SOVIET STATISTICS ON CAPITAL FORMATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP08S01350R000401120001-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 23
• Document Creation Date: December 27, 2016
• Document Release Date: March 2, 2012
• Sequence Number: 1
• Publication Date: August 1, 1982
• Content Type: REPORT

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Intelligence
Soviet Statistics on
Capital Formation
SOV 82-10093
August 1982
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Notice to recipients of Soviet Statistics on Capital
Formation, SOV 82-10093, August 1982.
1. Table 4 (page 6):
Under the heading "Gross fixed investment in agri-
culture--entire complex of works," the subheadings "pro-
ductive" and "nonproductive" are not components of "col-
lective farms" as shown. Rather they are a separate
breakdown of the major heading "Gross fixed investment
in agriculture--entire complex of works."
2. Table 7 (page 10):
The column head UCt-1 should read UCt-1 - UCt.
3. Text table (page 12):
The second column head should read "CIA: Producer
Durables Production" vice "CIA: Producer in Durables
Production."
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Directorate of
Intelligence
Soviet Statistics on
Capital Formation
SOV 82-10093
August 1982
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Soviet Statistics on
Capital Formation
Introduction This report presents a compilation of statistics on fixed capital assets and
capital investment in the Soviet Union. Included are estimates of the value
of fixed capital (a stock concept) as well as estimates of fixed capital
investment (a flow concept)-both series by sector of the economy and by
branch of industry. In addition, data are presented for gross additions to
capital and utilization of national income for accumulation, retirement
rates of the Soviet capital stock are estimated, and values of unfinished
construction are given for various sectors of the Soviet economy. All the
data are given in constant prices with the exception of the series on
unfinished construction and on utilization of national income for
accumulation.
These statistics were constructed from official data published by the Soviet
Government. Specifically, the sources used were annual issues of the Soviet
statistical handbook Narodnoye khozyaystvo (hereafter cited as N.kh.) and
annual issues of the CEMA economic handbook Statisticheskiy yezhegod-
nik stran-chlenov soveta ekonomicheskoy vzaimopomoshchi (hereafter
cited as the CEMA handbook). The methods used to construct each data
series are documented in footnotes appended to each table and in an
appendix describing the methodology used to convert data from one price
base to another.
The statistics in this report might be questioned on two counts. First, there
is the general consideration of whether data based entirely on official
Soviet statistics can be trusted. Second, there is the more specific concern
that the Soviet constant price investment series take inadequate account of
inflation and thus exaggerate the amount of investments.
Neither of these doubts can be dispelled completely. Nevertheless, the
available evidence suggests that the Soviet data do not suffer from serious
distortion. Doubts about the reliability of the Soviet investment series-
apart from inflation-have been largely allayed by Western economists,
notably Norman Kaplan, Richard Moorsteen, and Raymond Powell. They
have compared estimates of the Soviet capital stock obtained independent-
ly-by a perpetual inventory method-with the results of the 1960 and
Information available as of 1 April 1982
has been used in the preparation of this report.
SOV 82-10093
August 1982
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1973 Soviet censuses as well as with the annual indexes of the capital stock
published for intervening years. They found the correspondence between
the official data and their own estimates to be quite close. For example,
whereas the official index of the gross fixed capital stock implies an annual
growth rate over the 13-year period of 8.4 percent, the perpetual inventory
indexes implied a growth rate of 8.0 to 8.3 percent. Moreover, a similarly
close correspondence was found for years extending back from the early
1960s to 1928.'
In addition, the reliability of the Soviet data was tested in this study (see
p. 9). One measure of their reliability is the degree to which the various sta-
tistical series published by the Soviets are consistent with each other
because they should all be interrelated. Our analysis found the data to be
reasonably consistent.
Arguments on both sides of the inflation debate are presented in the final
part of this study. Our assessment is that (a) while inflation in construction
and machinery cannot be established with any degree of certainty, it
probably is mild-2 percent annually at most-and (b) the Soviets may
well be deflating more or less accurately the current price series for these
categories.
' See Richard Moorsteen and Raymond P. Powell, The Soviet Capital Stock, 1928-1962
(Homewood, Illinois: Richard D. Irwin, Inc.) and Raymond P. Powell, "The Soviet Capital
Stock From Census to Census, 1960-1973," Soviet Studies, XXXI (January, 1979), pp. 56-
75. The fact that the official Soviet series and the Moorsteen-Powell estimates give very
similar results does not exclude the possibility that both series may embody some inflation.
