RESEARCH AND DEVELOPMENT EXPENDITURES, PRODUCTIVITY TRENDS IN INDUSTRY AND AGRICULTURE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001900010006-1
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 20
• Document Creation Date: December 19, 2016
• Document Release Date: May 16, 2006
• Sequence Number: 6
• Publication Date: November 8, 1973
• Content Type: REPORT

 Approved For Relea
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tiny Deputy Chief
stern }iuropo Divis i.c;:
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11:1 c, ;0,1ou;d FUR;
2006/09/26 : CIA-RDP85T00875R001900010006-1
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A. Research nr,i Dcveloonent Tx onditures Productivity Trends
In In uztry arc, ~,r ture.
'Soviet outlays on R&D are shown in Table 1. The rapid growth
of expenditures is expected to continue over, the next few years.
No data are published on R&D expenditures by the various
industrial ministries or by other sectors of the economy.
Approximately 65% of total funds arc derived front the state
budget while the remaining 35% is generated locally as payment
to R&D organizations for work performed on contract. The
USSR State Committee for Science and Technology oversees the
allocation of funds. The USSR's 250 key R&D projects of national
importance, which always involve more than one industrial
ministry, are given 25% of the total funds. The Committee
divides the remaining 75% among the industrial ministries
and the USSR Academy of Sciences to finance the R&D projects
included in the annual R&D plan for these organizations.
Industrial growth in the USSR has been chiefly fueled
by large increases in inputs of human and material resources
and less so by gains in productivity stemming from improved
education'of workers and from the introduction of higher
quality machinery. During the 1950's productivity was
relatively high as the Soviets reaped the benefits of a
large backlog of unapplied technology and of extensive
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Table 1
Annual Expenditures for. R&D
billion currant rubles
1950
1960
1965
1970
1971
1972
Total outlays
1.0
3.9
6.9
11.7
13.0 ,
14.2
Construction
N.A.
0.6
1.1
1.6
1.7
.1.8
Current outlays
N.A.
3.3
5.8
10.1
11.3
12.4
1951-60 1961-65 1966-70 1971-72
Average annual
rates of growth
of total R&D
expenditures 14.6 12.1 11.1 10.2
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borrowing of technology from abroad. As Table 2 shows, the
growth of inputs renaincd high until the mid-1960s, but the
growth of. efficiency with which they were used declined after
1060. The continued low level of productivity gains after
the economic reform of 1965 was one of the factors leading
to the further reform introduced in April 1973 under which
industry is to be reorganized into production associations.
A primary objective of these associations is to accelerate
technological progress by bringing R&D facilities and
production enterprises under unified control.
As Table 3 shows, trends in agricultural productivity
resemble those in industrial productivity. During the 1950's
output grew faster than inputs,yiclding relatively high rates
of productivity growth. Productivity,-declined during 1961-65
as the result of the disastrous crop years of 1963 and 1965.
A recovery of productivity growth in 1966-70 was followed by
a precipitous decline in 1971-72, again as the result of a
poor crop year. Despite the good crop year in 1973, it is
unlikely that the goals for production and productivity
contained.in the 1971-75 plan will be'met.
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Table 2
Avorago Annual- Percentage Rates of Growth of Industrial Production,
Factor Inputs, and Factor Productivity
1951-60
1961-65
1966-70
1971-72
1971-75 Plan
Civilian industrial production
9.8
6.9
6.8
5.6
8.0.
Inputs:
Labor and capital
6.1
6.3
5.5
4.8
4.3
Labor (man-hours)
2.4
3.0
3.3
2.1
1.3
Capital
11.5
11.2
8.7
8.8
8.4
Factor productivity
3.5
0.5
1.2
0.8
3.7
Labor and capital
3.5
0.5
1.2
0.8
3.7
Labor (man-hours)
7.2
3.8
3.4
3.5
6.7
Capital
-1.5
-3.9
-1.8
-3.0
-0.4
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Table 3
Average Annual Rates of Growth of Agricultural
Production, Factor Inputs, and Factor
Productivity
1951-60
1961-65
1966-70
1971-72
1971-75 Plan
Output (3-year
moving average)
4.8
2.8
3.4
-1.9
4.5
Total inputs
2.5
2.8
1.3
2.0
1.9
Factor
productivity
2.3
-0.04
2.1
-3.8
2.5
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B. Investment Patterns in New Plant and E ui ment
Between 190 and 1971 Soviet gross fixed investment
grow nearly twice as fast as Soviet GNP, a reflection
of the determined pursuit of economic growth on the part
of Soviet leaders. The functional share of Soviet invest-
ment continues to be heavily weighted in favor of
construction, although the share of equipment has been
rising since 1954 (see Table 4).
