. A number of factors were at work: (1) the quantity of
forage crops harvested last fall was a record; (2) relatively
mild weather last winter coupled with an early spring this year
bolstered Soviet livestock feed supplies; (3) the increased
availability of high-protein feeds--particularly soybean meal and
single-cell protein--has improved the efficiency of feed rations
this year (that is, the amount of product produced from a unit of
feed). With herd numbers now at record levels, the stage is set
for substantial growth in total meat production this year after
four years of relative stagnation. Output could reach 16 million
tons--5 percent above the 1979-82 average--if grain production
reaches or exceeds 200 million tons, at least 20 million tons of
grain are imported, and ample supplies of forage crops remain
available through the rest of the year.
Meanwhile, the availability of quality foods has increased
somewhat since Andropov came to power, although not enough to
permit relaxation of the informal rationing system for selected
food items. Surveys of private farm markets and state retail
stores, for instance, have shown increased supplies of most
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foodstuffs. Various reports also suggest that in many regions
the food shortages prevalent since at least 1980 have become less
severe.
The Soviets are still finding it hard, however, to provide
adequate supplies of nonfood consumer goods. Retail trade
turnover in real terms grew by 1 1/2 percent in the first six
months of 1983 compared with first-half 1982 while the average
monthly wage of workers increased by more than 2 percent. The
continued low growth in retail sales is caused partly by
production problems in the industries manufacturing soft goods
and consumer durables. The production of textiles, for example,
has been hampered by shortages of quality cotton.
Imports of nonfood consumer goods will help somewhat.
Moscow bought about $10.5 billion worth of these goods last year,
almost 70 percent of them from Eastern Europe. In internal
prices these purchases accounted for a substantial share of
retail sales of nonfood consumer goods--about 15-20 percent.
Railroad performance has also improved markedly in the first
6 months of 1983. Freight turnover climbed to 1.8 trillion ton-
kilometers, a 3.7 percent increase over first half 1982--it had
fallen 2.3 percent during the same period in 1982. A number of
factors may have been responsible. The relatively mild weather
experienced so far this year has certainly helped.. The priority
attention given to the transport sector by the new leadership
probably is also a factor. Politburo member Geydar Aliyev was
given special responsibility for overseeing the railroads earlier
this year, and a campaign to enlist industrial enterprises and
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other shippers in the repair of damaged freight cars has been
instituted. Still, reports of supply disruptions and delayed
shipments are continuing. As in industry, the record in the
second quarter of this year suggests that the initial burst of
higher performance in Andropov's early months is not being
sustained (figure 6). Because the problems in the transport
sector cannot be resolved quickly, transport snarls can be
expected to be a drag on the economy over the next several
With brighter prospects in agriculture, Soviet planners will
not have to worry so much for the time being about hard currency
availability. Nonetheless, we believe that the hard currency
trade deficit will increase slightly in 1983. In the first half
of the year both exports and imports remained at about first-half
1982 levels. A drop in agricultural purchases was offset by
increased purchases of pipe and machinery and equipment and of
Libyan oil for resale to Soviet customers in the West. Oil sales
for hard currency could remain below the 1982 level for the year
as a whole, however. The USSR may feel it cannot cut deliveries
to Eastern Europe again this soon.
Longer Term Outlook
A stronger economic showing this year would help Andropov
politically, but it would not--in our view--foreshadow a higher
growth rate over the longer term. The problems that have
constrained growth since the late 1970s have not gone away; some
of them, in fact, are just now reaching peak severity.
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Figure _ 6
USSR: Deviation.of Railroad Freight
Turnover From Recent Trend
1978-82 Trend
II ICI N I II
1982 - 1983
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Slower Growth in Labor and Fixed Capital
For example, the increment to the working age population--
about 389,000 persons--will be lower this year than at any time
in the last two decades (figure 8) and will continue to diminish
through 1986. Growth of capital stock also will slow during the
1980s because of the slowdown in investment that has occurred
since 1975. Unless plans for investment change drastically, we
project that the supply of labor and capital to the economy in
the 1980s will rise by only 2 1/2 percent per year during the
remainder of the 1980s compared with an average annual increase
of nearly 4 percent in 1.970s.
Given the slower growth of labor and capital, elevating
growth above the recent trend rate of about 2 percent a year
would require a dramatic reversal of the prevailing trend in
productivity. For example, sustaining the GNP growth rate of 4
percent per year that prevailed in 1971-77 would be possible only
if productivity increased by nearly 1 1/2 percent per year. In
fact--as the tabulation below shows--the combined productivity of
inputs of labor, capital, and land has been decreasing for over a
decade:
Average Annual Percentage Changea
1966-70
1971-75
1976-80
1981-82
5.3
3.7
2.7
2.1
Inputs of
labor and capital
4.1
4.2
3.6
3.1
Factor productivity
1.1
-0.5
-0.8
-1.0
From appendix C, Table 14.
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ti
The likelihood that the Soviets can recapture the
productivity gains of the late 1960s is small.
-- The discipline campaign may be exacting a somewhat greater
effort from Soviet workers, but, judging from numerous
reports of half-hearted enforcement and of workers often
ignoring appeals and threats designed to make them work
harder and longer, the long term impact would appear to be
marginal.
-- A substantial improvement in real incentives seems
unlikely, Andropov himself having indicated that the
standard of living, at best, will rise only slowly over
the next several years.
Andropov's evident reluctance to undertake major systemic
changes (discussed below) is a significant barrier to
substantial improvements in efficiency or accelerated
technological progress.
Imbalances
In addition, many of the unfavorable developments that
converged to slow industrial growth in the late 1970s will
continue to do so during the rest of 1980s. Because planned
investment will be inadequate to add capacities needed for
planned growth in output--especially in the extractive branches
where both depletion rates and investment costs will continue to
rise rapidly--shortages of raw materials and a deterioration in
the quality of many materials will continue. In particular, slow
growth of steel production will constrain machinery output and
hence investment. Spot shortages of energy of the sort
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experienced in recent years will continue. Shortfalls in
chemicals production also will hamper production in a variety of
industries to which it provides raw materials, and slow growth of
construction materials output will be a further drag on
investment. Transportation also will continue to be a problem,
particularly the railroads which will continue to operate under
strain.
In agriculture, Andropov faces the same problems as Brezhnev
in improving agricultural efficiency: bureaucratic resistance to
changes in organization, weak incentives for farm workers,
insufficent skills in the farm labor force to manage production
and to use and maintain machinery properly, and a lack of
economic infrastructure (roads, storage areas and the like) in
rural areas. The greatest impediment, however, remains the
failure to allow farms more freedom to make decisions at the
local level about the composition of output and about planting
and harvesting schedules.
In this connection, although Moscow is placing increasing
emphasis on agricultural self-sufficiency, imports of 20-30
million tons of grain and 2-3 million tons of oilseeds and
oilseed meal will be needed annually to support livestock
expansion plans during the next several years, even with normal
harvests. The Soviets are committed through long-term trade
agreements with the United States, Canada, Argentina, and some
smaller suppliers to purchase about 20 million tons per year
through 1985.
On the other hand, we believe that the Soviet energy
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situation will not seriously constrain economic growth during the
1980s. This judgment is based on our latest study of the Soviet
oil industry and our resulting reassessment of Soviet energy
prospects into the 1990s. The principal conclusions of these two
studies are as follows:
-- The combined output of oil, natural gas, and coal will
increase by 10 to 12 percent in 1981-85 compared with the
17 percent planned for this period and the 22 percent
achieved in 1976-80. In the latter half of the decade
energy production will be about 6 percent greater than in
1981-85. Indeed, with oil output expected to be in
decline by the late 1980s and coal production stagnant in
terms of energy content, the increases in fuel
availability during the remainder of this decade will be
largely the result of rising gas output.
-- The Soviet Union has thus far averted the downturn in oil
production that CIA had earlier predicted by virtue of an
enormous, brute-force development effort that has tapped a
petroleum reserve base larger in size than we previously
believed. The cost of doing this has been high, but we
think that the Soviets have already allocated enough
investment resources to the oil industry to permit them to
come close to their production target of 12.6 million b/d
by 1985.
-- Because Moscow is likely to continue to increase the total
amount of economic resources going to the oil industry
during the 1986-90 Plan but at a slower rate, oil
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production probably will plateau by the middle of this
decade and then subside slowly.
-- Increments in energy production will become increasingly
expensive, and the USSR will find it hard to maintain oil
exports--a development that will constrain hard currency
earnings.
-- All things considered, however, we no longer believe that
major energy shortages will make a substantial difference
for growth in GNP unless things go very badly in the oil
sector.
