TRANSFER OF TECHNOLOGY FROM THE UNITED STATES TO THE USSR: PROBLEMS AND PROSPE

Created: 12/17/1973

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Intelligence Report

Transfer of Technology from the United Stales toroblems and Prospects

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Coo, No. g

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Transfer of Technology from ihc Uniled Stales to the USSR: Problems and Prospects

Soviet leaders recognize that rapid economic growth can be achieved once again only by accelerating technological progress, Because the Sovietector has been relatively inefficient in developing and applying new technology, the USSR has turned increasingly to imported technologyeans of accelerating technological progress and economic growth.

The major channel for acquiring technology from abroad is the purchase of machinery and equipment. Other channels have included the acquisition of technical data, contacts with Western firms and scientists, and formal arrangements for joint research and exchange of scientific and technical information. None of these channels has lived up to Soviet expectations. Western equipment frequently is not as productiveoviel setting as it is on native ground. Attempts to exploit foreign technical data or copy foreign machinery have had mixed success. In some military fields, the results of reverse engineering have been good; in civilian sectors, the outcome has been less happy.

The onset of detente has dismantled some of the traditional obstacles to Soviet acquisition of US technology. Medium-term and long-term credits were extended by the Uniled Stales afteresultingarge increase in Soviel imports of US equipment and technology. The relaxation of US export controls since delente contributed lo ihc rise in imports, although controls continue to limit access to very specialized and sophisticated foreign lechnology. Nevertheless, bureaucratic problems unique to the USSR still present problems to US businessmen.

Dcspiie the improvement in the opportunities for acquiring foreign technology, Ihe USSR continues to have trouble in assimilating il. The Soviet labor force is unfamiliar wiih complex foreign machinery, spare parts for foreign equipment arc often in short supply, and Soviet maintenance programs frequently are inadequate. These problems have caused the USSR to turn increasingly to the purchase of turnkey factories, relying on foreign firms lo design the plant, supervise construction, and install the equipment.

Note: This, report was prepared by the Office of Bconomic Research with contribution* from ihc Office of Scientific Intelligence.

Because machinerynd especially turnkeyre expensive, the Soviet leadership is trying to hold down the cost of acquiring foreign technology through this channel. The most prominent innovation in Soviet policy is the push for cooperative economic ventures that provide for the export to lhe USSR of equipment and technology on long-term credits. The credits arc repaid by deliveries of goods produced by the venture. As an alternative means of acquiring technology, the USSR is also strongly pressing for increased cooperative research with the United States in scientific and technological areas. Moreozen agreements with US firms have been concluded. Most promise to give the USSR tangible technological gains, while the US companies hope to enhance their sales prospects in the USSR. The USSR also expects lo benefit from research in Eastern Europe as well as from Western technology sold to these countries- In its drive to spur productivity growth in the civilian economy, however, there is little evidence that the USSR plans to release high-quality resources from.

The overall prospects are dim that technology transfer from the United States to the USSR willubstantial influence on Soviet economic development. The growing expense of debt service will limit machinery imports to perhaps S4 billion lo SS billion per year. Although transfers of technology in the form of imported machinery and the acquisition of technical data from the West will continue, they will be insufficient and too slowly assimilated toubstantial impact on Soviet economic and technical development. Ultimately, the USSR must depend on ils ownector to close the technological gap with the West and to boost economic growth. In certain areas, however, the acquisition of key Western technology could make some Soviet products -such as commercial aircraft andompetitive in Western markets.

DISCUSSION

Introduction

I. Moscow's interest in Western, and especially US, technology has flourished in the past five years or so. In pursuing trade deals, cooperation agreements, and bilateral technological contacts, the USSR has been more aggressive than at any time since. This activity has raised questions about the extent of the resulting technology transfer and its impact on Soviet economic capabilities and performance. This report first sketches the background of the Soviet preoccupation with Western technology, with particular focus on US-Soviet ties. It then discusses the channels through which technology flows from West to East and the degree of success that the USSR has had in assimilating technology from abroad. Recent Soviet efforts to increase the volume and improve the effectiveness of technological transfer are described, and general judgments are made as to the effeel of current Soviet policies with respect to acquiring Western technology on the development of the economy.

as the technology offensive is still gathering steam,of this report should be considered preliminary. In many areasparticularly in the analysis of the technology transfer implied bynumber of direct contacts between Soviet organizationsood deal of spade work remains to be done. Much moreis needed on the transfer of particular types of technology andon individual industries. In addition, the world energy bindUS attitudes toward the granting of long-term credits to thelikely toubstantial impact on Soviet programs to attract

Background of the Soviet Interest in US Technology

oviet economic growth has slowedlarge continuing increases in the labor force and investment.number of reasons, the average annual rate of increase in thelabor and capita) inputs fell off abruptly in, anddeclined, as shown in the following tabulation:

Outpui per unitand

Looking into Ihe future. Soviet leaders recognized lhat the rate of economic growih would nol trend upward again unless productivity could be accelerated. Because of lower birth rates, ihe labor force would eventually increaselower rate while the growih of plant and equipment is becoming harder to sustain in ihc face of competing demands for consumer goods.

