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

Approved for Release: 2019/07/19 C05210421
products; the increasing specialization within indus-
try, which leads to more transportation of semiproc-
essed materials; and the shifting of industrial produc-
tion toward Siberia, which leads to longer shipping
distances to reach the European population centers.
Within the transport sector itself, the share of rail
transport has been steadily falling: rail freight trans-
port accounted for 86 percent of total freight revenue
in 1950 in the sample used in this study to estimate
the contribution of this sector to GNP and only 47
percent in 1980, as air and truck freight transport
expanded rapidly from minuscule levels.
The share of GNP produced in the service sector has
declined from 29 percent in 1950 to 20 percent in
1970.“ This decline has been shared by almost all of
the individual services; only science has shown any
appreciable growth as a share of GNP, rising from 1.1
percent of GNP in 1950 to 2.3 percent in 1980. The
decreasing share of GNP produced in the service
sector is contrary to the experience of most developing
nations. Normally an increase in the income level of a
nation leads to above-average growth in the demand
for services. The below-average growth of services in
the USSR suggests a deliberate policy to restrain the
development of services.
Changing Patterns of Output Use
Accompanying the shifts in the producing structure of
the Soviet economy has been a changing pattern of
output use since 1950. The dominant trend is the
increasing share of GNP which is allocated to invest-
ment at the expense of most other use categories.
Measured in 1970 prices, expenditures on investment
have climbed from 14 percent of GNP in 1950 to 33
percent in 1980 (figure 6). The growth of investment
reflects partially the traditional Soviet emphasis on
growth through rapid increases in capital stock.
Moreover, there has been a pronounced change in the
structure of investment. The share of expenditures for
the sum of producer durables and new construction
allocated to producer durables alone has risen from 22
percent in 1950 to 39 percent in 1980.” This shift
1’ The service sector includes housing, utilities, repair and personal
care, recreation, education, health, science, credit and insurance,
and government administrative services.
1’ Table A-6. This change in the structure of Soviet investment is
analyzed by Boris Rumor, The Dynamics of the Capital Coefficient
of USSR Industrial Output: Investment Process in Soviet Industry,
National Council for Soviet and East European Research, 1981.
Figure 6
Distribution of Soviet GNP by End Use
Percent
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reflects the increasing emphasis toward reequipping
and modernizing existing production sites rather than
creating entirely new facilities. The growth rate for
investment has slowed sharply, however, from 11.5
percent per year for the 1950s to an average of 5.8
percent per year since 1960. The direct consequence
of slower investment growth is a smaller contribution
to GNP growth through a larger capital stock.
Defense is a major claimant on Soviet resources.
Although no data are presented here on total defense
expenditures, it is believed that total defense expendi-
tures amounted to 11 to 13 percent of GNP in 1970
and have increased at an average annual rate of 4 to 5
percent per year since 1965.“ Since this rate is
somewhat above the growth in GNP during that
period, the share of GNP allocated to defense has
1‘ Allocation of Resources in the Soviet Union--1980, US Con-
gress, Joint Economic Committee, Government Printing Office,
Washington, D.C., 1981, p. 124.
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