Work Incentives
An integral feature of Andropov's campaign to tighten labor
discipline and stimulate productivity is his strong support for
linking wages and bonuses to the contribution of the individual
worker and tying remuneration more directly to production
results. In his public statements Andropov has harshly attacked
the long-time practice of wage leveling because it conflicts with
the priority the regime has assigned to raising labor
productivity. But long cultural conditioning in the work force
and the difficulty of reversing trends entrenched for the last 20
years will present substantial obstacles to broad use of
increased wage differentials.
Serious obstacles also stand in the way of continued
implementation of the discipline campaign. Public tolerance of a
tough discipline drive 30 years after Stalin is likely to be
tenuous and transitory. In the current labor market, moreover,
management will be reluctant to crack down on workers, who can
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easily quit and find jobs elsewhere, often at higher pay. Firing
workers also goes against the grain of Soviet society, which
guarantees a right to a job. Punitive measures against the worst
offenders may help, but they cannot substitute for economic
reforms to remedy fundamental problems with the incentive
system.
There are also political risks in pushing the anticorruption
campaign too far. Young party workers who were frustrated by the
slow rate of promotions under Brezhnev may welcome a change, but
the fear of a purge reportedly impelled many regional officials
to oppose Andropov's succession. Any wholesale drive to purify
the party could provoke further resistance.
Prospects for Relief Via Foreign Trade
In our judgment, the regime will not be able to rely
substantially on increased imports to relieve resource pressures
in the domestic economy during this decade. Our projections
indicate that--barring another round of spiraling oil prices--
Soviet hard currency purchasing power will not rise significantly
through 1990. Consequently the USSR will have difficulty
financing more than modest growth in hard currency imports unless
it is willing to accept a sharp increase in its debt. Western
credits are one--and a relatively immediate--means of financing
additional hard currency imports. But Soviet debt management
policy would first have. to become less conservative, and Western
governments would probably have to provide significantly greater
encouragement and guarantees to Western banks.
Nor will the Soviets be able to go much further in reducing
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net exports to Eastern Europe. Most East European countries are
struggling to sustain some positive growth in GNP while putting
their hard currency balances in order. The USSR and its East
European allies seem unable even to agree on an agenda for a CEMA
summit (proposed by Brezhnev two years ago) to discuss their
mutual economic concerns. The principal issue in dispute is a
Soviet push for greater economic integration, which would give
CEMA, but in reality the Soviets, far-reaching authority over
planning and production in individual countries. The East
Europeans oppose such integration because they fear it would tie
them even closer politically and economically to the USSR. The
East Europeans--who want guarantees of future deliveries of
Soviet energy and raw materials--also fear that Moscow would use
the summit to announce additional cuts or to impose harder
conditions on their energy and raw material exports to Eastern
Europe.
Potential for Better Performance
The regime could improve the performance of the economy in a
number of ways. Some investment resources, for instance, could
be redirected to sectors where their payoff is greater than at
the present time. The current investment plan is lopsided and
lacks balance; it stresses development of energy and agriculture
at the expense of other sectors also vital to economic growth. A
greater return could probably be achieved by shifting more
investment to such sectors as machinebuilding, transportation,
and ferrous metals. Finally, holding down growth in defense
spending would free up resources that could be used to bolster
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the civilian economy.
Some gains could be achieved also by identifying those areas
in the economy where mismanagement and administrative efficiency
are worst and replacing the managers responsible at all levels
with more competent people. Indeed, Andropov has removed a
number of managers, although the shifts thus far have not been as
dramatic as some Soviet officials had anticipated. Clearly there
is a good deal of dead wood to be removed. Whether political
obstacles and bureaucratic opposition will prevent a managerial
shakeup on a broad scale is still uncertain. After a few years,
however, unless the system changes to promote innovation or
managerial initiative, a new generation of administrators would
probably fall back into the practices of their predecessors.
The greatest potential for economic gain in the long term,
however, lies in more "radical" measures that would alter Soviet
economic mechanisms. While we believe that caution and
conservatism characterize Andropov's approach to economic change,
we cannot rule out the possibility that he might yet introduce
more innovative economic programs. Andropov's freedom of action
in his first year as General Secretary probably has been
restricted. He is bound, to some extent at least, by an annual
economic plan made before Brezhnev's death. Moreover, still
lacking an independent political base and still much indebted to
those who helped elevate him to power, he must move with
circumspection.*
-'Since he replaced Brezhnev, Andropov has been extremely
candid in acknowledging his dissatisfaction with the performance
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of the economy and has indicated on occasion that some problems
may stem from built-in systemic shortcomings. In a major speech
in mid-August, for instance, he underscored the necessity for
changes in planning, management, and economic mechanisms before
the start of the 1986-90 Plan period and expressed
dissatisfaction with the pace at which the economy is improving
and the lack of vigor in the search for solutions to its
problems. From time to time, he has also encouraged wide-ranging
public discussion and debate on what ails the Soviet economy and
how to improve its organization and management.
The major constraint, however, in changing the Soviet
economic system is that Andropov and the rest of the leadership--
for compelling cultural, economic, and political reasons--will
not dismantle the command economy and replace it with some form
of market socialism. A planned,economy is all Soviet leaders
have ever known. They do not understand the economic rationale
for markets and believe that, however efficiently markets may
operate at the enterprise level, they necessarily produce chaotic
results on a economy-wide scale. Planning, by contrast, is not
only mandated by "Marxism-Leninism", but it is seen as being
responsible for the elevation of the USSR to world superpower
status. Andropov's adherence to this line of thinking is made
crystal clear in his recent article in the party's ideological
journal Kommunist. There he states that only change within the
existing bounds 'of socialism will be considered.
Consequently, Andropov is likely to rely primarily on
Brezhnev's legacy of programs and proposals for change worked out
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between 1978 and 1982. Thus the central issue now facing the
leadership is what direction to move in carrying out already
approved policies, what to select from a menu of fairly well-
known alternative ideas, and what commitment it is prepared--or
able--to undertake in attempting to enforce its will. A case in
point is the recently announced economic experiment--Andropov's
only significant new program to date. When closely scrutinized
it is very limited--it is confined to a few selected ministries
and contains little that.is new.
We are likely to see an increase in the number and variety
of such reform proposals. In his mid-August speech, Andropov
said that changes would be made before the start of the 1986-90
Plan but that they would be undertaken carefully and only after
unhurried evaluation of large scale experiments. In addition, a
high level committee under the leadership of new Central
Committee Secretary Nikolay Ryzhkov was formed earlier this year
to review the party's options for changing the economic system
and given a year or more to report back.
Given the emphasis on study and small-scale experiments, we
think that reforms of organization and management will have
little impact on the economy during the next few years. Indeed,
the improved performance in 1983 may even reduce the pressure for
economic change in the short run.
Striking a Balance
A point stressed in our testimony last December before the
Joint Economic Committee of Congress still holds. Despite its
problems, the USSR is not on the verge of economic collapse. The.
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Soviet economy is the second largest in the world, with a large
and literate population, a huge industrial plant, and an enormous
endowment of natural resources. Moreover, a highly centralized,
rigid system of administering the economy enables the leadership
to mobilize resources to focus on key objectives. The USSR has
found ways to muddle through periods of economic difficulty in
the past, and it will do so again in the 1980s.
We emphasize that economic growth is likely to continue--
not at the rapid pace of this year, but at a trend rate of about
2 percent a year.
We would also note that the strains on the Soviet economy
may be somewhat less than we thought a. year ago.
-- First, the outlook for oil production looks less
unfavorable. To recapitulate, we now expect that
production will hold roughly steady through the mid-1980s
and then will fall only gradually through 1990.
-- Second, we have revised downward our estimates of how fast
defense spending has been growing, implying greater
availability of resources for other uses than we had
estimated earlier.
-- Third, despite Andropov's basic caution and conservatism,
his more energetic approach to improving the existing
economic system makes Soviet economic prospects seem
slightly brighter than they appeared last year.
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Appendix A
Estimating Soviet Defense Expenditures
This appendix explains in some detail the methodology we use
Background
Because of the uncertainties surrounding the true coverage
of the announced Soviet defense budget and the clear evidence
based on observable defense activity of a much higher level of
ruble outlays, two principal methodologies have arisen for
estimating how much the Soviets spend on defense. The first
relies on deriving implicit costs from published Soviet economic
statistics. The second, used only by CIA because of the large
amount of data on Soviet military activities needed to apply it,
is the direct-costing or building-block approach. This approach
requires the identification and enumeration of physical elements
of the defense effort over time and the application of direct-
cost factors. Although all methodologies involve uncertainty, we
find the building-block approach to be more reliable because it
is based on the Intelligence Community's detailed estimates of
the physical components that make up the Soviet effort.
We define "defense" differently for different purposes. Our
dollar estimates cover those national security activities
conducted in the US by the Department of Defense as well as the
defense related- programs of the Department of Energy and US coast
Guard. To understand how the Soviets might view their defense
effort we also use a broader definition that also includes civil
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space programs, railroad and construction troops, and internal
security forces. The ruble estimates are customarily presented
in terms of this broader definition.
