Documents / FOIA release
This Joint Committee Print, dated December 8, 1982, gathers studies that the Central Intelligence Agency's Directorate of Intelligence prepared for the Joint Economic Committee of the US Congress. It gives estimates of Soviet gross national product for 1950 to 1980, with indexes of industrial production, agricultural production and consumption, and explains the methods and data behind them. The foreword says official Soviet statistics inflate growth and that the CIA measures offer a more accurate picture. The document contains no UFO material.
“Gross”60+ pages
Approved for Release: 2019/07/19 C05210421 Finally, industries with a high ratio of material inputs to gross output are more susceptible to biases imposed by double-counting. This means we would expect a greater danger of significant bias in the measurement of machinery, chemicals, and construction materials output and a smaller bias in the remaining branches. The preferred measure for most purposes is the sum of value added by industrial sector, where value added equals gross value of output of a sector less purchases of goods and services from other sectors of the economy. Value added measures the net contribution of a particular industry to national product. It is the sum of profits, wages, depreciation, other payments to the factors of production, and indirect business taxes less subsidies. To construct a value-added index, however, requires accurate data on production (quan- tities and prices) and purchases of inputs from other sectors (quantities and prices). Two approaches have been used to derive indexes of value added in constant prices. One approach—re- ferred to in the economic literature as double-defla- tion——measures both outputs and intermediate inputs in constant prices, where value added is the difference between the two. This can be accomplished in one of two ways; either constant price measures for output and intermediate inputs can be used or current price measures for each individual component can be de- flated with price indexes. The information require- ments of this approach are extremely rigorous because both outputs and purchases from other sectors of the economy must be tracked over time. While reported Soviet production data are deficient in quantity and quality, statistics on material inputs are even scarcer. For this reason, double-deflation is not practical in compiling SPIOER. An alternative approach (used in the Federal Reserve Board’s index of US industrial production) is a hybrid procedure that combines gross output indexes with value-added weights for a base year. This approach, known as a single indicator method, is as good as double-deflation only if gross output and purchases from other sectors move over time at the same rate. Since this is a rough approximation at best, the hybrid F RB-type indexes only approximate a true value- added series. They do remove most of the double- counting inherent in pure GVO measures of industrial production (completely in the base year, less than completely in other years). While double-deflation is closer than the single indi- cator approach in theory to the notion of value added, both the output and input indexes used by double- deflation must be accurate. T. P. Hill has argued convincingly that under fairly weak assumptions er- rors in the output and input indexes will compound measured bias rather than offset each other and that using a single indicator will produce a more accurate result. Moreover, Hill’s study of growth in several OECD countries suggests that on average the growth rate is not much different whether double-deflation or a single indicator is used. Although the method used undoubtedly affects the measured growth of some components of industrial activity, these differences tend to cancel out.“ Depending on whether gross output or value added is used, one may receive an entirely different impression of both industrial structure and growth. In figure 3 the share of industrial production by branch of indus- try in 1972 is displayed both for gross output and value-added weights. The_gross-output scheme tends to give a higher weight to sectors that either produce mainly for final consumption or are highly material intensive and a lesser weight to sectors that either produce mainly for further industrial processing or are highly labor and capital intensive. Thus, to the extent that industries with the most double-counting are growing relatively slowly, the gross- output index is biased downward and vice versa. In the Soviet case, both light industry and processed foods have lagged behind other branches whereas machinery has grown the fastest. With gross-output weights, light industry and processed food gain in importance and machinery loses. Other things being equal, therefore, Soviet gross output of industry tends to increase more slowly than value added. “ For an extensive discussion of the properties and relative merits of the two methods, see T. P. Hill, The Measurement qfReaI Product: A Theoretical and Empirical Analysis of the Growth Rates for Different Industries and Countries, (Organization for Economic Co-operation and Development, 1971), pp. ll-37, 111-112, 118- 1 19. 186 Approved for Release: 2019/07/19 C05210421
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FOIA release, from the cia-readingroom collection. The PDF is mirrored here; the original link is under it. 399 pages are in the text index: search them above, or from the library's search.