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

Approved for Release: 2019/07/19 C05210421
transport are measured by the number of rides; and
taxi services are measured by the volume of paid
kilometers. It was assumed that 25 percent of the
1970 expenditures on passenger transportation repre-
sented business travel expenditures; this amount was
deducted in arbitrary proportions from the rail, air,
and taxi weights. No allowance was made for a
change in the relative importance of business travel
over time.
Communications. Since a large share (about two-thirds) of
communications activity is considered to be consump-
tion rather than production related, we use our index
for total communications as a sector of origin. This
index is a weighted average of: (1) the volume of
letters, newspapers, parcels, and money orders mailed,
(2) the number of telegrams sent, (3) the stock of
telephones and the volume of long distance telephone
calls, and (4) the stock of radio and television receivers
and the number of radio relay facilities.
Repair and Personal Care. This index is the sum of expen-
ditures on state-supplied services and on private serv-
ices. State services include the repair of clothing,
shoes, furniture, radio and television receivers; dry
cleaning; film processing; and similar household serv-
ices. The index is based on sales data in constant
prices patched together from several Narkhoz series.
Estimates of sales to state organizations were deduct-
ed from the Narkhoz values. Also the value of
materials used in some types of services, but not
included in the Narkhoz data, were added. The
purchase of private services is based on a few reports
of aggregate expenditures and is not a satisfactory
index. It represents, however, a declining share of the
total index; hence, errors in the estimate of private
services should not greatly disturb the total index.
Recreation. The recreation index attempts to measure a
diverse collection of expenditures. It is computed as a
weighted average of the number of movie and theater
admissions, the number of people attending resorts,
and employment in hotels. The latter is a crude
measure of personal expenditures on hotels.
Education. The education index is a weighted average of
indexes of employment and other current expendi-
tures. The employment index is based on man-hour
47
data and is straightforward. The calculation of other
current expenditures is quite complicated. It is based
on budgetary data for several levels of educational
activities. For each level, all labor and capital expend-
itures identified in republic budget data are subtract-
ed from the total, yielding a residual that is assumed
to represent current expenditures other than labor
costs. Each index of nonlabor current expenditures is
then applied to a USSR total for that level of
educational activity to obtain a series of nonlabor
current expenditures expressed in current prices. The
sum of those series is then deflated by our implicit
price index for the consumption of goods.”
Health. Construction of this index parallels that of the
education index, but in less detail.
Investment. The index of Soviet investment is a
weighted average of indexes of new fixed investment
and capital repair. The index of new fixed investment,
in turn, is a weighted average of investment in
machinery and equipment, construction and other
capital outlays, and net additions to livestock. The
index of investment in machinery and equipment is
taken directly from the Narkhoz, and is said to be in
constant prices. Most machinery and equipment, how-
ever, are produced by the machinery sector, for which
the published price index is widely believed to be
seriously understated.” Thus, we suspect that the
growth of investment in machinery and equipment
may be overstated. The index of construction and
other capital outlays are derived from our sector-of-
origin construction index described below. The two
major products of the construction sector are new
construction and capital repair. The construction
component of capital repair is estimated and then
subtracted from the sector-of-origin index for the
total construction sector. The Narkhoz series on
" See M. Elizabeth Denton, “Soviet Consumer Policy: Trends and
Prospects," JEC, I979, p. 766, for the derivation of this price index.
” An Analysis Qf the Behavior af Soviet Machinery Prices. I 960-
73, US Central Intelligence Agency, Washington, D.C., I979; and
Abraham Becker, “The Price Level of Soviet Machinery in the
1960s," Soviet Studies 26, July 1974, pp. 363-379, are two of many
sources that discuss the shortcomings of the official machinery
price index.
Approved for Release: 2019/07/19 C05210421