The sectoral structure of Soviet investment has varied
in recent years. Heavy industry has lost some ground,
although it continues to-maintain a wide margin as the
leading c].uimant on investment funds. In 1965, agriculture,
housing, and services were all vying for the position of
second largest claimant. By 1971., however, agriculture
had taken second place followed by services and housing
(see Table 5).
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Gross Fixed Investment by Function
(billion rubles - prices of 1 January 1969)
1950
1960
1965
billion
-rubles
bill o: n
rubles
3. on
rubles
Total investment
12.8
100.0
42.0
100.0
57.0
Construction
8.6
67.2
29.2
69.5
35.8
Equipment
3.4
26.6
10.5
25.0
17.5
Other capital
outlays*
0.8
6.2
2.3
5.5
3.7
For surveys, pans, deqignFand t e like.
1'970
1971
ton'_ E1 n
$
rubles
%
rubles
t
100.0
82.0
100.0
88.0
100.0
62.8
.50.3
61.3
54.7
62.2
30.7
25.3
30.8
26.6
30.2
6.5
6.4
7.8
6.7
7.6
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Gross Fixed Investment in Consumer-.Oriented and Producer
Oriented Sectors
(billion rubles - prices of 1 Tanuary 1969)
1965 1968 1971
bill on hill on - billion
rubles rubles rubles 6
Total investment 57.0
100.0
71.2
100.0
88.0
100.0
Consumer oriented
31.6
55.4
41.2
57.9
50.1
56.9
Agriculture
9.6
16.8
12.1
17.0
16.2
18.4
Consumer goods
industry
2.8
4.9
4.1
5.8
4.8
5.5
Housing
9.6
16.8
12.1
17.0
14.1
16.0
Services
9.6
16.8
13.0
18.2
14.9
16.9
Producer oriented
25.4
44.6
30.0
42.1
37.9
43.1
Construction
industry
1.5
2.6
2.4
3.4
3.3
3., 8
Heavy industry
18.3
32.1
21.2
29.8
26.0
29.6
Transport and
communications
5.6
9.8
6.4
9.0
8.5
9.7
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C. Industrial Manpower and Training Practices in the USSR
In 1971, about one of every four Soviet workers was
employed in industry, approximately the same proportion as
in the United States. The 32 million Soviet industrial
workers were employed in the following branches:
Industrial Sector Thousand Workers
Total industry
32,030
Machine building and metalworking
12,369
Light industry
5,036
Food processing
2,903
Logging, woodworking, pulp and paper
2,829
Construction materials
2,039
Chemicals and petrochemicals
1,598
Fuel
1,513
Ferrous metallurgy
1,352
Glass and chinaware
272
Other branches
2,11:'
To meet the growing demand for specialized and skilled
industrial manpower, Soviet educational policy at all levels
places great emphasis on training that equips the individual
with specific vocational, technical, or professionF.l skills.
Although the practice of forcibly drafting youths into
vocational-technical schools was phased out in the early 1950's,
vocational-technical education remains an important means of
training youths for semiskilled jobs in industry. The number
of students graduating from vocational-technical schools more
than doubled during the 1960's. In 1970, graduation of workers
from vocational-technical schools by branch of industry were
as follows:
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Thousand Parsons
Total industry 410
Electrical engineering 10
Oil extraction and oil refining 14
Coal 20
Ferrous and nonferrous metallurgy 24
Chemical and petrochemical 30
Mechanical engineering and motal.working 187
Logging, woodworking, pulp, and paper 20
Building materials 6
Light 63
Food processing 24
Printing 4
Other ?:ranchos 8
Despite the effort to provide widespread vocational
training, many workers entering industry have only an
elementary education and few industrial skills. These
workers receive formal on-the-job training and are provided
opportunities to enroll in various part-time education
programs to upgrade their skills.
While the vocational-technical school system provides mass
training in most semiskilled occupations, it does not graduate
highly skilled or sub-professional workers. Such training is
supplied thrcugh a system of secondary specialized schools
(tekhnikums). The secondary specialized schools train
technicians and various other sub-professionals who, in
general, function as assistants to the professional graduates
of :nigher educational establishments.
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Professional training in the Soviet Union is provided
by universities and.instittites that comprise the higher
educotional system. Professional training in the Soviet
Union differs markedly from Western patterns. First, both
the total number of students trained and the number by
specialty are determined by planned manpower requirements
rather than by the demand'of individuals for education.
Second, training tends to be much more functionally oriented,
and there is no program of general higher education comparable
to a Western liberal arts program. Finally, the Soviet Union
has relied more heavily than the United States on part-time
training to provide the needed professional manpower. To
be accepted by a higher educational institution, the applicant
must complete secondary education, take a competitive examination,
submit character references, and in, mott casts, have either
work or military experience.