In part, Ihc disappointing performance of productivity0 has been causedailure to introduce improvements in lechnology al the rale that was possible during the period of reconstruction afler World War II. The lower rate of Soviel technological advance, moreover, has preserved the substantial technological gap that separates Western from Soviet practice in almost every economic sector.

This disparity in technology is of great concern to the leadership, particularly since ihc resources devoted lo promoting technological progress are enormous. The USSR has more engineers employed in RDT&E* than the United Stales and almost as many scientisis. Expendituresre now almost four times0 level, whereas the number of scientific workers with advanced degrees Increased0ajor problem is thatector has been characterized by great unevenness. Basic research, particularly theoretical work, is considered strong, while applied RAD has been weak except in priority military sectors (including military applications of the spacehich atiract the bcsl scientific and material assets. In large part, the weakness ofn the civilian economy stems from its incompatibility with rigidly centralized direction and management. In addition, the indifferent quality of many Soviet engineers and applied scientisis has hampered theffort. The training of Soviet engineers and applied scientists is rather narrow, and many of the engineers are best described as technicians by Western slandards.

nhe Soviet leaders first concentrated on domestic reform as the solution for sagging economic performance.5 reform of economic administration and numerous decrees designed to reformere intended to spur productivity growth. Reform has nol produced ihc desired results, however, and the USSR has turned increasingly Io imported lechnologyeans of accelerating technical progress and economic growth. The recenl US-Soviei detente has encouraged thiselaxation of US export controls and ihc offer of US credits have redirected Soviet acquisitions of equipment and technology toward lhe United States, although West Germany and Japan are still lhe largesi non-Communist suppliers of machinery and equipment to ihe USSR.

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7. The revival of Soviet interest in US products and technology is partly political, but is also in line with the traditional policy of acquiring the most advanced technology available. US companies are the preferred sources of automotive equipment, oilfield equipment, both computer hardware and software, and civilian aircraft technology. The Soviets are abo seeking equipment and know-how from the United States in numerous other specialized areas such as cryogenics, air traffic control, and advanced metallurgical processing. If contracts cannot be reached with US companies, the Soviels recognize that other countries often can provide technology that is as good or almost as good. The USSR has had success, for example, in buying computer hardware and some kinds of automotive equipment tnd machine tools from Western Europe and Japan. In other areas, such as oilfield equipment for Arctic exploration, the United States is the only technology source in the eyes of the Soviets.

Soviet Acquisition of Foreign Technology

Overview

The USSR has acquired foreign technology mainly by purchasing machinery and equipment. Imports of machinery and equipment from the developed West have climbed especially rapidly since Brezhnev came to power.2 theyecordillion,0 million higher than the level in the. Other channels of transfer have included the acquisition of technical data (by purchase orttendance at international meetings, visits to Western firms, and formal agreements for collaborative research and the exchange of scientific and technical information.

In part, the USSR has been forced to buy machinery abroad simply because investment priorities were changing too rapidly for the capabilities of domestic industry. In the, for example.hemical campaignudden surge in imports of chemical plant and equipment from the West. These gave way in the middle ando imports of automotive manufacturing equipment for the giant FIAT plant and for the modernization of existing motor vehicle plants. In the past few years there have been massive imports of machinery and equipment (including large-diameter pipe) for transmitting natural gas. Last year's purchases were concentrated in the automotive, chemical, and wood processing industries.argo part of the imported machinery will be used to satisfy the requirements of the Kama truck complex.

oviel engineers have had mixed success in exploiting foreign technical data oi in practicing reverse engineering on examples of Western machinery In lhe military area, their performance has been sometimess in the quick duplication and production of Western air defense

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missiles. In other areas, Sovietas been so slow in working with Western blueprints or models that the products arc obsolete by the time they enter series production. The Soviet effort to copy US space suit ttctaology, for example, resultedears behind the current us level of sophistication. Copies of US biological materials (vaccines and antibiotics) are not up to US standards of efficacy and purity. In whatsic example of reverse engineering, the Soviet attempt to make the RYAD family of computers compatible with IBM machines is far behind schedule.

