LETTER TO RICHARD KAUFMAN FROM (SANITIZED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP92M00732R000300110010-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 5
• Document Creation Date: December 23, 2016
• Document Release Date: April 16, 2014
• Sequence Number: 10
• Publication Date: December 21, 1989
• Content Type: LETTER

Declassified in Part - Sanitized Copy Approved for Release 2014/04/16: CIA-RDP92M00732R000300110010-2
,
Dedember if; 1686
OCA 4235-89
Richard Kaufman
Joint Economic Committee
Dirksen Senate Office Building, Room GO1
Washington, D.C. 20501
Dear Richard:
I thought I,should provide you with a written copy of the
information we discussed yesterday over the telephone. In
response to your question about the level of effort the CIA
devotes to estimating Soviet GNP, we have calculated that roughly
four-fifths of the total value of GNP is based on data published
regularly in official Soviet statistical handbooks. The other
one-fifth of GNP is estimated using data pieced together, with
additional effort, from Soviet journals and monographs, and, in
some cases, from intelligence sources. These shares of regularly
published data and more scattered information are the same for
our estimates of both base-year GNP and year-to-year changes.
I am also enclosing a copy of our earlier suggestions on
points you may want to include in the Committee's introduction to
the paper on Soviet GNP. If you need any more material, please
let me know. Meanwhile, I hope the GPO presses run smoothly and
the backlog disappears quickly.
Enclosure
Sincerely,
STAT
Declassified in Part - Sanitized Copy Approved for Release 2014/04/16: CIA-RDP92M00732R000300110010-2
Declassified in Part - Sanitized Copy Approved for Release 2014/04/16: CIA-RDP92M00732R000300110010-2
Points to Make in Letter(s) of Transmittal
This study, Measures of Soviet Gross National Product in 1982
Prices, was prepared by the Central Intelligence Agency at the
request of the Joint Economic Committee. The paper was drafted by
who benefited from the advice and comments of many
of her CIA colleagues.
This study presents comprehensive estimates of Soviet economic
performance since 1950 and describes the derivation of these
estimates. It updates and supplements the 1982 volume, USSR:
Measures of Economic Growth and Development, 1950-80, which also
was prepared by the CIA and published by the JEC. The present
numerical estimates cover the years 1950-87 and include an update
of the ruble price base from 1970 to 1982.
STAT
? Declassified in Part - Sanitized Copy Approved for Release 2014/04/16: CIA-RDP92M00732R000300110010-2
Declassified in Part - Sanitized Copy Approved for Release 2014/04/16: CIA-RDP92M00732R000300110010-2
Points to Make in Foreword
Gorbachev's credibility has become increasingly dependent on his
ability to improve the functioning of the Soviet economy, and
especially the population's standard of living. The measurement of
progress toward these goals also has become increasingly important,
but official Soviet summary statistics on economic growth have long
been considered unreliable by Western specialists. Over the years,
the CIA's estimates of Soviet GNP growth have become widely
accepted as an alternative to those official statistics.
Since Gorbachev assumed power in March 1985, he has sought to
revitalize the Soviet economy by strengthening worker discipline,
modernizing production technology, and introducing decentralizing
reforms. But overall economic growth in 1986-89 has been about as
slow as it was during the 1981-85 "stagnation period," and in many
ways economic difficulties have mounted.
' Consumers have become increasingly impatient with the limited
- availability and low quality of goods and services.
A serious budget deficit has developed, partly because of
higher investment spending for Gorbachev's modernization drive
and a sharp drop in tax revenues resulting from his antialcohol
campaign.
Inflation rates--traditionally low by world standards--have
increased sharply in 1988-89.
Meanwhile, thanks largely to glasnost, Soviet criticisms of the
USSR's official statistics have become increasingly sharp.
Early in 1987, economic journalist Vasiliy Selyunin and
economist Grigoriy Khanin captured national attention by
publishing estimates of overall economic growth that were much
lower than official figures.
Two years later, an article in the official journal of the
Communist Party charged the State Committee for Statistics with
excluding a sharp drop in legal production and sales of
alcohol--as a result of Gorbachev's sobriety campaign--from
several summary measures of economic performance.
In July 1989, the Soviet leadership dismissed Mikhail Korolev
as head of the State Committee for Statistics and appointed
Vadim Kirichenko as his successor.
Declassified in Part - Sanitized Copy Approved for Release 2014/04/16: CIA-RDP92M00732R000300110010-2
Declassified in Part - Sanitized Copy Approved for Release 2014/04/16: CIA-RDP92M00732R000300110010-2
For many years, the CIA has devoted a large research effort to
estimating the size and growth of Soviet GNP. These estimates have
several objectives:
To remedy the shortcomings of official Soviet summary
statistics.
To estimate key aspects of Soviet economic performance for
which official data are not regularly published, partly because
of reluctance to reveal sensitive or embarrassing information.
To replicate as closely as possible the measures familiar to
users of the economic statistics of the United States and other
Western countries.
In the last few years, some critics have argued that the CIA's
estimates.of Soviet GNP growth are. understated, while others have
maintained. that groxiith is overstated. The CIA believes that its
estimates of total GNP growth are reasonably accurate, partly
because errors in opposite directions offset each other to some
extent. Certain components of GNP growth are not estimated as
accurately as the total, however, and efforts to improve those
estimates are under way.
In publishing this study, the JEC seeks to make the CIA's estimates
of Soviet GNP available to a wide audience, to promote an
understanding of the derivation of these estimates, and to
stimulate discussion of possible improvements in methods of
estimation.
The present paper updates and supplements the 1982 volume,
USSR: Measures of Economic Growth and Development, 1950-80,
which also was prepared by the CIA and published by the JEC.
The numerical estimates here cover the years 1950-87 and update
the ruble price base from 1970 to 1982.
The JEC also conducts annual hearings on the allocation of
resources to defense in the Soviet Union and periodically
publishes collections of papers by a variety of academic and
government specialists on the Soviet economy.
Declassified in Part - Sanitized Copy Approved for Release 2014/04/16: CIA-RDP92M00732R000300110010-2
Declassified in Part - Sanitized Copy Approved for Release 2014/04/16: CIA-RDP92M00732R000300110010-2
The CIA's estimates of Soviet GNP are prepared by a core group of
full-time analysts, whose efforts are supplemented by detailed
research on various aspects of the economy, such as agriculture,
energy, and high-technology industries. In large part, these
estimates are based on detailed data published in official Soviet
statistical handbooks. Because the official data are incomplete,
however, additional information must be pieced together from
Soviet journals and monographs and, in some cases, from
intelligence sources.
About 1-v/ of the total value of GNP in the base year
(1982) is estimated from data published in official
handbooks, while the rest comes from information pieced
toget4r from other sources.
About 05 of the value of the samples used to estimate
year-to-year changes in GNP is based on regularly published
official data.
-- Declassified in Part - Sanitized Copy Approved for Release 2014/04/16: CIA-RDP92M00732R000300110010-2