Estimates of Soviet defense costs are computed by resource
category. These are defined as follows:
-- Investment - the costs of replacing, modernizing, and
expanding forces through the procurement of weapons and
equipment, including major spare parts, and the
construction of facilities.
-- Operating - The costs of personnel, equipment maintenance,
and logistics associated with the routine functioning of
the Soviet armed forces.
-- RDT&E - the costs of exploring new technology, developing
new weapons systems and developing improvements to
existing systems.
We calculate the ruble and dollar costs of all Soviet
defense activities except RDT&E by identifying and listing Soviet
forces and their support apparatus. Our model contains-a
description _of over 1,000 distinct defense components--for
example, individual classes of surface ships; ground force
divisions, divided into categories on the basis of type and
readiness level; and air regiments, categorized by aircraft type
for each service--and our latest estimates .of the order of
battle, manning, equipment inventories, and new equipment
purchases for each of those components.
`Although we are confident in the basic trends, there are
uncertainties inherent in these estimates. We are fairly
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confident of our estimates of the physical quantities that go
into the Soviet defense effort because once the major weapon
systems have been produced and deployed, we can measure what is
there. Our projection of future weapon production, however, is
obviously less certain.
We are somewhat less confident in the prices we use. We
have an adequate sample of ruble prices to measure Soviet costs
in the base year of those prices--1970. However, over the last
dozen years, Soviet prices and cost relationships have
undoubtedly undergone considerable change.
The Ruble Estimate
To obtain our rubles estimates of Soviet defense spending,
ruble prices are applied to the detailed estimates of physical
resources. The procedure is complex but, in general, is as
follows:
-- Procurement - For many Soviet weapons we have an actual
ruble price. For others we must derive a ruble price
either by applying ruble-dollar ratios created for weapons
groups or by using cost estimating relations (CERs) that
make the price a function of certain performance
parameters. The prices are multiplied by our estimates of
the physical quantities of weapons used by the Soviet
forces.
-- Operating - Personnel costs are calculated by multiplying
the estimates of the number of men in each military
organization by ruble factors covering each type of
personnel-associated outlay. Ruble maintenance costs are
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derived from knowledge of Soviet operating rates.
Operating costs combine our knowledge of Soviet operating
rates with rubles costs for utilities, POL, and civilian
labor.
RDT&E - RDT&E is estimated directly from official Soviet
statistics. (For this reason, it is the least certain
part of our estimates.)
The results, not including RDT&E, are aggregated by Soviet
service, resource category, or military mission.
The Dollar Estimate
The dollar estimates begin with the same set of Soviet
physical defense activities as the rubles but instead apply
appropriate US dollar prices and wage rates.
-- Procurement - we estimate what it would cost to build the
actual Soviet weapons and equipment in the United States
at prevailing dollar prices for materials and labor
(including overhead and profit), using US production
technology and assuming the necessary manufacturing
capacity, materials, and labor would be available.
-- Operating - Personnel costs are derived by estimating the
military rank of the person in the United States who would
be assigned the duties of each Soviet billet and then
applying the appropriate US pay and allowance to that
billet. O&M costs are derived by applying dollar prices
to estimates of labor, materials, spare parts, overhead,
and utilities required to operate and maintain equipment
the way the Soviets do.
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-- RDT&E - To estimate the dollar cost of performing Soviet
RDT&E activities in the US, the aggregate ruble figure is
converted into dollars.
Once again, the results, not including RDT&E, can be
aggregated by service, mission, or resource category.
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JEC Briefing Paper
Appendix B
List of Tables
Table
1:
USSR:
GNP by Sector of Origin.at Factor Cost
Table
2:
USSR:
GNP by End Use at Factor Cost
Table
3:
USSR:
Value Added in Industry at Factor Cost
Table
4:
United States and USSR: Production of Selected
Commodities in Selected Years
Table
5:
USSR:
Selected Indicators of Agricultural Output
Table
6:
USSR:
Freight Turnover by Transport Mode
Table
7:
USSR:
Estimated Hard Currency Balance of Payments
Table
8:
USSR:
Estimated Hard Currency Debt to the West
Table
9:
USSR:
Foreign Trade by Major Region
Table 10:
USSR:
Per-Capita Annual Growth of Components of
Table 11:
Consumption
United States and USSR: Production of Selected
Consumer Goods
Table 12:
USSR:
Average Annual Employment by Sector
Table 13:
USSR:
Gross Fixed Capital Investment
Table 14:
USSR:
Growth of GNP and Factor Productivity
Table 15:
USSR:
Growth of Industrial Output and Factor
Productivity
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USSR: GNP by Sector of Origin at Factor Cost
(billion 1970 Rubles)
1970
1975
1976
1977
1978
1979
1980
1981
1982
GNP* 383.3
459.8
481.8
497.4
514.2
516.1
524.7
536.1
547.0
Industry
122.6
163.6
170.1
177.0
182.8
186.6
191.8
196.6
201.0
Agriculture
81.0
72.0
80.2
83.0
86.0
78.5
74.0
73.7
76.0
Construction
28.0
36.8
38.0
38.9
40.1
40.4
41.3
42.2
42.5
Transportation
33.4
45.8
47.8
48.8
51.1
52.3
54.3
56.4
57.1
Communications
3.3
4.7
5.0
5.3
5.6
5.9
6.2
6.5
6.7
Trade 28.0
35.0
36.3
37.6
38.8
39.6
40.8
41.8
42.1
Services
78.5
92.7
95.0
97.3
100.3
103.2
106.6
109.2
111.6
Other (including 8.4
military personnel)
9.3
9.4
9.5
9.6
9.6
9.7
9.8
.10.1
* Components may not add exactly to total because of rounding.
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USSR: GNP by End Use at Factor Cost
(billion 1970 Rubles)
1970
1975
1976
1977
1978
1979
1980
1981
1982
GNP* 383.3
459.8
481.8
497.4
514.2
516.1
524.7
536.1
547.0
Consumption
207.8
247.3
252.8
260.1
267.8
275.1
283.7
289.5
291.7
goods
133.1
158.6
161.4
166.7
171.2
175.8
181.5
184.9
185.0
services
74.6
88.7
91.4
93.4
96.6
99.4
102.2
104.6
106.7
Investment
108.2
140.6
151.8
159.5
165.5
168.0
172.2
178.5
183.2
Other 67.3
72.0
77.2
77.8
80.9
73.0
68.8
68.1
72.2
* Components may not add exactly to total because of rounding.
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Table 3
USSR: Value Added in Industry at Factor Cost
(billion 1970 rubles)
1970
1975
1976
1977
1978
1979
1980
1981
1982
Industry*
122.6
163.6
170.1
177.0
182.8
186.6
191.8
196.6
201.0
Ferrous metals
8.8
10.7
11.0
11.0
11.3
11.3
11.2
11.2
11.1
Nonferrous metals
4.8
6.4
6.6
6.8
6.9
7.1
7.2
7.3
7.3
Fuel
12.1
15.4
16.0
16.7
17.2
17.7
18.0
18.3
18.7
Electric power
8.3
11.7
12.5
12.9
13.5
13.9
14.6
14.9
15.4
Machinebuilding
& metalworking
38.5
56.6
59.9
63.3
66.5
69.3
72.2
74.6
77.5
Chemicals
7.6
11.7
12.3
12.9
13.4
13.4
14.0
14.5
14.8
Wood, pulp, and paper
9.4
10.7
10.7
10.7
10.7
10.3
10.5
10.8
10.9
Construction materials
8.0
10.4
.10.8
11.1
11.5
11.0
11.0
11.2
11.0
Light industry
9.8
11.2
11.6
11.9
12.2
12.4
12.7
13.0
13.0
Food industry
11.6
14.1
13.9
14.5
14.3
14.8
14.9
15.2
15.6
Other industry
3.6
4.8
4.9
5.1
5.3
5.4
5.6
5.7
5.8
Components may not add exactly to total because of rounding.