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bypass some of these problems of exploitingthe USSR has recently placed greater emphasis onplants and arranging cooperative ventures with Westernexpensive, turnkey plants avoid many of the problems. Soviet-style cooperative ventures permit the USSRtechnology on credit and to repay the Western partner with(raw materials or manufactured goods) of the venture.ensure Western participation in the development andrepayment in full by the endtated term. Hence, thedesigned to bc self-liquidating.

Obstacles to Acquisition of Foreign Technology

of the barriers that have impeded the flow of UStechnology to the USSR in the past have diminished with thedetente. Other obstacles remain. The current status of the varioustechnology transfer is discussed below.

Prior to the extension of medium-term and long-term credits to the USSR by the developed West, hard currency shortages were the major constraint on acquisition of Western machinery and equipment. With the increased availability of medium-term and long-term credit, this constraint has been eased somewhat.8he USSR5 billion in medium-term and long-term credit from Western Europe and Japan. Credit from the United States was extended only after the2 summit, andS credits are expected to account for about half ofS billion total for the two years.

US attitudes toward trading with the USSR have long obstructed transfers of US technology to lhe USSR. Many US firms have opposed trading with the USSR, and US public opinion has influenced other firms to refuse to deal with the USSR. Since thehese attitudes havereat deal in favor of increased contacts with the Soviet Union.

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Bureaucratic problems unique to the conduct of trade with Ihe Soviet Union present special problems for US businessmen. Long, expensive pilgrimages to Moscow without assurance of seeing the right people are often followed by long, difficult, and expensive negotiations with the Soviets that do not bear fruit. The US businessman is frustrated by the great difficulty in contacting the ultimate user of his product; he must work with foreign trade organizations instead, adding to the usual delays encountered in conducting business in the USSR.

Western firms frequently are reluctant lo part with their technology, preferring the sale of their finished productsransfer that might generate future competition for the firms in world markets.

Export controls continue to limit Soviet access to very specialized and sophisticated foreign technology. The range of controls has been reduced substantially in receni years, however, as East-West tensions have cased and as Western exporters have pressed for expanded sales to Communist countries. The United States is now supplying the Kama River truck complex with manufacturing equipment and lechnology that was embargoed two years ago. Computers, integrated circuits, telecommunications, avionics, and other sophisticated electronics lechnology continue lo be controlled, although controls have been relaxed even in these fields. Third-generation computers of rather sophisticated design can now be exported where they could notear ago. Nevertheless, the controls on other high-technology items such as advanced disc units and disc packtill hinder Soviet computer development.

Problems in Assimilating Foreign Technology

oreign technology has been of less help to the Soviet Union than expectedreat many instances, particularly when machinery is bought piecemeal. Frequently, the purchased machinery fails to mesh well with existing Soviet equipment, with other foreign equipment, or with Soviet inputsroduction process. In part, this interface problematural one. The Sovietector, however, takes an inordinate length of time to solve problems of compatibility in the civilian economy. In the case of the Kama truck factory, where most of the equipment is being supplied by numerous foreign firms. Western engineers estimate that several years will be required lo interface all of the equipment

into an integrated operation. By the time trucks roll off the assembly line, they will be obsolete by Western standards.

he USSR's difficulties stem partlyendency to import equipment that is too advanced for rapid assimilation, given existing leveb of domestic technological development This overreaching is especially evident in the computer field but extends into other sectors such as production of color television sets.8 Ihe USSR purchasedSomplete package of very advanced automated machinery and lechnology for the fabrication of shadow masks for color televbion tubes, capable of supporting an output of one million color television sets annually. By the endear's training in the United States for four Soviet technicians, the equipmeni still was not operational, and. in fact, had suffered severe damage through improper operating procedures and poor maintenance. Thus the Soviets were forced to procure,ost greater than the original purchase price, additional technical assbtance and parts to restore the line to its original condition. Thb line, now operating atraction of its rated capacity,ajor bottleneck in Soviet production of color televbion sets which,evel ofear.

esult of Soviet reticence to supply foreign companies wilh information on how the importedo be used, purchased Western machinery is sometimes less productive than it otherwise would bc. The Kama plant is an example; the buildings at the truck plant are standing, and foreign equipment will have to fit into space allotments that have already been designated. Yet foreign suppliers have been hindered in obtaining useful drawings of the factory and in obtaining permission to vbit the site. Whereonsidered critical, the USSR would ratherurchase than release details necessary to make an interface possible. For thb reason, purchases of aircraft navigation equipment, radar equipment, and the like have been deferred in ihc past

