USSR: Measures of Economic Growth and Development, 1950-80

Approved for Release: 2019/07/19 C05210421
Appendix C
End-Use Indexes
Consumption
The indexes of consumption are described by Ger-
trude Schroeder and Elizabeth Denton in JEC,
Consumption.
Investment
Investment is the sum of new fixed investment and
capital repair. New fixed investment is the sum of
machinery and equipment (producer durables), new
construction and other capital outlays, and net addi-
tions to livestock.
Soviet investment data are equivalent in concept to
the machinery and equipment and construction and
other capital outlays components of new fixed invest-
ment. The Soviet investment data in each edition of
the Narkhoz are published in “comparable estimate”
prices of some base year (primarily 1955 or 1969).
Western economists have debated about whether
these data are valid measures of the real growth. For
example, Becker used the Soviet data for his constant
price accounts without any discount for inflation
(Becker, Soviet National Income, p. 116). On the
other hand, Nove asserts that the Soviet data so
overstate growth that real investment may actually
have fallen in recent years (Alec Nove, “A Note on
Growth, Investment and Price Indexes,” Soviet Stud-
ies, January 1981). The uncertainty about the official
data has led Western economists to consider alterna-
tive series. In this report, we use one such alternative
for the construction and other capital outlays compo-
nent of new fixed investment. We have not yet found
an acceptable alternative for the machinery and
equipment component. Although our index of indus-
trial production contains a producer durables catego-
ry, it is not a suitable substitute because of problems
relating to foreign trade and inventory changes.
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Machinery and Equipment
Scope and Coverage. Investment in machinery and
equipment includes all expenditures by state enter-
prises and organizations and collective farms. Private
investment is negligible. By the Soviet definition, this
sector now includes the purchase of all new equipment
costing more than 100 rubles and lasting longer than
one year. Capital repair of machinery and equipment
is not included. Soviet investment data do not include
expenditures for certain producer durables by budget-
ary institutions. An estimate of these expenditures in
1970 was made, however, and these purchases are
implicitly assumed to have grown at the same rate as
other purchases of machinery and equipment.
Description of the Index. The index is based on
reported Soviet data on investment in machinery and
equipment. These data are said to be in constant
prices. There is considerable controversy over the
existence and amount of price inflation in the machin-
ery sector. It seems clear from the published data that
the Soviets have made some attempt to account for
price changes in their investment data. Because a
large share of producer durables, perhaps as much as
one-third, consists of unique products, all of the
inflation in the investment data may not have been
eliminated. Nevertheless, it was not possible to con-
struct an alternative series.
Over the years, the Soviets have published investment
data in constant 1955, 1969, and 1973 estimate
prices. In the 1950s the published data excluded
collective farm investment. Table C-1 presents the
published values for state investment and estimates of
collective farm investment. The values in the various
prices are linked to form the index of investment in
machinery and equipment.
Construction and Other Capital Outlays
Scope and Coverage. This sector includes all new
construction of buildings and structures (including
private housing) and certain other expenditures for
design work, geological exploration, and drilling. As
Approved for Release: 2019/07/19 C05210421