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Table 4
United States and USSR: Production of Selected
Commodities in Selected Years
1970
1975
1978
1980
1981
1982
Primary energy
(million b/d oe)
US 29.5
28.6
28.9
30.5
30.4
30.1
USSR
18.3
23.2
26.6
28.2
29.0
29.8**
011*
(million b/d)
US 11.3
10.0
10.3
10.2
10.2
10.3
USSR
7.1
9.8
11.4
12.0
12.2
12.3
Natural Gas (Dry)
(trillion cubic feet)
US 21.0
19.2
19.1
-19.6
19.4
17.8
USSR
7.0
10.2
13.1
15.4
16.4
17.7
Coal
(million metric tons)
US 555.8
593.9
608.0
752.7
747.3
756.1
USSR
624.1
701.3
723.6
716.4
704.0
718.0
Electricity (gross)
(billion kilowatt-hours)
US**
1,743
2,131
2,436
2,438
2,448
2,387
USSR
741
19039
1p202
1,294
1,326
19366
Iron ore (million metric tons)
US 91.2
80.1
82.9
70.7
75.5
37.0
USSR
197.1
234.7
246.2
245.0
242.0
244.0
Bauxite (thousand metric tons)
US 2,125
1,800
1,669
1,559
1,510
700
USSR
6,700
8.000
8,800
9,100
9,100
9,000
Pig iron (million metric tons)
Us 83.0
72.5
79.6
62.3
67.3
39.1
USSR
85.9
103.0
110.7
107.0
108.0
107
Crude steel (million metric tons)
US 119.3
105.8
124.3
101.5
108.8
65.7
USSR
115.9
141.3
151.5
148.0
149.0
147.0
* Including natural gas liquids.
** Estimated.
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Table 4 (cont.)
1970 1975
1978
1980
1981
1982
Refined copper (thousand metric tons)
US 2,074 1,632
1,869
1,726
2,026
-
1684.0
USSR 1,015
1,320
1,460
1,520
1,530
1510.0
Primary aluminum (thousand metric tons)
US 3,607
3,519
4,358
4,654
4, 489 -
3,274
USSR
1,490
2,130
2,330
29460
29475
2, 490
Lead (thousand metric tons)
US 605
577
565
550
500
515
USSR
470
540
580
600
600
560
Refined zinc (thousand metric tons)
US 866
450
441
370
345
298
USSR
690
820
875
900
900
820
Gold (million troy ounces)
US 1.7
1.0
1.0
1.0
1.3
1.4
USSR
7.0
8.3
9.5
10.2
10.4
10.6
Synthetic ammonia (million metric
tons of N)
US 10.3
12.2
12.8
14.7
14.2
11.5
USSR
6.3
9.9
11.5
13.8
14.6
15.4
Mineral fertilizer (million
metric tons, nutrient content)
US 14.8
17.1
19.0
22.5
23.2
19.2
USSR
13.1
22.0
23.7
24.8
26.0
26.7
Nitrogen fertilizer (million
metric tons of N)
US 7.6
8.5
9.5
11.2
11.8
10.5
USSR
5.4
8.5
9.3
10.2
10.9
11.2
Plastics (million metric tons)
US 9.7
10.2
12.4
12.8
13.1
12.4
USSR
1.7
1.8
3.5
3.6
4.1
4.1
Synthetic rubber (million metric tons)
US 2.2
2.0
2.7
2.2
2.2
1.8
USSR
0.9
1.4
1.8
1.9
1.9
1.8
Woven cotton fabrics
US (billion linear meters)
5.7
3.7
3.7
3.4
3.6
3.0
USSR (billion square meters)
6.2
6.6
7.0
7.1
7.2
7.1
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Table 4 (cont.)
1970
1975
1978
1980
1981
1982
Tractors (thousands)
US 191.7
232.0
197.3
155.4
151.0
97.4
USSR
458.5
550.4
576.1
555.0
559.0
555.0
Automobiles (millions)
US 6.5
6.7
9.2
6.4
.6.2
5.0
USSR
0.3
1.2
1.3
1.3
1.3
1.3
Trucks and buses (millions)
US 1.7
2.3
3.7
1.7
1.7
1.9
USSR
0.6
0.8
0.8
0.9
0.9
0.9
Cement (million metric tons)
US 67.4
61.8
76.2
69.8
66.1
57.5
USSR
95.2
122.1
127.0
125.0
127.0
124.0
Grain (million metric tons)
US 186.7
249.2
276.5
269.7
333.4
339.0
USSR
186.8
140.1
237.4
189.1
158
18oa
Wheat (million metric tons)
US 36.8
57.9
48.3
64.5
76.0
76.4
USSR
99.7
66.2
120.8
98.2
81.0
86a
Coarse grain (million metric tons)
US 146.1
185.5
222.1
198.6
248.9
255.5
USSRb
85.8
71.9
114.5
88.3
75.0
83.6
Potatoes (million metric tons)
US 14.8
14.6
16.6
13.6
13.9
15.6
USSR
96.8
88.7
86.1
67.0
72.0
78.0
Sugar (million metric tons)
US 5.3
6.0
5.1
5.3
5.6
5.4
USSR
11.1
11.3
13.3
11.0
10.3
13.2
Meat (million metric tons)
US 22.5
23.0
25.0
24.3
24.5
23.8
USSR
12.3
15.0
15.5
15.0
15.2
15.2
Milk (million metric tons)
US 53.3
52.3
55.1
58.3
60.2
61.6
USSR
83.0
90.8
94.7
90.9
88.5
90.1
Ginned cotton (thousand metric tons)
US 2,219
1,808
2,364
2,422
3,426
2,602
USSR
2,343
2,674
2,669
2,858
2,947
2,738
a USDA estimate
b Excluding rice
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Table 5
USSR: Selected Indicators of Agricultural Output
1970 1975 1976 1977
1978
1979
1980
1981
1982
Value of outputa 83.6 82.0 88.6
(billion rubles)
Commodity Production (million metric tons)
92.8
95.8
89.8
86.9
87.2
90.0
Grainb
186.8
140.1
223.8
195.7
237.4
179.3
189.1
158.0c
180.0d
Potatoes
96.8
88.7
85.1
83.7
86.1
91.0
67.0
72.1
78.0
Sugar beets
78.9
66.3
99.9
93.1
93.5
76.2
81.0
60.8
71.3
Sunflower seed
6.14
4.99
5.28
5.90
5.33
5.41
4.62
4.68
5.30
Cotton
6.89
7.86
8.28
8.76
8.50
9.16
9.96
- 9.64
9.28
Vegetables
21.2
23.4
25.0
24.1
27.9
27.2
27.3
27.1
29.2
Meat 12.3
15.0
13.6
14.7
15.5
15.3
15.1
15.2
15.2
Milk 83.0
90.8
89.7
94.9
94.7
93.2
90.9
88.9
90.1
Wool .419
.467
.435
.459
.467
.478
.461
.460
.460
Eggs (billions)
40.7
57.4
56.2
61.2
64.5
65.8
67.9
70.9
72.1
a Net of feed, seed, and waste in constant 1970 prices.
b Bunker weight. To be comparable to Western measures, an average reduction of
11 percent is required.
c Unofficially reported.
d USDA estimate
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Table 6
USSR: Freight Turnover by Transport Mode
(billions of ton/kilometers)
Year
Total
All Modes
Railroads
Inland
Roads Waterways
Maritime
Pipelines
(Oil & Oil Products)
Air
1970
1975
1976
1977
1978
1979
1980
1981
1982
3829.2
5200.9
5432.7
5632.7
5948.7
5986.3
6184.2
6337.4
6328.4
2494.7
3236.5
3295.4
3330.9
3429.4
3349.3
3439.9
3503.2
3464.2
220.8
337.9
355.1
373.3
396.0
409.6
432.1
458.9
464.0
174.0
221.7
222.7
230.7
243.7
232.7
244.9
255.6
262.5
-58-
656.1
736.3
762.2
772.6
827.6
851.1
848.2
853.4
827.9
281.7
665.9
794.6
922.4
1049.1
1140.7
1216.0
1263.2
1306.8
1.88
2.59
2.71
2.80
2.86
2.91
3.09
3.08
3.03
L EM:
Table 7
Estimated Hard Curyvr r Balance of Pats
(Million axret US dollars)
19TO 1975 1976 1977 1978 1979 1980 1981 1982
Curt acoDut balance 260 -4,607 -3,216 462 422 2,178 1,904 -100 4,0
Trade tal3x a -560 -6,297 -5,253 2,942 -3,690 -2,018 -2,486 -4,000 -992
E4ats, f.o.b 11217 R_2An in-7A 11.861 11.E 19.417 23.584 23.778 26.552
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Table 8
USSR: Estimated Hard Currency Debt to the West
(Million US dollars, yearend)
1975
1976
1977
1978
1979
1980
1981
1982a
Gross debt
10,577
14,707
15,609
16,373
18,047
17,861
20,900
20,100
Commercial debt
6,947
9,662
9,858
9,513
10,479
10,013
13,000
11,500
Government and
government-backed debt
3,630
5,045
5,751
6,860
7,568
7,848
7, 900
8, 600
Assets in Western banks
3,127
4,738
4,428
5,980
8,806
8,572
8,430
10,000
Net debt
79450
99969
119181
109393
9,241
9,289
12,470
109100
a Provisional estimate.
