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

Approved for Release: 2019/07/19 C05210421
whole. They are considered to be quite reliable. Seven
of the indexes with 72 percent of the weight are based
on production series, and the rest are based on
deflated retail sales, using official retail price indexes.
When possible, the indexes based on physical produc-
tion data have been adjusted for net foreign trade and
inventory change. Three of these indexes can be
compared with indexes derived from official Soviet
data on per capita consumption in physical units and
with deflated retail sales. The comparisons are shown
below (l950= I00). The CIA indexes agree quite well
with those based on Soviet data on per capita
consumption.
Knitwear Hosiery » Leather
Footwear
Z __A 13 c A 13 c A 13 c
1960 314 214 443 224 204 358 206 206 31s
1975 vss 809 2,275 331 310 1,235 411 304 901
A—Index derived from Soviet per capita consumption data in
physical units, including imports.
B—CIA index.
C—Indexes derived from official deflated retail sales.
But both indexes grow much less rapidly than those
based on officially deflated retail sales. No doubt, the
physically based measures understate the real growth
of consumption of these items because they do not take
account of improvements in quality and product
assortment. On the other hand, deflated retail sales
indexes surely overstate real growth, since the price
deflators are known to have a downward bias. There is
no way to determine the degree of bias independently
because there are no suitable price data.
The index for clothing (sewn garments) with a third of
the soft goods weight is based on official Soviet data on
the value of production in so-called constant (1967)
prices. It, too, increases much more slowly than the
value of officially deflated retail sales: the respective
indexes for 1975 (l950= 100) are 608 and 1048. Both
indexes, as well as the others discussed above, overstate
real growth of consumption to some extent because
they do not take into account the shift from home
production to factory manufacture. Although both
deflated value indexes (production and retail sales) are
believed to have unreliable deflators, that for retail
sales is considered the least accurate. The comments
about the reliability of official retail price indexes
apply also to the 6 sub-indexes that are based on
deflated retail sales. There are ,no alternative data to
use in estimating consumption of these items. Because
of the familiar faults of official price indexes, the
indexes probably have an upward bias. One can hope,
but not be certain that the various biases more or less
cancel out. However, the composite index of consump-
tion derived here clearly is preferable to a measure that
relies entirely on official values and price deflators.
The CIA indexes for clothing and related items, based
on production, do not allow for imports, which come
mainly from CEMA countries. Although imports rose
rapidly during the 1950s, they were miniscule relative
to the value of retail sales. During the 1960s, imports in
current prices increased at about the same rate as the
value of production in constant prices. Although
imports in current prices increased faster than real
production in the 1970s, prices of imports evidently
increased rapidly also. From this evidence, it appears
that the CIA index for clothing is not seriously biased
downward by failure to allow for imports. Exports of
clothing have been negligible throughout the period.
Weights. The derivation of the 1970 expenditure '
weights for the soft goods index is shown in Table 9.
Essentially, the task was to disaggregate the principal
expenditure categories—retail sales for consumption
and military subsistence. The allocation of retail sales
to sub-groups can be made with confidence from
published retail sales data and assumptions about the
distribution of sales to enterprises and institutions. The
distribution of the military clothing ration is tenuous
but is probably not grossly wrong. Because their
content is unknown, purchases of soft goods in
collective farm markets, a small sum, were not
distributed. The value of consumption in kind of wool
was obtained by the methodology used to derive the
total of such consumption and is thought to be
reasonably reliable; the wool was assumed to be used to
produce various items of knitted clothing.
Indexes. The data underlying all sub-indexes are
given in Appendix C. Six sub-indexes are based on
physical production data available in Promyshlennost
SSSR I964 and in annual Narkhozy. They include:
knitted outerwear, knitted underwear, leather foot-
wear, rubber footwear, felt footwear, and hosiery. The
series for leather footwear was adjusted for net trade
and inventory change—needed because of rapidly
rising imports. These adjustments could not be made
for the other categories; imports are known to be
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Approved for Release: 2019/07/19 C05210421
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