| CIA HISTORICAL REVIEW PROGRAM
MEMORANDUM FOR; Deputy Director for Intelligence
DCI Request Regarding Soviet Economic
The attached statement waa prepared in response to Mr. Holms' request for additional information on the performance of tho Soviet economy.
We have not yet received the data necessary for nioro proaiso evaluation of Soviet performance during tho first half These data are expectedew days and if they are received, wo shallore extonsivo article in next weok's Weekly.
attachment has been coordinated with OCI.
Acting uireccvi Economic Rooearch
The Current Soviet Economic Situation
Soviet industrial outputercent greater in the first half0 than in the comparable period of last year.* Thisignificant improvement overercent increase posted in the first half Viewedonger time frame, however, the figure is less impressive. The following average annualincreases have been claimed for industrial production in other periods:
It should be noted that, because economic activities were hampered by unusually bad weather inhe increase in production between the first half9 and the first half0arge element of rebound or recovery. In addition, production this year has been stimulated to some degree by widespread efforts to tighten labor discipline and by campaigns to boost production to commextoratc the Lenin centenary and completelan periodlourish.
Although the short-run picture has brightened, it is apparent that the long-run outlook for the Soviet economy has not improved fundamentally. Despite decades of strenuous development, Soviet gross national product is only half as great as the US GNPand onlyercenter capita basis. The growth of industrialis still in tho long-run decelerating trend
* The figures cited in this memorandum are official Soviet statistics and overstate Soviet economic growth. They are believed to be fairly consistent over time, however, and therefore comparable to one another. It may bc noted that the CIA estimate of the increase in industrial production in9ercent, whereas tho corresponding Soviet figureercent. Data for the first half0 have not yet been received in sufficient detail to permit recalculation and deflation.
that led Brezhnev and Kosygin to initiate the economic reform The growth of investment is slowing. Civilian technology is far below the US level, and the speed of technological progress is unsatisfactory. The labor force is growing slowly. Agriculture employs nearly one-third of the labor force and even sohronic laggard. Judging by the recently announced agricultural program, agriculture probably willradually increasing share of investment in thos it did in.
There is evidence of some disagreement among Soviet leaders concerning the allocation of resources among tho various sectors and industries, programs to accelerate technological progress, and organizational questions. Their inability to develop new and promising approaches to these problems appears toactor in the late appearance of the five-year plan. The plan was to have been published two years ago and now is scheduled to be firmed up by next March. To date only its agricultural section has been agreed upon and published.
This year's recovery from the unusually poor economic performancehort-run phenomenon, should reduce the pressuro on the Soviet leaders and tend to moderate their disagreements. Economic problems will seem less urgent as increasing production makes more resources available for the competing claimants. Disputes over allocations and priorities arc endomic to the Soviet system, particularly during the formulation of five-year plans, but there is no evidence that the intensity of tho current disputes is abnormally sovere.