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Table 9
USSR: Foreign Trade by Major Region
(million current rubles)
1970
1975
1976
1977
1978
1979
1980
1981
1982
Dotal Exports
11,520
24,034
28,022
33,255
35,668
42,426
49,635
57,108
63,165
Communist Countries
7,530
14,584
16,448
19,101
21,254
23,628
26,903
31,192
34,136
Developed West
2,154
6,140
7,834
8,817
8,699
12,506
15,862
17,247
18,849
Less Developed Countriesa
1,836
3,310
3,740
5,337
5,715
69292
6,870
8,669
10,180
L'otal Imports
10,559
26p671
28,731
30,092
34,556
37,864
44,463
52,631
56,411
Communist Countries
6,873
13,968
15,104
17,171
20,744
21,427
23,650
26,742
30,816
Developed West
2,540
9,704
10,822
9,924
10,981
13,248
15,721
18,112
18,892
Less Developed Countries
1,146
2,999
2,805
2,997
2,831
3,189
5,092
7,777
6,703
a Including exports of military goods, which rose from an
estimated 944 million rubles in 1970 to 5,352 million rubles in
1981 and 6,600 million rubles in 1982.
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
Table 10
USSR: Average Annual Growth of Per-Capita Consumption
(1970 established prices)
1966-70
1971-75
1976
1977
1978
1979
1980
1981
1982a
'otal consumption
5.1
2.8
1.8
2.3
2.4
2.4
3.0
1.1
-0.7
Food
4.3
1.6
0
1.3
2.0
1.5
2.1
-0.5
-1.0
Soft goods
7.1
3.0
3.6
2.7
2.0
3.5
3.7
1.9
-0.6
Durables
9.1
10.0
5.6
8.0
3.3
3.6
6.7
5.3
-3.5
Services
5.8
4.6
3.8
1.7
3.8
3.8
3.8
2.6
2.1
Housing
2.1
1.7
1.4
1.4
1.4
1.3
1.2
0.8
1.2
Utilities
5.4
5.3
5.1
3.0
3.8
3.3
3.7
2.3
2.9
Transportation
8.0
6.1
5.0
-1.3
3.0
3.6
3.0
2.5
1.2
Communications
7.8
6.3
5.5
4.7
4.5
4.9
4.7
3.7
2.3
Repair and Persona
l care 8.4
5.7
5.0
4.1
6.2
6.1
6.1
4.4
3.5
Recreation
1.6
0.6
-2.5
-0.4
1.7
0.9
1.9
-0.4
-0.3
lealth
3.2
1.4
0.9
0.8
2.9
0.7
0.1
-0.7
0.3
education
5.8
1.4
1.6
1.2
2.2
1.2
1.7
0
0.1
a Preliminary.
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Table 11
United States and USSR:
Production of Selected Consumer Goods
1970
1975
1976
1977
1978
1979
1980
1981
1982
'ood
Graina
(kilograms per capita)
US 910
1,154
1,197
1,208
1,242
1,345
1,184
1,450
1,461
USSRc 769
551
872
756
908
681
712
590
667
Meatd
(kilograms per capita)
US 110
106
117
114
112
104
107
107
103
USSR 51
59
53
57
59
58
57
57
56
Cransportation
Passenger automobile productione
(units per hundred persons)
US 3.19
3.11
3.95
4.18
4.12
3.74
2.81
2.71
2.18
USSR 0.14
0.47
0.48
0.49
0.50
0.50
0.50
0.49
0.48
lousehold equipment
Washing machine productions
(units per thousand persons)
US 20
20
21
23
23
22
20
19
17
USSR 22
13
14
14
14
14
14
15
15
Washing machines in user
(units per thousand persons)
USg 194
238
248
256
263
273
280
287
291
USSR 141
189
195
200
203
205
205
205
205
Refrigerator production
(units per thousand persons)
USe 26
21
22
26
26
25
23
21
19
USSR 17
22
23
22
23
23
22
22
22
Refrigerators in user
(units per thousand persons)
USg 336
340
344
349 349
352
352
352
349
USSR 89
178
194
210.-..225
240
252
262
268
a The data do not necessarily represent food available for consumption, because imports of foreign
grain and exports of domestically produced grain are not included.
Excluding corn silage and forage but including sorghum for grain.
Including miscellaneous grains and pulses. Measured in bunker weight, i.e., gross output from
the combine which includes excess moisture, unripe and damaged kernels, weed seeds, and other trash.
For comparison with US or other country grain output, an average discount of 11 percent should be
applied.
e Data are on a slaughter weight, bone-in basis.
Data are for factory sales and include complete units exported for assembly.
f As of the end of the year.
g Data are understated because they are based on the number of households with one or more units;
thus, a household with more than one is counted as having only one.
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USSR: Average Annual Employment by Sector
(thousands)
Sector of the Economy 1970
1975
1980
1981
1982
Total 103,774
113,942
121,990
122,988
123,932
Industry
31,593
34,054
36,891
37,236
37,550
Construction
9,052
10,574
11,240
11,298
11,321
Socialized agriculture
23,440
22,756
21,600
21P300
21,141
Transport and communications
9,315
10,743
11,958
12,172
12,375
Trade, public dining, sales & ,material
technical supply, procurement
7,537
8,857
9,694
9,828
9,880
Health, education, social security,
cultural arts, science & scientific
services
16P561
19,196
219515
21,909
229275
Government administration, credit
& insurance organizations
2,226
2,707
3,144
3,218
3,265
Other (housing, personnel services,
etc.)
4,050
5,055
5,948
6,027
6,125
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Table 13
USSR: Gross Fixed Capital Investments
(Billion rubles, 1973 Feces)
1970
1975
1976
1977
1978
1979
1980
1981
1982
Total inmstme
80.7
112.9
118.0
122.3
129.7
130.7
133.7
138.8
141.7
of bitch
State
69.2
98.0
103.0
106.9
113.9
114.6
117.7
1227
125.4
Collective farm
7.6
10.7
11.0
11.3
11.6
11.8
11.9
11.9
12.0
Cooperative enterlri.ses
arid orgmzaticns
2.2
2.4
2.3
2.5
2.5
2.5
2.5
2.5
2.7
Private h i sing a -d
apartments
1.6
1.8
1.7
1.7
1.7
1.7
1.6
1.7
1.6
Irxk try
28.5
39.7
41.6
43.5
45.6
45.7
47.6
49.9
NA
Agriculture
14.3
23.3
24.3
24.9
25.8
26.3
26.9
27.5
NA
Transport and camnxiications
8.0
12.7
13.3
13.9
16.3
16.2
16.1
16.8
4
4
2
5
3
4
5
8
5
3.0
.3
5.0
.7
5.
.
.
.
26.9
32.9
33.8
35.3
36.8
37.2
37.7
38.8
Saxes: IDI Refer"Enme Aid, SOV 82-10093 (Unclassif'ied), Aug~ 1982, Soviet Statistics on Capital
Formation and N.ldn. SSM, 1922-1982-
** Canp xo is may rnt add exactly because of ru ndir
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USSR: Growth of GNP and Factor Productivity
(average annual percentage change)
1966-70a
1971-75a
1976-80a
1981
1982
Gross national productb
5.3
3.7
2.7
2.2
2.0
Combined inputsc
4.1
4.2
3.6
3.2
3.1
Manhours
2.0
1.7
1.3
1.0
1.1
Capital
7.4
8.0
6.9
6.7
6.1
Land
-0.3
0.8
Neg.
Neg.
Neg.
Total factor productivity
1. 1
-0.5
-0.8
-1.0
-1.0
Manhour productivity
3.2
2.0
1.3
1.2
0.9
Capital productivity
-2.0
-4.o
-4.o
-4.2
-3.8
a For computing average annual rates of growth, the base year is
the year prior to the stated period
b Based on indexes of GNP (1970 rubles), by sector of origin, at
factor cost.
c Inputs of manhours, capital, and land are combined using
weights of 55.8 percent, 41.2 percent, 3.0 percent, respectively,
in a Cobb-Douglas (linear homogeneous) production function.'
These weights represent the distribution of labor costs (wages,
other income, and social insurance deductions), capital costs
(depreciation and a calculated capital charge), and land rent in
1970, the base year for all indexes underlying the growth rate
calculations.
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Table 15
USSR: Growth of Industrial Output and Factor Productivity
(average annual percentage change)
1966-70a
1971-75a
1976-80a
1981
1982
Industrial production
6.3
5.9
3.2
2.5
2.2
Combined inputsb
5.7
4.9
4.5
4.1
3.6
Manhours
3.1
1.5
1.6
0.9
0.7
Capital
8.8
8.7
7.7
7.8
6.9
Total factor productivity
0.5
1.0
-1.2
-1.6
-1.3
Manhour productivity
3.1
4.4
1.6
1.6
1.5
Capital productivity
-2.3
-2.6
-4.2
-4.9
-4.3
a For computing the average annual rates of growth, the base
year is the year prior to the stated period.
b Inputs of manhours and capital are combined using weights of
52.4 percent and 47.6 percent, respectively, in a Cobb-Douglas
(linear homogeneous) production function. These weights
represent the distribution of labor costs (wages and social
insurance deductions) and capital costs (depreciation and a
capital charge) in 1970, the base year for all indexes underlying
the growth rate calculations.
