Documents / FOIA release
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 should be weighted appropriately. The Soviet Union attempts to capture this effect in the construction sector by allowing price supplements for work done during the winter. No adjustments are made in this study. Price Discrimination, Quality Changes, and Unique Products. According to one of the conditions of the AFCS, product prices must be uniform within a market area. This condition is violated frequently in the Soviet Union, especially in energy pricing. Some sectors pay preferential prices, receive higher quality products for the same price, or enjoy special delivery privileges. To the extent that differential prices are included in the input-output data, the factor-cost prices are inaccurate. Changes in the degree of dis- crimination will also affect the indexes. The problem of quality change is pervasive in index computations. The basic question is how much of the change in the price of a product actually reflects a change in the quantity of the services provided by the product. The answer is not always clear. The problem is particularly severe in the Soviet case, because we rarely can observe products over time on a scale sufficient to assess quality changes and because a common method of raising prices in the Soviet Union is to make a cosmetic change in the product and call it a new product. The quality problem mainly affects our index of industrial production, which frequently relies on physical output data covering fairly broad product categories. The lack of adjustments for quali- ty changes probably understates real quantity changes." ' Many investment goods are produced as unique prod- ucts or in very small batches. Most construction projects and as much as one-third of producer dura- bles constitute unique products. A variety of tech- niques have been devised to measure the real cost of unique products: summing input costs; using hedonic indexes; using a related, standard product as an analog; and computing the cost as a sum of standard components. The construction index used here, for example, is a material-input index rather than an output index. Although we suspect that our index of " See Comparing Planned and Actual Growth, Central Intelligence Agency, Washington, D.C., for a discussion of this problem. investment in producer durables (based on official values in so-called constant estimate prices) overstates growth, we lack the data to use an alternative approach. Problems of Measuring the Real Growth of Value Added The discussion to this point has centered on the problems of any constant-price activity index. The construction of indexes of value added in economic sectors poses additional problems. Value added cannot be measured directly in constant prices because changes in depreciation, profits, and social insurance do not lend themselves to separation into price and quantity changes. Therefore, value added is computed as a residual—the difference between gross output and current material inputs. This procedure makes value added especially subject to measurement error. Specialists generally agree that the preferred ap- proach to measure real changes in value added is the so-called double deflation method. If Q(_i,t) is the gross output of sector j in year t, q(i,j,t) is the current input of type i used by sector j in year t, n is the number of sectors, and p(j,t) is the price of the good or service produced by sector j in year t, then value added in sector j in year t is: n D(J'J)Q(JlI) _ Z P(i,1)q(i,i.I)- i=l The value added in base-year prices (year 0) is then computed as the difference between the deflated values of both terms, or: n V(.i,t) = t>(.i.0)Q(i,i) -‘ Z t>(i,9)q(i,j,t)- i=1 The virtue of this approach is that it preserves consistency between the end-use and sector-of-origin accounts. If the sales of all sectors are properly deflated, then the sum of deliveries to end-use compo- nents of GNP in base-year prices will equal the sum of deflated value added by sectors of origin. 44 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.