This is true because the constant "estimate prices" used in both the capital stock censuses
and in enterprise accounts may in fact include some price inflation.
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Introduction
iii
Gross Fixed Capital
1
Gross Fixed Capital Investment
2
Changes in Capital Stock and Investment in Process
2
Other Published Statistics
9
Consistency of the Published Data
9
Inflation and Soviet Investment Statistics
11
Converting Data From One Price Base to Another
15
1. Gross Fixed Capital by Sector of the Economy, 1949-80
3
2. Gross Productive Fixed Capital in Industry, Total
and by Branch, 1959-80
3.. Gross Fixed Capital Investment by Sector of the
Economy, 1960-80
4. Gross Fixed Capital Investment in Agriculture, 1960-80
6
5. Gross Fixed Capital Investment by Branch of Industry, 1960-80
7
7. Testing the Consistency of Soviet Data on Capital
Formation for the Economy as a Whole
8. Estimating Retirement Rates of Soviet Fixed Capital Stock
11
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Soviet Statistics on
Capital Formation
Gross Fixed Capital
The principal sources of information on the capital
stock in the Soviet Union are the official capital
censuses undertaken periodically by the Soviet Gov-
ernment. A census was carried out in 1959 and 1960.
At that time the fixed capital on hand as of 1 January
1960 (excluding that on collective farms) was surveyed
and revalued in 1955 prices. For a discussion of the
1959-60 census, see Norman M. Kaplan, "Capital
Stock," A. Bergson and S. Kuznets (eds.), Economic
Trends in the Soviet Union (Cambridge, Mass: Har-
vard University Press, 1963), pp. 96-149, and Richard
Moorsteen and R. P. Powell, The Soviet Capital
Stock, 1928-1962 (Homewood, Ill: Richard D. Irwin,
Inc., 1966).
Another census was undertaken in 1971 and 1972. At
that time, the stock of fixed capital on hand as of
1 January 1972 (for budget organizations, the stock of
capital on hand as of 1 January 1973) was surveyed
and revalued at replacement cost determined on the
basis of 1969 estimate prices.' The stock of private
housing was an exception; values formerly declared to
be in 1955 prices were now declared to be in 1973
prices. Subsequent adjustments were made for new
wholesale prices for equipment introduced on 1 Janu-
ary 1973. The 1971-72 census was a large and
elaborate effort, involving 1.5 million enterprises and
organizations, over 5 million workers, and 180 million
distinguishable assets. For its execution, the Central
Statistical Administration prepared 222 handbooks,
172 for the evaluation of equipment and 50 for
structures. For a discussion of the 1971-72 census, see
' Estimate prices are those used for project estimates and for
planning and reporting purposes. Cost estimating prices indicate
the value of normed input requirements and purchased equipment
plus normed overhead charges, where wages are reckoned at
prevailing rates of the indicated year and materials inputs and
equipment at wholesale transfer prices of the indicated year. Values
at estimate prices differ, therefore, from actual investment outlays
of the indicated year insofar as actual input consumption, overhead
outlays, and distribution costs differ from the corresponding norms.
See Richard Moorsteen and Raymond P. Powell, The Soviet
Capital Stock, 1928-1962 (Homewood, Illinois: Richard D. Irwin,
Inc., 1966), p. 187.
Raymond P. Powell, "The Soviet Capital Stock From
Census to Census, 1960-1973," Soviet Studies, vol.
XXXI, No. 1 (January 1979), pp. 56-75.
Data on the value of the capital stock for noncensus
years expressed in "comparable prices" are published
in index form in the annual issues of Narodnoye
khozyaystvo. The source of the official indexes is
obscure. Powell presents evidence suggesting that the
indexes are based on reports submitted annually by
enterprises of the capital on their books. Little is
known, however, about the source and nature of the
deflators used.'
The Soviet definition of fixed capital (osnovnyefondy)
includes the undepreciated value of buildings, struc-
tures, conveying equipment, machinery and equip-
ment (operating and power machinery and equipment,
measuring and control instruments and devices, lab-
oratory equipment, computer hardware), vehicles,
tools, and productive and draft livestock of basic herds
(excluding young livestock, livestock allocated for
fattening, and some minor categories such as poultry,
rabbits, and fur-bearing animals). Fixed capital is
broken down into "productive" and "nonproductive"
capital. In Marxist parlance, productive capital is
used directly in the production process.' Nonproduc-
tive capital includes capital in the housing and munic-
ipal services sector and in organizations and institu-
tions of public health, education, science, culture, art,
credit institutions, and administrative organs.