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JEC Briefing Paper
Appendix B
List of Tables
Table
1:
USSR: GNP by Sector of Origin' at Factor Cost
Table
2:
USSR: GNP.by.End Use at Factor Cost
Table
3:
USSR:. Value Added in Industry at Factor Cost
Table
4:
United States and USSR: Production of Selected
Commodities in Selected Years
Table
5:
USSR: Selected Indicators of Agricultural Output
Table
6:
USSR: Freight- Turnover by Transport Mode
Table
7:
USSR:. Estimated Hard Currency Balance of Payments
Table.
8:
USSR: Estimated Hard'Currency Debt to the West
Table
9:
USSR: Foreign Trade by,Major Region
Table 10:
USSR: Average Annual Growth of Per-Capita
Consumption
Table 11:
United States and USSR: Production of Selected
Consumer Goods
Table 12:
USSR: Average Annual Employment by Sector
Table 13:
USSR: Gross Fixed Capital Investment
Table 14:
USSR: Growth of GNP and Factor Productivity
Table 15:
USSR: Growth of Industrial Output and Factor
Productivity
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
USSR:- GNP by Sector of Origin at Factor Cost.
(billion 1970 Rubles)
1970
1975
1976
1977 '
1978
1979
1980. .
1981
1982
GNP*
383.3
459.8
481.8
497.4
514.2
516.1
524.7
536.1
547.0
Industry
122.6
163.6
170.1
177.0
182.8
186.6
19.1.8
196.6
201.0
Agriculture
81.0
72.0
80.2
83.0
86.0.
78.5
74.0
73.7
76.0
Construction
28.0'
36.8
38.0
38:9
40.1
40.4
41.3
42.2
42.5
Transportation
33.4
45.8
47.8
48.8
51.1
52.3
.54.3
56.4
57'.1
Communications.
3.3
4.7
5.0
- 5.3
5.6
5.9
6.2
6.5
6.7
Trade
28.0
35.0
36.3
37.6
38.8
39.6
40.8
-41.8
42.1
Services
78.5
92.7
95.0
97.3
100.3
103.2
106.6
109.2
111.6
Other (including
8.4
9.3
9.4
9.5
9.6
9.6
9.7
9.8
10.1
military personnel)
Components may not add exactly to total because of rounding.
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
Table 2
USSR: GNP by End Use at Factor Cost
(billion 1970 Rubles)
1970
1975
.1976 1977
1978 1979
1980
1981
1982
GNP*
383.3.
459.8
481.8 497.4
514.2 516.1
524.7
536.1
547.0
Consumption
207.8
247.3
252.8 260.1
267.8 275.1
283.7
289.5
291.7
goods
133.1
158.6
161.4 166.7
'1171.2 175.8
181.5
184.9
185.0
services
74.6
88.7
91.4 93.4
96.6 99.4
102.2 '
104.6
106.7
Investment
108.2
140.6
151.8 159.5
165.5 168.0
172.2
178.5
183.2
Other
67.3
72.0
77.2 77.8
80.9 73.0
68.8
68.1
72.2
* Components
may not add exactly to total because of rounding.
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 Approved For Release 2007/07/12 CIA-RDP85B00263R000200150027-7
Table 3
USSR: Value Added in Industry at Factor Cost
-(billion 1970 rubles)
1970
1975
1976
1977
- 1978
1979
- 1980 '
1981
1982
Industry*
122.6
163.6
170.1
177.0
182.8
- 186.6
191.8
196.6
201.0
Ferrous metals
8.8
10.7
11.0
11.0
11.3
11.3
11.2
11.2
11.1
Nonferrous metals
4.8
6.4
6.6
6.8
6.9
7.1
7.2
7.3
.7.3
Fuel
12.1
15.4
16.0
16.7
17.2
17.7
18.0
18.3
18.7
Electric power
8.3
11.7
12.5
12.9
13.5
13.9
14.6
14.9
15.4
Machinebuilding
& metalworking
38.5
56.6
59.9
63.3
66.5
69.3
72.2
74.6
77.5
Chemicals
7.6
11.7
12.3
12.9
13.4
13.4
14.0
14.5
14.8
Wood, pulp, and paper
9.4
10.7
10.7
10.7
10.7
10.3
10.5
10.8
10.9
'Construction materials
8.0
10.4
10.8
111.1
11.5
11.0
11.0
11.2
11.0
Light industry
9,.8
11.2
11.6
11.9
12.2
12.4
12.7
13.0
13.0
Food industry
11.6.
14.1
13.9
14.5
14.3
14.8
14.9
15.2
15.6
Other industry
3.6
4.8
4.9
5.1
5.3
5.4
5.6
5.7
5.8
Components may not add exactly to total because of rounding.
53
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United States and USSR:
Production of Selected
Commodities in Selected Years
1970
.1975
1978
1980.
1981
1982
Primary energy
.(million b/d oe)
US
29.5
28.6
28.9
30.5
30.4
30.1
USSR
18.3
23.2
26.6
28.2
29.0
29.8**
011*
(million b/d)
US
11.3
10.0
10.3
10.2
10.2
10.3
USSR
7.1
9.8
11.4
12.0
12.2
12.3
Natural Gas (Dry)
(trillion cubic feet)
US
21.0
19.2
19.1
19.6
19.4
17..8
USSR
7.0
10.2
13.1
15.4
16.4
17.7
Coal
(million metric tons)
US
555.8
593.9
608.0
752.7
747.3
756.1
USSR
624.1
701.3
723.6
716.4
704.0
718.0
Electricity (gross)
(billion kilowatt-hours)
US**
1,743
2,131
2,436
2,438
2,448
2,387
USSR
741
1,039
1,202
19294
19326
19366
Iron ore
US
(million metric tons)
91.2
80.1
82.9
70.7
75.5
~ 37.0
USSR
197.1
234.7
246.2
245.0
242.0
244.0
Bauxite
US
(thousand metric tons)
2, 125
1,800
1,669
1,559
1,510.
700..
USSR
6,700
8.000
' 8, 800
0,100
9,1100
9,000
Pig iron
US
(million metric tons)
83.0
72.5
79.6
62.3
67.3
39.1
USSR
85.9
103.0
110.7
107.0
108.0
107
'Crude steel (million metric tons) '
US
119.3
105.8
124.3
101.5
108.8
65.7
USSR
115.9
141.3
151.5
148.0
149.0
147.0
* Including natural
gas liquids.
** Estimated.
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Table 4 (cont.)
1970
1975
1978
1980
1981
1982
Refined copper (thousand metric tons)
US 2,074
1,632
1,869
1,726
2,026
1684.0
USSR 1,015
1,320
1,460
1,520
1,530
1510.0
Primary aluminum (thousand.metric tons)
US 3, 607
3, 519
'4,358
4, 654
4, 489
3,274
USSR 11490
2,130
29330
29460
29475
29490
Lead (thousand metric tons)
US 605
577
565
550
500
515
USSR 470
540
580
600
600
.560
Refined zinc (thousand metric tons)
US 866
450
441
370
345
298
USSR 690
820
875
900
900
820
Gold (million troy ounces)
US 1.7
1.0
1.0
1.0
1.3
1.4
USSR 7.0
8.3
9.5
10.2
10.4
10.6
Synthetic ammonia (million metric
-
tons of N)
US 10.3
12.2
12.8
14.7
14.2
11.5
USSR 6.3
9.9
11.5
13.8
14.6
15.4
Mineral fertilizer (million
metric tons, 'nutrient content)
US 14.8
17.1
19.0
22.5
23.2
19.2
USSR 13.1
22.0
23.7
24.8
26.0
26.7
Nitrogen fertilizer (million
metric tons of N)
US 7.6
8.5
9.5
11.2
11.8
10.5
USSR 5.4
8.5
9.3
10.2
10.9
11.2
.Plastics (million metric tons)
US 9.7
10.2
12.4
12.8
13.1
12.4
8
6
4
1
4
USSR 1.7
1.
3.5
3.
.1
.
Synthetic rubber (million metric tons)
US 2.2
2.0
2.7
2.2
2.2
1.8
SS
0
1
4
8
1
1
1
8
R
.9
U
.
1.
.9
.9
.
Woven cotton fabrics
US (billion linear meters) 5.7
3.7
3.7
3.4
3.6
3.0
USSR (billion square meters) 6.2
6.6
7.0
7.1
7.2
7.1
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
Table 4 (cont.)
