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

Approved for Release: 2019/07/19 C05210421
assumed that the same distribution of taxes estimated
for the 1972 I-O table is also valid for 1970. The taxes
included in final-demand values are then subtracted
directly. The taxes paid by each sector when it
purchases material inputs are subtracted from each
entry in that sector’s column of the I-O table,
summed, and placed in a new row in the value-added
quadrant. The new row is necessary to preserve the
equality between a sector’s output and input.
The purchase price of any good includes the transpor-
tation expenses necessary to deliver the good from the
producer to the purchaser. Since this expense is not a
real cost of production and can be highly variable
depending on the transportation mode and the type
and location of the purchaser, a better estimate of the
structure of production costs is obtained by subtract-
ing this transportation expense. The cost of transpor-
tation still exists, but is now shown as a separate
purchase in the transportation row.
If a complete purchasers’ prices table is available, the
reallocation of transportation expenses is simple. First
the value of each sector’s purchases of transportation
and communications services is deleted and the value
of its gross output is reduced by the same amount.
This value represents the amount paid by the produc-
ing sector for the delivery of its output to purchasers.
Then the same value is removed from that sector’s
row by assuming that the proportion of transportation
and communications expenses in each sector’s sales is
equal. For example, if a sector’s purchases from the
transportation sector in purchasers’ prices is equal to
5 percent of its gross output, then it is assumed that 5
percent of that sector’s sales to each other sector and
to final demand represents transportation expenses.
The values removed from all of a sector’s material
purchases are summed and entered as a single pur-
chase of transportation and communications services.
This value represents the amount paid by the produc-
ing sector for the delivery of its material inputs.
In this case, a complete purchasers’ prices table is not
available. Therefore, it was assumed that the propor-
tion of each sector’s sales that represented transporta-
tion and communications services in 1970 was the
same as it was in 1972. The transportation purchases
by each sector were then summed and compared with
the gross output of the transportation and communi-
cations sector. The calculated amount, 27.1 billion
rubles, was 5 percent higher than the published gross
output, (25.7 billi0n—Narkh0z I 978, p. 41). All of the
1972 transportation rates were lowered by 5 percent
to remove the discrepancy, and the calculations were
repeated.
The trade and distribution expenses were reallocated
using the same procedure as for transportation. This
operation is slightly more complicated because there
are sharply different markups for wholesale trade,
retail trade, and agricultural procurement services.
Again the rates used for the 1972 I-O table were
assumed to be valid for 1970, and the gross output of
the trade sector was calculated. Again, the resulting
total was 5 percent greater than the gross output of
the trade sector. The same proportional reduction of
the 1972 trade and distribution rates was used to
remove the discrepancy.
Subsidies were removed in an analogous manner to
turnover taxes and other fees. The subsidies row in the
value-added quadrant was deleted, and the gross
output of each sector was increased by the same
amount. The same amount was then allocated among
purchasing sectors and final demand, using the distri-
bution of the corresponding subsidies in the 1972 I-O
table. Finally, the estimated subsidies received by
each sector on its material purchases were summed
and entered as a new row in the value-added
quadrant.
Estimating a 1970 Input-Output Table
The computation described in the previous two sec-
tions produced a partial 1970 I-O table in producers’
prices. The remaining parts of the table were estimat-
ed based on the assumption that all production rela-
tionships should be as similar as possible to what they
were in 1972 and yet be consistent with the data
already filled in.
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Approved for Release: 2019/07/19 C05210421