Ass ui.. of foreign technology also depends on the quality of the labor force. Soviet workers must first master lhe unfamiliar and complex foreign machinery, so many foreign-built plants do not reach rated capacity until after lengthy delays. For example, the huge FIAT-equipped passenger car facility in Tol'yatti became fully operationalears behindajor factor retarding assimilation of Ihe technology was the quality of the Soviet labor force. Soviel workers frequently shut down an entire line to make minor adjustment*ingle piece of machinery. Despite intensive training in Italy, technicians commonly-reassembled machines improperly after repairs, and workers were casual in Iheir approach lo lhe maintenance of precision machinery. Supervisory personnel at ihe working level, reluctant lo make even minor decisions.

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bucked upstairs virtually aU problem-solving decisions. In addition, the installation of the FIAT plant was also hampered by language barriers and frequent conflicts between Soviet workers and foreign supervisors.

To keep foreign plants and equipment operating, the USSRteady supply of spare parts and solid maintenance programs. Shortcomings in these areas have often put foreign equipment out of commission. Foreign-made spare parts seem to be purchased only for high-priority industries such as the chemical industry. Industries with lower pnonty apparently get no foreign exchange to buy spare parts. Because of the shortage of foreign spare parts, low-priority industries may favor less modem domestic machinery or East European machinery even if hard currency is available for the purchase of original equipment from the West.

Because of its problems in digesting imported technology Piecemeal, the USSR, as indicated earlier, has turned increasingly to the purchase of turnkey factories. Foreign firms design the factory, supervise construction, and are responsible for the selection and installation of equipment; Soviet workers assume control once the plant is operating. The USSR has purchased numerous chemical plantsurnkey basis, but the most famous turnkey plant in the USSR is the FIAT plant discussed above.

* not Proved to be the final answer to theifficulties with foreign technology, because they arc too expensive to buyassive scale and because they do not resolve all of the interface problems. As in the case of the FIAT plant, the Western plants often require labor skills in construction and operation that exceed the skills available on site in the Soviet Union. In addition, as ihe Soviets found in taking over Western-buili chemical plants, ihe processes sometimes demand raw and semifinished materialsuality that lhe domestic economy is not prepared lo supply.

should be noted, too. that the Soviets' relative lackin managing large complexes of very modem technologyproblems. Soviel managers have been trained to concentratenarrowly defined production goals in an organizationaldoes not promote the coordination of many complex parts.management has invested heavily in specificallymanagers in problems of complex organization beforeto higher levels. The Soviets have displayed much interest inWestern management techniques.

New Directions in Soviel Policy Toward Technology Transfer

in promoting lhe acquisition of foreign technologyto contend with the USSR's hard currency problem. The increased

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availability of long-term credits on favorable termsesumption of gold sales2 enabled the USSR to postpone the consequences of its inability to sell enough to the WesL Nevertheless. Soviet indebtedness to the West has increased sharply, by the end3 it will amount5 billion,f the USSR's hard currency exports will be needed just for debt service. The leadership is trying to hold down the cost of acquiring technology from abroad byumber of the options available to it. The cooperative ventures discussed earlier and bilateral agreements to cooperate in research are the most prominent innovations in Soviet' policy. The USSR is also attempting to involve Eastern Europe more directly in Soviet technology interests. Thus far, however, there is no Indication that the USSR will transfer high-quality resources presently allocated too work on assimilation of technology in civilian industry.

Search for Economic Cooperation

cooperation agreementsartial solutionUSSR's growing balance-of-payments problem. Cooperativefor the export to the USSR of equipment and technologycredits The credits are to be repaid by deliveries ofby the venture, casing the Soviet hard currency problem.projects often involve Soviet deliveries in excess of repaymentscreate new markets for Soviet exports. Tlie gas-for-ptpe dealsGermany, Trance. Italy, and Austria are prime examples of thisarrangement. More recently. Occidental Petroleum and Eletter of intent with the USSR to help develop thegas fields in Eastern Siberia and lo supply transmissionfacilities in exchangehare of the gasiven period

Bilateral Scientific and Technological Cooperation

The Irade and Joini venture aspccls of the transfer of lechnology between lhe Uniled States and ihc USSR basically favor the USSR and arconventional commercial nature. Since the US-USSR summit meeting ofhe Soviet Union has also strongly supported increased cooperative research with Ihe United Stales in scientific and technological areas. The Soviets portray such cooperationeans ofenuine exchange of lechnology and enhancing Ihe returns to the vast resources devotedn the two countries.