1970
1975
1978
1980
1981
1982
Tractors (thousands)
US
191.7
232.0
197-3-
155.4
151.0
97.4
USSR
458.5
550.4
576.1
555.0
559.0
555.0
Automobiles (millions)
US
6.5
6.7
9.;2
6.4
6.2
5.0
USSR
0.3
1.2
1.3
1.3
1.3
1.3
Trucks
US
and buses (millions)
1.7
2.3
3.7
1.7
1.7
1.9
USSR
0.6
0.8
0.8
0.9
0.9
0.9
Cement
US
(million metric tons)
67.4
61.8
76.2
.69.8
66.1
57.5
USSR
95.2
122.1
127.0
125.0
127.0
124.0
Grain (million metric tons)
US
186.7
249.2
276.5
269.7
333.4
339.0
USSR
186.8
140.1
237.4
189.1
158
180a
Wheat (million metric tons)
US
36.8
57.9
48.3
64.5
76.0
76.4
USSR
99.7
66.2
120.8
98.2 -
81.0
86a
Coarse grain (million metric tons)
US
146.1
185.5
222.1
198.6
248.9
255.5
USSRb
85.8
71.9
114.5
88.3
75.0
83.6
Potatoes (million metric tons)
US
14.8
14.6
16.6
13.6
13.9
15.6
USSR
96.8
88.7
86.1
67.0
72.0 .
78.0
Sugar (million metric tons)
US
.5.3
6.0
5.1
5.3
5.6
5.4
USSR
11. 1
11.3
13.3
11.0
10.3
13.2
Meat (million metric tons)
US
22.5
23.0
25.0
24.3
24.5
23.8
USSR
12.3
15.0
15.5
15.0
15.2
15.2
Milk (million metric tons)
US
53.3
52.3
55.1
58.3
60.2
61.6
USSR
83.0
90.8
94.7
90.9
88.5
90.1
Ginned cotton (thousand metric tons)
US
2,219
19808
2,364
29422
39426
29602
USSR
2,343
2,674
2,669
2,858,
2,947
2,738
b USDA estimate
Excluding rice
-56-
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
USSR:. Selected Indicators of Agricultural Output
1970 1975 1976
1977
1978
1979
1980
1981
1982
Value of outputs 83.6 82.0 88.6
(billion rubles)
Commodity Production (million metric tons)
92.8
95.8
89.8
86.9
87.2
90.0
Grainb
186.8
140.1
223.8
195.7
237.4
179.3
.189.1 ,
.158.0c
180.Od
Potatoes
96.8
88.7
85.1
83.7
86.1
91.0
67.0 ,
72.1
78.0
Sugar beets
78.9
66.3
99.9
93.1
93.5
76.2
81.0
60.8
71.3
Sunflower seed
6.14
4.99
5.28
5.90.
5.33
5.41
4.62
4.68
5.30
Cotton
6.89
7.86
8.28
8.76
8.50
9.16
9.96
9.64
9.28
Vegetables
21.2
23.4
25.0
24.1
27.9
27.2
27.3
27.1
29.2
Meat
12.3
15.0
13.6
14.7
15.5
15.3
15.1
15.2.
15.2
Milk
83.0
90.8
89,7
94.9
94.7
93.2
90.9
88.9
90.1
Wool
.419'
.467
.435
.459
.467
.478
..461
.460
.460
Eggs (billions)
40.7
57.4
56.2
61.2
64.5
65.8
67.9
70.9
72.1
a Net of feed, seed, and waste in constant 1970 prices.
b Bunker weight. To be comparable to Western measures, an average reduction of
11 percent is required.
c Unofficially reported.
d USDA estimate
-57-
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
Table '6
USSR: Freight. Turnover by Transport Mode
(billions of ton/kilometers)
Year
Total
All Modes
Railroads
Roads
Inland
Waterways
Maritime
Pipelines
(Oil & Oil Products)
Air
1970
3829.2
2494.7
220.8
.174.0
656.1
281.7
1.88.
1975
5200.9
3236.5
337.9
221.7
736.3
665.9
2.59
1976
5432.7
.3295.4
355.1
222.7
762.2
794.6
2.71
.1977
5632.7
3330.9
373.3
230.7
772.6
922.4
.2.80
1978
5948.7
3429.4
396.0
243.7
827.6
1049.1
2.86
1979
5986.3
3349.3
409.6
232.7
851.1
1140.7
2.91
1980
6184.2
3439.9
432.1
244.9
848.2
1216.0
3.09
1981
6337.4
3503.2
458.9
255.6
853.4
1263.2
3.08
1982
6328.4
3464.2
464.0
262.5
827.9
1306.8
3.03
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 Approved For Release 2007/07/12: CIA-RDP85B00263R000200150027-7
UM:
Table 7
Estimated Hard CuTer cy Balance of Payments
Q1 llicn axret US dollars)
1970
1915
1976
1977
1978
1979
1980
1981.
1982
Cut acoout balance
260
-4,607
-3,216
462
422
2,178
1,904
-100
4,508
Trade balance
-56D
-6, 297
--5,253
2,942
-3,690
-2,018
2,486
-4,000
-992
Exports, f.o.b.
2,424
8,28Q
10,225
11,863
13,336
19,417
23,584
23,778
26,552
Imports, f.o.b.
2,984
14,577
15,478
14,805
17,026
21,435
26,070
27,778
27, 544
Additional military deliveries,
to LDCs, f. o.b. a
400
1,500
1, 850
3,220
3,965
3,855
4,200
4, 200
5,900
Net interest
-80
-570
-724
-848
-881
-799
-710
-1,300
-19500
Other invisibles
and transfers
500
760
911
1,032
1,028
.1,140
900
1,000
1,100
Capital ac cour t belance
NegL.
6,522
3,888
2,830
1,734
338
19628
5,940
-1,270
Grass 1raain&5b
NA
6,371
5, 495
2,857
3,096
4,474
2,865
6,300
2,600
Gove rn e t backed
450
1,972
2,450
1,991
2,565
2,410
2,195
2,100
2,800
Canne'cial
NA
4
399
045
3
866
531
2
064
670
4
200
-200
,
,
,
,
Reraymerits
NA
969
1,365
1,995
2,332
2,800
3,051
3,200
3,400,
Cojertioat backed
160
730
1,035
1,285
1,456
1,702
1,915
2,000.
2,100
Carniacial
NA
239
330
670
876
1,098
1,136
1,200
1,300
Net dmng~ in assets
held in Western banks
NA
-395
1,611
-310
1,552
2,826
-234
-140
1,570
Gold sales
Negl.
725
1,369
1,618
2,522
1,490
1,580
2,700
1,100
Net ems- and anissiaiso
NA -1,915
-672
-3,292
-2,156
-2,516
-3,532
-5,840
-3,238
a These estinr
=tes exclu3e the alue of a related cxmn ^cial experts included in the reporting on Soviet
exports to individual LDCs, wttidi we estimate at about $2 billion in 1981. They are based a the reported
export residuals in published Soviet data on trade with LDCs (i.e., the diffe ice between Soviet reported
aggregte exports to the Tics aid Soviet reporting an exports to individual LDCs). The expert residuals
were redired by the estimated value of Soviet exports of major arms systems to non-bard caxrericy paying LDCs on
a f.o.b. basis. The estimates also excludes the value of follaw-on services, winch may be substantial.
b Including additions to short-tarn debt.
Reflects hard axrvicy assistance to other Conanist ooixtries; hard currency trade with other Cannixnst
oo rtries; hard cixrcxy credits to LDCs to finance Soviet sales of nadthie^y and ec pnet (including
military ecpipm t ); and credits to developed Westen countries to f iraice sales of cal and other
oonmdities, as well as errors in other line items of the acmuits.
9
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
Table 8
USSR: Estimated Hard Currency Debt to the West
(Million US dollars, yearend)
1975
1976
1977
1978
1979
1980
1981
1982a
Gross debt
10,577
14,707
15,609
16,373
18,047
17,861
20,900
20,100
Commercial debt
6,947
9,662
9,858
9,513
10,479
10,013
13,000
11,500
Government and
government-backed debt
3,630
5,045
5,751
6,860
7,568
7,848
7,900
8,600
Assets in Western banks
3,127
4,738
4,428
5,980
8,806
8,572
8,430
10,000
Net debt
7,450
9,969
11,181
10,393
9,241
90289
12,470
10,100
a Provisional estimate.
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
USSR: Foreign Trade by Major Region
(million current rubles)
1970
1975
1976
1977
1978
1979
1980
1981
1982
tal Exports
11,520
24,034
28,022
33,255
35,668
42,426
49,635
57,108
.63,165
Communist Countries
7,530
14,584
16,448
19,101
219254
239628
269903
319192
349136
Developed West
29154
6,140
7,834
8,817
8,699
12.5o6
15,862
17,247
18,849
Less Developed Countriesa
1,836
39310
3,740
59337
59715
6,292
69870
89669
10,180
tal Imports
109559
26,671
28,731
30,092
349556
37,864
449463
529631
569411
Communist Countries
6,873
13,968
15,104
17,171
20,744
21,427
23,650
269742
30,816
Developed West
2,540
9,704
10,822
9,924
10,981
13,248
15,721
18,112
18,892
Less Developed Countries
1,146
2,999
2,805
2,997
2,831
3,189
5,092
7,777
6,703
a Including exports of military goods, which rose from an
estimated 944 million rubles in 1970 to 5,352 million rubles in
1981 and 6,600 million rubles in 1982.
