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This Joint Committee Print, dated December 8, 1982, gathers studies that the Central Intelligence Agency's Directorate of Intelligence prepared for the Joint Economic Committee of the US Congress. It gives estimates of Soviet gross national product for 1950 to 1980, with indexes of industrial production, agricultural production and consumption, and explains the methods and data behind them. The foreword says official Soviet statistics inflate growth and that the CIA measures offer a more accurate picture. The document contains no UFO material.
“Gross”60+ pages
Approved for Release: 2019/07/19 C05210421 Problems in Estimating Volume Indexes of Economic Activity in the USSR The real growth of Soviet GNP is computed by multiplying each of the 1970 sector-of-origin and end- use weights by an appropriate constant-price activity index. While use of this method is not unusual in OECD countries, it is more common to deflate cur- rent-price data. The lack of detailed Soviet price indexes and our distrust of those that do exist pre- cludes that approach here. The problems of estimating constant-price indexes have generated a voluminous amount of literature.” In connection with the presentation of our Soviet GNP indexes it is appropriate to summarize some of the general problems encountered in working with index numbers. Effect of the Base Year on the Growth Rate In the computation of GNP, the aggregation of physical quantities expressed in different units re- quires the use of prices as weights. Thus the growth of GNP between any two years in constant prices is the ratio of two summations of prices times quantities. If relative prices or quantities of the various goods and services produced in the two years are the same in each year, then it does not matter whether the prices of the first or second year are used for aggregation. In general, however, technological progress; changing endowments of land, labor, and capital; and other factors will cause changes in relative prices. In prac- tice, then, the measured GNP growth rate will vary, depending on whether prices of the first or second year are used. In computing a series of growth rates for a multiyear period, it is possible to use the prices of one year for "’ Some of the general sources are: Lawrence Grose, Real Output Measurement in the United States National Income and Product Accounts, US Department of Commerce, Washington, D.C., 1967; T. P. Hill, The Measurement of Real Product, The Organization for Economic Cooperation and Development, Paris, 1971; R. G. D. Allen, Index Numbers in Theory and Practice, Aldine Publishing Co., Chicago, 1975; United Nations, Guidelines on Principles of a System Qf Price and Quantity Statistics, New York, 1977; Richard Stone, Quantity and Price Indexes in National Accounts, Organi- zation for European Economic Cooperation, Paris, 1956; Franklin M. Fisher and Karl Shell, The Economic Theory of Price Indices, Academic Press, New York, 1972; and Dan Usher, The Measure- ment of Economic Growth, ch. 4, Columbia University Press, New York, I980. all calculations or to use a moving price base. With a moving price base, the weights used to combine the constant-price volume indexes are different for each calculation. In this report, 1970 prices are used for all growth rate calculations. The primary reason for this approach is that the construction of current-year weighted (Paasche) indexes requires current-price GNP accounts for each year, information which is not currently available. In addition, Western practice is to use the base-year weighted (Laspeyres) index." For analysis of current trends, the base year should be reasonably close to the current year so that the base- year relative prices are not greatly different from those of the current year. For the Soviet Union, 1970 is sufficiently recent to qualify as Soviet prices have not changed much since then. The large energy price changes of 1973-74 make it more important to use a price base of 1975 or later for a Western economy.” Aggregation of Quantity Indexes Instead of Deflated Value Indexes There are two basic methods of computing a constant- price activity index of the output of a collection of goods or services. Assuming that observations are available on the quantities produced and the prices of each good or service, then the current-price output can be deflated by a price index, or a weighted quantity index can be computed. With full informa- tion, the result will be the same. For the year 0, let Q(0,l), . . . , Q(0,i), . . . , Q(0,N) be the physical quantities of the N goods produced in year 0 and p(0,l), . . . , p(0,i), . . . , p(0,N) the corresponding prices. Then the growth of output from year 0 to year t, expressed in current prices, is: N 2 Q(t,i)p(t,i) i=1 N Z Q(0,i)p(O,i) i = 1 " Bergson, 1961, pp. 25-41, discusses the various economic interpre- tations of the two indexes. Also, see Becker, 1969, pp. 69-72, and the sources listed in footnote 50. ” The benchmark of the US accounts in 1981 retained 1972 as the base year, implying that the data for using a more recent base year are not available or that the US national income accountants do not think the change in relative prices is a severe problem. Many OECD countries, however, have shifted to a 1975 base year. 42 Approved for Release: 2019/07/19 C05210421
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FOIA release, from the cia-readingroom collection. The PDF is mirrored here; the original link is under it. 399 pages are in the text index: search them above, or from the library's search.