See Powell, op. cit., p. 66.
In practice this obviously leads to compromise in difficult
accounting situations. For example, freight transportation and
communications serving production are viewed as productive activi-
ties while passenger transportation and communications serving the
public are considered nonproductive. The capital stock data pub-
lished in the annual issues of N.kh., however, categorize all
transport and communications capital assets as productive-proba-
bly because of the practical difficulty of clearly delineating and
separating out the two types of activities. Less frequently published
data such as the input-output tables, on the other hand, do make
this differentiation.
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The statistics on Soviet gross fixed capital stock
shown are presented by sector of the economy (table 1)
and by branch of industry (table 2); all values are
expressed in constant 1973 prices. The specific
sources and methods used to construct the data series
are explained in the footnotes to the tables.
Gross Fixed Capital Investment
In general terms, fixed capital investment is a meas-
ure of a nation's yearly expenditure on reproducible
fixed assets-machinery and production facilities-as
part of the process of undertaking new projects and
continuing and completing existing projects. Gross
fixed capital investment includes net capital forma-
tion plus depreciation. It may or may not include
expenditures on capital repairs depending upon the
convention adopted by individual countries. The
Soviet definition of capital investment (kapital'nye
vlozheniya) excludes capital repairs; 5 it includes out-
lays for new construction, for reconstruction, expan-
sion and reequipment of existing industrial, agricul-
tural, transportation, trade and other enterprises, as
well as outlays for construction of housing, municipal
service facilities, and facilities for rendering cultural
and everyday services to the public.
Soviet gross fixed capital investment includes outlays
for construction work, including assembly of structur-
al elements which become part of the structure of a
building; outlays for the work of installing equipment;
outlays for the drilling of producing and exploratory
petroleum and gas wells; outlays for equipment
whether requiring installation or not; outlays to ac-
quire production tools and equipment for maintenance
and upkeep; outlays for survey work in the project
planning stage; outlays for other operations classified
among capital investments, and miscellaneous
outlays.
Not included in Soviet gross fixed capital investment
are expenditures for the following: geological explora-
tion; design work for cities, urban settlements, and for
planting forests and forest belts; foundation herds;
' In Soviet practice maintenance expenditures fall into two catego-
ries-current and capital repairs. Current repairs, which are fi-
nanced as a component of production costs, cover preventive
maintenance and routine servicing of machinery and equipment.
Capital repairs, which are financed out of amortization allowances,
involve major renovating outlays to replace defective or worn parts
of existing assets.
equipment for existing government institutions,
schools, hospitals, kindergartens, and day nurseries;
and major repairs of buildings and installations,
equipment, vehicles, and other fixed assets.
The statistics on gross fixed capital investment in the
USSR are presented by sector of the economy (table
3). The investment series for the agricultural sector is
then singled out and broken down in various ways
(table 4). Finally, the industrial investment data are
presented by individual branches of industry (table 5).
The data on gross fixed capital investment presented
in tables 3 through 5 are given in 1973' prices to
differentiate them from the 1973 price base of the
gross fixed capital stock data presented in tables 1 `and
2. The gross fixed capital investment data for plants
are given in 1969 estimated prices, adjusted for
reduced construction-installation coefficients intro-
duced on 1 January 1976. For producer durables, the
data are given in 1969 estimate prices, adjusted for
new wholesale prices introduced on 1 January 1973.
Overall, in terms of prices the investment data are
probably as comparable. as possible to the statistics on
the gross fixed capital stock, but some differences
may still exist, hence the designation "1973' prices." 6
The specific sources and methods used to construct
the data series are explained in the footnotes to the
tables.
Changes in Capital Stock and Investment in Process
In addition to publishing data on the value of fixed
capital stock and gross fixed capital investment, the
Soviet Government publishes several other statistical
series relating to capital formation. These data are
compiled and presented in table 6. All of the data on
capital formation published by the Soviet Government
should, theoretically, be interrelated and logically
consistent. Indeed, determining the consistency of the
data is an important issue because the statistical
series are used in the West to assess the efficacy of
Soviet investment policies in particular and the per-
formance of the Soviet economy in general. Conse-
quently, this report discusses testing of the consistency
of the published data. Finally, some brief comments
on the impact of wholesale price inflation in the
USSR on official investment statistics follow.
6 For a discussion of how the Soviets estimate construction costs, see
Research Aid ER76-10068 (Unclassified), February 1976, Ruble-
Dollar Ratios for Construction.
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