-61-
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
Table 10
USSR: Average Annual Growth of Per-Capita Consumption
(1970 established prices)
1966-70
1971-75
1976
1977
1978
1979
1980
1981
1982a
'otal consumption
5.1
2.8
1.8
2.3
2.4
2.4
3.0
1.1
-0.7
Food
4.3
1.6
0
1.3
2.0
1.5
2.1
-0.5
-1.0
Soft goods
7.1
3.0
3.6
2.7
2.0
3.5
3.7
1.9
-0.6
Durables
9.1
10.0
5.6
8.0
3.3
3.6
6.7
5.3
-3.5
Services
5.8
4.6
3.8
1.7
3.8
3.8
3.8
2.6
2.1
Housing
2.1
1.7
1.4
1.4
1.4
1.3
1.2
0.8
1.2
Utilities
5.4
5.3
5.1
3.0
3.8
3.3
3.7
2..3
2.9
Transportation
8.0
6.1
5.0
-1.3
3.0
3.6
3.0
2.5
1.2
Communications
7.8
6.3
5.5
4.7
4.5
4.9
4.7
3.7
2.3
Repair and Personal care
8.4
5.7
5.0
4.1
6.2
6.1
6.1
4.4
3.5
Recreation
1.6
0.6
-2.5
-0.4
1.7
0.9
1.9
-0.4
-0.3
3.2
1.4
0.9
0.8
2.9
0.7
0.1
-0.7
0.3
5.8
1.4
1.6
1.2
2.2
1.2
1.7
0
0.1
a Preliminary.
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
Table 11
United States and USSR: Production of Selected Consumer Goods
1970 1975
1976
1977
197
1979
1980
1981.
1982
ood
Graina
(kilograms per capita)
US 910 1,154
1,197
1,208
1,242
1,345
1,184
1,450
1,461
USSRc 769 551
872
756
908
681
712
590
667
Meatd
(kilograms per capita)
US 110 106
117
114
112
104
107
107
103
USSR 51 59
53
57
59
58
57
57
56
'ransportation
Passenger automobile productions
(units per hundred persons)
Us 3.19 3.11
3.95
4.18
4.12
3.74
2.81
2.71
2.18
USSR 0.14 0.47
0.48
0.49
0.50
0.50
0.50
0.49
0.48
[ousehold equipment
Washing machine productions
(units per thousand persons)
US 20 20
21
23
23
22
20
19
17
USSR 22 13
14
14
14
14
14
15
15
Washing machines in user'
(units per thousand persons)
USg 194 238
248
256
263
273
280
287
291
USSR 141 189
195
200
203
205
205
205
205
Refrigerator production
(units per thousand persons)
use 26 21
22
26
26
25
23
21
19
USSR 17 22
23
22
23
23
22
22
22
Refrigerators in user'
(units per thousand persons)
US9 336 340
344
349
349
352
352
352
349
USSR 89 178
194
210
225
240
252
262
268
3 The data do not necessarily represent food available for consumption, because imports of foreign
Fain and exports of domestically produced grain are not included.
Excluding corn silage and forage but including sorghum for grain.
Including miscellaneous grains and pulses. Measured in bunker weight, i.e., gross output from
;he combine which includes excess moisture, unripe and damaged kernels, weed seeds, and other trash.
For comparison with US or other country grain output, an average discount of 11 percent should be
plied. ^- .
-
r1
..
1 .. ...L.4
i .1.4 L........ L...
..
a
-
e
s
on
f Data are for factory sales and include complete units exported for assembly.
As of the end of the year.
Data are understated because they are based on the number of households with one or more units;
;bus, a household with more than one is counted as having only one.
-63-
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
USSR:
Average Annual Employment by Sector
(thousands)
Sector of the Economy
1970
1975
1980
1981
1982
Total
103,774
113,942
121,990
122,988
123,932
Industry 31,593
34,054
36,891
37,236
37,550
Construction 9,052
10,574
11,240
11,298
11,321
Socialized agriculture 23,440
22,756
21,600
21,300
21,141
Transport and communications 9,315
10,743
11,958
12,172
12,375
Trade, public dining, sales & material
technical supply, procurement 7,537
8,857
9,694
9,828
9,880
Health, education, social security,
cultural arts, science & scientific
services 16,561
19,196
21,515
21,909
22,275
Government administration, credit
& insurance organizations 29226
29707
3, 144
39218
3,265
Other (housing, personnel services,
etc.) 4,050
5,055
5,948
6,027
6,125
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
Table 13
USSR: Gross Fixed Capital Investment*
(Billion nables, 1973 prices)
1970
1975
1976
1977
1978
1979
1980
1981
1982
Total iri store t
80.7
112.9
118.0
122.3
129.7
130.7
133.7
138.8
141.7
of which
State
69.2
98.0
103.0
106.9
113.9
114.6
117.7
122.7
125.4
Collective farms
7.6
10.7
11.0
11.3
11.6
11.8
11.9
11.9
12.0
Cooperative ante^Irises
and argnizatic s
2.2
2.4
2.3
2.5
2.5
2.5
2.5
2.5
2.7
Private housing and
apartsnalts
1.6
1.8
1.7
1.7
1.7
1.7
1.6
1.7
1.6
Irik try
28.5
39.7
41.6
43.5
45.6
45.7
47.6
49.9
NA
A'iailture
14.3
23.3
24.3
24.9
25.8
26.3
26.9
27.5
NA
'1 risport and ornmtxic atiors
8.0
12.7
13.3
13.9
16.3
16.2
16.1
16.8
NA
Corstnxticn
3.0
4.3
5.0
4.7
5.2
5.3
5.4
5.8
NA
C+the^
26.9
32.9
33.8
35.3
36.8
37.2
37.7
38.8
NA
S:xx e: IDI Refe e Aid, SW 82-10093 (Unclassified), Augist 1982, Soviet Statistics on Capital
Fomzatim and N. n. SSM, 1922-1982.
Canpa nts may mt add exactly bemuse of romding.
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
Table 14
USSR: Growth of GNP and Factor Productivity
(average annual percentage change)
1966-70a
1971-75a 1976-80a 1981
1982
Gross national productb 5.3
3.7 2.7 2.2
2.0
Combined inputsc 4.1
4.2 3.6 3.2
3.1
Manhours 2.0
1.7 1.3 1.0
1. 1
Capital 7.4
8.0 6.9 6.7
6.1
Land -0.3
0.8 Neg. Neg.
Neg.
Total factor productivity 1. 1
-0.5 -0.8 -1.0
-1.0
Manhour productivity 3.2
2.0 1.3 1.2
0.9
Capital productivity -2.0
-4.o -4.o -4.2
-3.8
a For computing average annual rates of growth, the base year is
the year prior to the stated period
b Based on indexes of GNP (1970 rubles), by sector of origin, at
factor cost.
c Inputs of manhours, capital, and land are combined using
weights of 55.8 percent, 41.2 percent, 3.0 percent, respectively,
in a Cobb-Douglas (linear homogeneous) production function.
These weights represent the distribution of labor costs (wages,
other income, and social insurance deductions), capital costs
(depreciation and a calculated capital charge), and land rent in
1970, the base year for all indexes underlying the growth rate
calculations.
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 Approved For Release 2007/07/12 : CIA-RDP85B00263R000200150027-7
Table 15
USSR: Growth of Industrial Output and Factor Productivity
(average annual percentage change)
1966-70a
1971-75a
1976-80a
1981
1982
Industrial production
6.3
5.9
3.2
2.5
2.2
Combined inputsb
5.7
4.9
4.5
4.1
3.6
Manhours
3.1
1.5
1.6
0.9
0.7
Capital
8.8
8.7
7.7
7.8
6.9
Total factor productivity
0.5
1.0
-1.2
-1.6
-1.3
Manhour productivity
3.1
4.4
1.6
1.6
1.5
Capital productivity
-2.3
-2.6
-4.2
-4.9
-4.3
a For computing the average annual rates of growth, the base
year is the year prior to the stated period.
b Inputs of manhours and capital are combined using weights of
52.4 percent and 47.6 percent, respectively, in a Cobb-Douglas
(linear homogeneous) production function. These weights
represent the distribution of labor costs (wages and social
insurance deductions) and capital costs (depreciation and a
capital charge) in 1970, the base year for all indexes underlying
the growth rate calculations.
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