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

Approved for Release: 2019/07/19 C05210421
by growth rates. A statistical test was then performed
using Spearman’s rank correlation coefficient to de-
termine the degree of agreement in branch growth
rankings between the SPIOER and official indexes.”
The results are summarized in table 7. The sum of
squared differences indicate that the rank correlation
coefficients for the 1960s and 1970s are significant at
the 99-percent confidence level—strong statistical evi-
dence that both SPIOER and official branch indexes
exhibit similar relative growth. The 1950s are a
different matter, however, as the correlation is not
significant at this level of confidence. The source of
this insignificance is the wide disagreement over the
machinery rankings. Both quinquenniums in the
1950s give machinery a rank four places higher in the
official indexes than in the SPIOER versions. Perhaps
disguised inflation operated at higher rates then than
in the later periods. In every five-year period except
1971-75, both indexes agree on the most rapidly
growing branch; in the one exception, the fastest
growing branch in the SPIOER series is ranked
second in the Soviet data. Moreover, in nearly every
case the slowest growing branch in one set of indexes
matches either the slowest or next slowest in the
other. The largest divergence in rankings occurs
during the 1950s, the smallest deviation during the
most recent quinquennium.
Since the beginning of the 1960s, the major incongru-
ities have involved construction materials and machin-
ery. The official series generally ascribe a higher rank
to these two branches. In the case of construction
materials, double-counting seems to have increased
over the years, causing the growth of gross value of
construction materials measured by the official data
to be more rapid than our estimated growth of output.
The increase in double-counting results partly from a
conscious drive to “industrialize” construction. (See
earlier discussion.)
The machinery anomaly occurs because machinery is
probably the branch most susceptible to the problems
of new-product pricing. The official machinery index
becomes an uncertain amalgamation of constant
prices and current prices—the latter tending to rise
” Sec John E. Freund, Modern Elementary Statistics, (3rd Edition;
Englewood Cliffs, N. J.: Prentice-Hall, Inc., 1967), pp. 364-366.
over time. The official machinery index inflated by so-
called new product prices grows more rapidly than the
SPIOER output indexes, so machinery tends to rank
higher in the official series.
Plausible Elimination of Inflated Growth. The offi-
cial indexes are unacceptable because of the twin
biases of new-product pricing and double-counting
that exaggerate growth according to most Western
observers and even some Soviet ones. If the SPIOER
indexes are to be plausible measures of industrial
growth, the difference between the SPIOER and
official rates should be largest for those branches of
industry most susceptible to upward bias—machinery,
chemicals, and construction materials. The average
annual rates of growth for both the official and
SPIOER series are shown in table 8 for each quin-
quennial period since 1950. The SPIOER growth rate
is less than the official rate in each comparison period
for total industry and for the individual branches with
the exception of fuels ( 1956-60 and 1976-80) and
processed food ( 1951-55 and 1956-60). The largest
reductions in growth occur in those industries with the
most severe new product pricing and double-counting
problems: machinery, chemicals, and construction
materials (table 9).
All of these tests of SPIOER’s consistency with the
official index have considered only multiyear periods.
A year-by-year comparison for total industry (table 10
and figure 6) shows that the SPIOER growth rate is
less than the official rate for every year.
Thus, to the extent that the SPIOER methodology is
designed to avoid the growth distortions in the official
series, it seems to do so. In most cases the rate of
growth measured by SPIOER falls below the rate
claimed in the official Soviet measures. Moreover,
SPIOER reduces the rate of growth most in those
branches-—machinery, chemicals, and construction
materials—most afflicted by new-product pricing and
increased double-counting.
Consistency of Growth Trends. A third consistency
test compares the aggregate and branch growth
trends measured by the SPIOER and official indexes.
The SPIOER indexes should agree in general with the
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Approved for Release: 2019/07/19 C05210421