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

Approved for Release: 2019/07/19 C05210421
Appendix B
Computation of the
Machinery Index
Creation of the machinery index requires two separate
tasks:
- The relative weights of producer durables, consumer
durables, and military machinery as a share of all
machinery in the base year must be estimated.
v Indexes must be derived to drive these weights over
time to record the growth in production.
These two tasks can be decomposed into the following
six steps:
The first step is to determine which input-output
sectors produce consumer and / or producer durables.
Unfortunately, information was inadequate to divide
consumption final demand between private and public
consumption in the reconstruction of the 1972 input-
output table. Thus, we are forced to use the 1966
input-output table in 1970 prices as the basis for
splitting machinery deliveries to consumption into
private and public components.‘ Of the 27 machine-
building and metalworking (MBMW) sectors in the
1966 table, all except possibly one manufacture pro-
ducer durables and only eight produce consumer
durables based on patterns of deliveries to final
demand.
The second step is to construct indexes representing
each type of durable for as many of the machinery
sectors as possible. These sector indexes are con-
structed in much the same way as they are for other
branches. The products for every sector are valued in
1 July 1967 prices and then summed for every year.
The one difference is that some of the sectors produc-
ing both consumer and producer durables are divided
into two subsamples, resulting in two indexes for these
sectors. Occasionally the sample for a given sector is
so limited in scope that we are compelled to use the
same index to move both producer and consumer
durables.
'
A version of this table appears in Vladimir G. Treml and Gene D.
Guill, “Conversion of the 1966 Producer’s Price Table to a New
Price Base,” in Treml, Studies, pp. 197-281.
241
Ideally we should have 35 indexes: 27 for the sectors
that manufacture producer durables and eight for
those making consumer durables. Because of informa-
tion gaps reasonable indexes can be constructed for
only 27 of the possibilities—20 producer durable
sectors and seven consumer durable sectors. More-
over, in three of these sectors the same index is used
for both kinds of machinery. The sectors with missing
indexes and their estimated share of machinery value
added in 1972 are as follows:
Percentage Share
of Value Added
Total i 31.8
Cables—consumer durables l.l
NEGLCables—producer durable;
K
Casting machine & equipment—producer 0.1
durables
Tools and dies—producer durables _>_1;3VWmvfi*i
Construction materials
Machine & equipment-—producer durables 0.5 if
Bearings—producer durables 1.0
27.4
Abrasives—producer durables 0.4
Other machinery—nonconsumer durables
Although the tabulation above casts considerable
doubt on the coverage of the index for machinery,
with nearly one-third of value added unaccounted for,
it is somewhat misleading. The bulk of the missing
share is in the “other machinery” sector, which is
commonly believed to conceal a large military ma-
chinery component that is captured elsewhere in our
index. If it is assumed that all of the “other machin-
ery” is military and the totals are accordingly
adjusted, the missing sectors combined add to less
than 6 percent of the total.
The third step consists of estimating value added in
1972 for each sector and type of machinery (see table
B-1). To do this we assume that every ruble of product
Approved for Release: 2019/07/19 C05210421