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

Approved for Release: 2019/07/19 C05210421
The data clearly show that Soviet GNP grows more
rapidly when measured in 1960 prices than in 1970
prices, but that the differences are not large. The use
of 1976 prices appears to make little difference in the
growth rate of GNP compared to 1970 prices.”
Patterns in the GNP Residual
In the 1970 GNP accounts for the Soviet Union,
certain expenditures cannot be identified explicitly.
These outlays not elsewhere classified (n.e.c.) com-
prise a residual component within the base-year ac-
counts. Conceptually, this category includes defense
expenditures n.e.c., changes in strategic reserves, oth-
er unidentified expenditures, and a statistical discrep-
ancy. In addition, we have not been able to calculate
constant-price indexes of inventory change or net
exports; therefore, both of these quantities are also
conceptually part of the outlays n.e.c. component in
the time-series data. Outlays n.e.c. is calculated as a
residual. Total GNP is derived from the sector-of-
origin data. Then the sum of identified end-use
components is subtracted from total GNP. The result-
ing value is outlays n.e.c.
Since total GNP should be the same regardless of
whether it is calculated as the sum of the sector-of-
origin or of the end-use components, the reliability of
our GNP estimates can be assessed by examining the
level and the trend in the residual component. The
level of outlays n.e.c. should be well above zero.
Although inventory change and net exports can be
negative, the other elements of outlays n.e.c. (mainly
some defense expenditures) should be sufficiently
large to ensure that total outlays n.e.c. is positive. The
reasonableness of the trend in the residual can be
-
checked by using some additional data and making
some strong assumptions about defense expenditures.
Data are available on a large share of inventory
change in current prices, but a suitable deflator is not.
The fluctuations in this component of outlays n.e.c.,
however, generally should be in the same direction in
both constant and current prices.
’° This comparison may understate somewhat the sensitivity to the
base year used because the same activity indexes were used with all
three sets of weights. If the indexes were recalculated using 1960 or
1976 prices to combine their various subindexes, then the difference
in the average GNP growth rate probably would be increased
slightly.
The Soviet foreign trade statistical handbook, Vnesh-
nyaya torgovlya SSSR v I9—g0du, now publishes
volume indexes of exports and imports. For the pur-
pose of this exercise, we can assume that these indexes
are accurate reflections of exports and imports in
1970 prices.
Although total defense expenditures are estimated to
have grown at 4 to 5 percent per year since 1965," the
portion included in outlays n.e.c. may have increased
at a quite different rate. Nevertheless, for the purpose
of this exercise, it is assumed that all of the unidenti-
fled expenditures in the base-year accounts are de-
fense expenditures and that they have increased at a
rate of 4.5 percent per year since 1965.
The sum of inventory change in current prices and net
exports and partial defense expenditures in constant
prices provides a synthetic measure of outlays n.e.c.
which should indicate whether the actual trend in
outlays n.e.c. is plausible. The ruble values of the
synthetic measure and the actual outlays n.e.c. com-
ponent of end-use GNP are compared in figure 7. The
year-to-year changes in the synthetic measure usually
are in the same direction as changes in outlays n.e.c.
until 1978; therefore, outlays n.e.c. appears to be a
reasonable reflection of those expenditures that can-
not be explicitly identified. The synthetic measure
shows an upward trend while outlays n.e.c. shows
little change prior to 1978. The difference in the
trends can be interpreted as an indication of the
existence of inflation. The imprecision in all of the
data underlying this comparison, however, precludes
any inference about the actual rate of inflation.
After 1978, outlays n.e.c. decrease rapidly and be-
come implausibly low to represent a large portion of
defense expenditures plus inventory change and net
exports. The cause of this decline is not known.
Arithmetically, it could result from an underestimate
of the growth of GNP or an overestimate of the
growth of the other end-use components.
" See footnote 24.
24
Approved for Release: 2019/07/19 C05210421