Under Ihe US-USSR Agreement on Cooperation in Ihe Fields of Science and Technology signed onhe Soviets have participated actively in planning joint research programs with US scientistsariety of fields, including medicine and biology, space, pollution,

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chemical catalysis, energy research, microbiological synthesis, and scicnlific and technical information processing. They have also markedly increased the number of direct conlacts with US industrial firms, which are permitted underf Ihe Agreement, and in moreozen instances have signed agreements or protocols with specific organizations.

In contrast with earlier cooperative agreements in science and technology, which emphasized basic scientific research, the more recent Soviet interests are directed more toward areas of technology where' additional work could lead fairly quickly to improved products and stepped up productivity for the USSR. For example, joint US-USSR research on catalytic reactor modeling and joint work on lhe design and operation of thermal and hydroelectric power stations arc likely to benefit the USSRhorter period than the more scholarly work in pure mathematics or theoretical physics carried out under prior agreements- With some exceptions, the Soviets haveongstanding interest in these newer areas, but their progress has been slow. Interestingly, in most of the areas -including magnetohydrodynanucscientific and technological information processing, and metrology andt least one proposed project involves the use of computers, which is In consonance with other indications of intense Soviet interest in Western computer technology and applications.

Judging by the vigor of Ihcse efforts, it is clear that they have been strongly endorsed by the top leadership of the USSR. The Soviel scientists identified lo pursue the collaborative research arc among the USSR's best, and Ihey seem to have received somewhat more freedom than in ihe past to plan and cany out viable cooperative programs.

Despite the Soviet desire for successful scientific and technological cooperation with the United States, lhe agreements have encountered delays In some cases, lhe Soviets arc not yet ready to receive, fund, and otherwise lake care of the US researchers who would be working in the USSR. Hard currency problems continually reappear wilh respect to Soviets traveling abroad, and communications between US scientists and their Soviel counterparts, particularly by letter, arc very slow. Vestiges of the USSR's long history of secrecy and bureaucracy in science and technology are still visible, but some loosening appears lo bc taking place.

To date, lhe USSR's rcccnl overtures to US industry underf the Agreement have been decidedly one-sided, in ihai US companies in the end have given information to Soviet agencies nor in return foi oilier information hut rather in Ihc hope ofoothold in Soviet markets. With very few exceptions, the Soviets have refrained from revealing any lechnology of their own for possible licensing or trade with the US firms. However, there is some feeling on the pari of the US firms thai

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there probably is nol much Soviel technology that would interest them. So far in these contacts, the Soviets havereference for high technology and for dealing wilh largeonglomerates and multi-nationals. It appears that the USSR's principal objective is to explore and exploit at minimum cost modem US technology under lhe guise of cooperation, just as they have done with the French under the Sovicl-French cooperation agreement.

Sharing the Burden with Eastern Europe

astern Europe's laboratories and industry have been an important source of lechnology for the USSR in the past. Through CEMA, the Soviets arc trying toore systematic allocation of research responsibilities. The RYAD computer programotable example, ln the. Bulgaria. Czechoslovakia, East Germany, Hungary, and Poland reluctantly agreed lo cooperate wilh the USSR in the joint development und produclion of RYAD computers. These countries already had their own computer projects as well as licenses to produce Western-style computers thai were nol compatible with RYAD. Eastern Europe was first given responsibility for developing software and peripheral equipment. Laicr. its role was expanded lo include central processing units as well. In the nuclear field, the USSR and Eastern Europe have cooperatedumber of years in ihc production and distribution of radioisotopes for medical research and industry The program was expanded0 to include reactor engineering

eanwhile, the USSR expects to benefit from growing East European acquisition of Western technology, especially in lhe field of electronics. There are enough reported cases of such transfers lo suggest that (he Soviet Union normally geis the benefit of East European purchases of Western equipmeni, sometimes including the equipmentood deal of state-of-the-art as well as obsolescent technology has been transferred within therea in connection with the large and rapidly growing trade in machinery, the sale of licenses, and Ihe recent spurt in joint Soviet-East European investment projects.