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E. !, xport promotion Practices
Soviet export organizations are markedly doficiont in the
marketing expertise required to sail manufactured products
in the West. Much of this ignorance is attributable to the
traditional pattern of Soviet foreign trade, whereby a major
portion of Soviet exports are destined for other Communist
nations under the umbrella of bilateral agreements. As a
result, the composition and quantity of exports is fixed
in advance and no real marketing expertise is required. Goods
sold in the West traditionally have consisted largely of raw
materials and semi-manufactures which can often be sold on
organized commodity markets such as the London Metals' Exchange.
While the Soviets have become quite proficient in effecting
such sales, such knowledge is largely inapplicable to the
marketing expertise required to effectively compete in tte
highly diversified and competitive Western markets for
manufactured goods.
The Soviets are concerned over the need to generate
new exports to obtain the additional hard currency required
to support the rapidly increasing level of Soviet imports from
the West. Therefore, the USSR has begun to seriously pro-
mote the sale of Soviet manufactured goods in the West. The
USSR suffers from a lack of the requisite sales and service
facilities and Western uncertainties over the quality of
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their manufactured goods. Soviet exports also face other
impediments. r ntorpriso n, whose production in geared for the
huge domestic market'and whose success is measured against
their ability to meet quantitative targets, have little incentive
to upgrade their production for Western markets. This attitude
toward the export market on the part of plant managers has
continued in spite of Moscow's use of'quality bonuses and
various organizational measures such as the creation of export
councils at local and republic levels.
The Soviets have been active participants in Western
trade fairs, although often many of the items demonstrated
are in short supply and arc not available for export. For
certain commodities -- automobiles, tractors, some machine
tools, and certain other goods -- the USSR has established
foreign-based firms with sales and service facilities. While
many of those firms are still getting started, the success
of more established outlets has been limited by Western
dissatisfaction with the Soviet product. Recently the UESR
has sought direct Western assistance in marketing its products.
In several major barter-type deals, for example, the Western
partner is tasked with the responsibility for selling the
Soviet products on Western markets. The USSR has also
engaged the services of Western marketing consultants in an
attempt to better assess both export potentialities and the
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changes -- design,, appearance, quality -- which must be made
in the Soviet product lines. Those initiatives will result
in increased future efforts to market Soviet products in the
West, but if such promotion is to be effective, Soviet
producers must allocate the time and material necessary to
make their products saleable in the West -- a decision which
they have yet to make.
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P. Export Markets, USSR
USSR Exports in 1972
Million currant US dollars
To World
To Developed
West
15,408
`,634
Agricultural
1,210*
333
Industrial
8,773**
1,238**
Other
5,425
1,063
* Includes estimated grain exports.
** Includes estimat~+d exports of polik-hed diamonds
and processed petroleum products.
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G. Environr.ental Practices in Cie USSR
Environrmental disruption is found in most of its varied
forms in the USSR. Water pollution is the most pressing
environmental problem; most major rivers, lakes, and seas
receive sometimes untreated industrial and urban wastes
as well as pesticides and other runoff from agricultural
lands. Oil spills pose occasional threats to the environment,
and thermal pollution from electric power generating facilities
is present. The mismanagement of the nation's natural resources
through wasteful, and exploitative extraction proc asses is also
a major problem. Although air pollution is at present of
lesser importance on a national scale, local geographic
features and the presence of industry often lead to pockets
of pollution as serious as those in the West. Other pollution
problems -- such as automobile exhaust, waste paper, and
containers -- are not presently major problems in the USSR
but will in all likelihood develop as the output of consumer
goods increases. Legislative controls aimed at curbing
environmental disruption were previously initiate-1 at republic
or local levels. Within the last few years, nationwide laws
such as the Principles ~f Water. Legislation -- which became
effective on 1 September 1971 -- have been enacted.
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The law attempts to set general guidelines controlling the
use of the nation's water resc'irces. Other lawn ha-.,T kloen
aimed at specific problems. For example, a 17 March 1972
dec::ee pledged 1 billion rubles by 1975 for construction of
both industrial waste treatment plants and municipal water
treatment facilities in an effort to clean up. the Ural-Volga
River Basin. The USSR contributes little to pollution
control systems R&D, generally waitirg until such systems
have been tried elscwhere before installing them. Current
technology is applicable to most Soviet problems. Generally
known techniques are being used to control water pollution:
for example, by increasing the flow in polluted rivers, by
treating sewage a-d industrial effluent before dischargev and
by changing industrial processes and raw materials to rA:luce
pollutant production. In combatting air pollution, the
Soviets have depended largely on dispersal to avoid the
acc