Release ofesources

lthough Ihe resources presently preempted hy Soviel military and space RAD programs would be of great use in the development of civilian lechnology or in assimilating Western technology, there is very little evidence thai lhe USSR is moving in this direction, ln fact, the current pace of development of Soviet mililary weapons systems Is such that, barring abrupt cancellations of major programs, all major mililary RAD resources -including (hose concerned wilh ballistic missiles, major surface ships, manned bomber aircraft, space systems, and nuclear and conventional

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warfarehould be employed almost exclusively in military work at leastfter that time, the effects of international SALT negotiations may lead to some realignment in the allocationesources between military and civilian uses.

Outlook

he Soviet campaign to acquire foreign technology has been and will be successfulimited sense. The growing imports of machinery and equipment together with more cooperative ventures and bilateral agttmems willubstantial amount of Western technology to thehether in the form of informal (and sometimes inadvertent) disclosure of know-how. exchanges of technical data, or finished products. Nevertheless, these transfers are unlikely to close the technological gap with the West or to speed Soviet economic growth appreciably. On balance the Sov,et leadership probably will be disappointed in what is accomplished through importing machinery from the West, and the prospects for rapidly and effectively exploiting the other channels of technology transfer appear not much better.

direct effect of machinery imports will not be large, because their volume will be small relative to total domestic investment in the USSR.otal imports of machinery and equipment from the developed West wereillion In view of the cost of debt service and the Soviet Union's hard currency constraint, it is reasonable to assume that macliinery imports will not exceed S4 billion toillion per yearf imports grow evenly to S4 billion toillion over the nextears and are all directed into industry, the growth of industrial investment will increase by less than one half percent per year.

the imported technology should bc more productive than the technology available domestically, it clearly cannotarge impact unless it can be duplicated and adaptedide scale. There is no indication that the Soviet record with respect to assimilating foreign technology will improve markedly in the short or medium term.

he cooperative ventures now being considered have an importance beyond the quantity of technology transferred,hout Western (and particularly US) help, the Soviet Union could not develop its raw material resources as quickly as it hopes to. In part, the USSR simply lacks critical elements of the technology needed to exploit

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its raw materials The United States can supply, for example, the drilling and production technology necessary Tor rapid exploitation of oil and gas deposits in the permafrost regions of Siberia or off Soviet shores. Although the USSR will sell part of this oil and gas to finance its machinery imports, there is some evidence that the projects designated for joint Soviet-Western development will be needed tooviet energy shortage by.

hile technology transferred from the West is not likely,to improve the USSR's overall economic performance much, (his technology could be instrumental in making some Soviet products competitive in important Western markets.

developed technologynnclimcnt. and low electric power costs in Siberia, some of the Soviet enrichment plants probablyompetitive advantage over Western plants. If the USSR develops or obtains additional gaseous diffusion technology, the Soviet advantage would tend to increase. In general. Soviet nuclear power reactor technology isar wilh that in the West, although Soviet designs sufferifference in safety philosophy. The Soviets will either have to adopt Western safety practices or convince the West of the validity of their approach before they will be able to sell any reactor plants in the West-

Soviet commercial aircraft have been improving steadily in terms of world standards. At least Iwo remaining technical hurdles must be overcome, however, before Soviel civilian aircraft can be considered truly competitive in rhe world "market: they mustnternationally approved navigation systemserformance in terms of engine life, maintenance, and economy comparable with Western aircraft. The USSR is well on its way to acquiring navigation systems by purchase of Western equipment and technology Improving engine performance may take longer because the Soviet metallurgical industry generally has not been able to control quality adequately in the production of high-temperature materials However, acquisition of Ihis technology from the West may be piohibited because of lis direct military application.

The Soviet manufacture of certain common biological products andspirin, penicillin, streptomycin, and theould be improved, with minimal technical help, to the level that would allow international competition with similar Western items this tame observation applies to many packaged foods and dnnks.

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3S. The bilateral scientific-technical agreements, if carried outufficiently broad basis, could help the USSR where it needs help most -bypark to theector. Some joint projects -principally those involved in basicill resultairly equitable distribution of benefits between Ihe United States and the USSR Most other projects will benefit the USSR more than its partners. In all cases, the quality ofork should be enhanced by the close contacts required by the agreements. Still, delays in communication and both government and private reluctance to divulge information willontinuing problem andew instances may well lead to Ihe termination of projects.

n sum, the prospects arc dim that technology transferred from the United Stales lo the USSR willubstantial influence on Soviet economic developmentor all of the reasons discussed above -the transfers will probably be too meager and loo slow. Thestablishment itself must generate most of the productivity gains necessary Io speed up economic growih and to narrow the technological gap separating the USSR from Western countries.

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