SOVIET EXPENDITURES FOR RESEARCH AND DEVELOPMENT (SR IR 69-19)

Created: 10/1/1969

OCR scan of the original document, errors are possible

DIRECTORATE OF INTELLIGENCE

Intelligence Report

Soviet Expenditures for Research and Development

CI Or

s 'ARCHIVALNo.

PLEASE RETURNARCHIVES,ly

9

CENTRAL INTELLIGENCE AGENCY Directorate of Intelligence9

INTELLIGENCE REPORT

Soviet Expenditures for Research and Developraont

Introduction

Military research and development ) and military and civil space programs are pursued as highest priority undertakings in the USSR. The continuing drive to find and exploit technological breakthroughs in modern weaponryegular theme of Soviet scientific and military literature, and the aims and achievements of the Soviet space program have been given ample publicity.

Civil andas found it difficult to compete with such glamorous claimants for scarce

"ote This report was produced solely by CTA. It prepared by the Office of Strategic Research coordinated with the Offices of Current Intel-enoe, Economic Research, and Scientific Intelli-ae and the Foreign Missile and Space Analysis

It updates certain aspects of SR Rubles for Research: Trends ir.xpenditures, November Revisions in the data in the earlier report result partly from the acquisition of new information on Soviet expenditures for science and partly from continuing improvements in dollar conversion rates for military research and development. changes make the dollar valuation offforts more comparable to the series estimated for Soviet militaryand deployment. the terme of reference and methodology described ii Rubles for Research are unchanged.

I

resources, but the Soviets are now giving attention to the role of.

Estimates of expenditures by the USSR for military andnd space have intelligence utility in several ways. First, when combined with estimates of the costs of Soviet forces and deployed weapon systems they enable an estimate of total military related activity in the USSR. they permit conclusions about Sovietof heavy burdens againstoftenin the strategic and space arenas. Third, they indicate how much the Soviets have been willing to spend to improve theirand consumer sectors. Finally, theyeasure of total Soviet resources devotednd space which can be compared with US data.

This report analyzes Soviet funding for both military and civil research and development and space; examines overall trends in the financial support given to, including military space, to, and to civil space programs; and compares the Soviet effort with US levels and trends. Conclusions begin on page

-2-

The Evidence

The USSR annually publishes statistics on the science budget and total science expenditurescapital investment (exceptor which investment has not yet beenoviet statements imply that these published ruble expenditure data refer to outlays which correspond to US spending for both private and governmental research and development, including that financed by the Department of Defense, the Nationaland Space Administration, and the Atomic Energy Commission. Despite uncertainties in the details of Soviet statisticalprimarily to definitions and conceptswith those used in thein coverage is believed to exist between the two sets of data.

The Soviets do notreakdown of their expenditures among {including military space, and the civil space program- Analysis of the detailed budgetary information that is available, however, hasreakout of the Soviets'ffort from theirffort, which covers bothnd the entire space program.

To distinguish betweennd space expenditures, the Soviet military and civil spacecan be clearly definedombination of intelligence information and published soviet material--has been costed in dollars as if it were purchased in the us. when these figures are converted to rubles, theythe derivation of an estimate of Soviet. urther distinction is madecivil and military space programs on the basis of US categories tootal fornd military space.*

* These numerical findingspecial case among the military-economic estimates of the components of Soviet military expenditures in that they are based primarily on openly published Soviet financial data rather than on calculations of the expenditure implications of observed and es timotedprograms.

i

&1ZCRET

eneral check on the validity of theofxpenditures derived frombudget data and costing the civil space program, an independent effort has been made to estimateosts of individual weapon systems and then to sum these costs. xpenditure data on known weapon systems are adjusted to includexpenditures not allocable lo specific weapon systems, the results for there close enough to the estimate oferived by theanalysis approach to indicate that budgetyields generally valid results.

Gaps in information and problems of monetaryconversion of ruble expenditures to their US dollarto limit the precision of estimates of total funding levels for. Although the level of actualmay be higher or lower than calculated, the estimated trends in overall growth presented in this report are probably not markedly different from the actual trends as seen by Soviet leaders. Intrends can be estimated more confidently than absolute levels of expenditure.

Trends innd Space Expenditures

Total Soviet financial outlays forhich is believed to include all civil andresearch and development anda broad measure of trends in the resources the USSR is devoting to these endeavors.

* Ruble expenditure data are converted to dollars using ruble-to-dollar ratios that S efficiency level considerably above that of the USSR. Although thie ie in agreement withof qualified US engineers who have visited the USSR and also coincides with Soviet statements that US industry in general is about twice asas its Soviet counterpart, additional research is needed to further refine these ratios to morereflect varying efficiency levels in the different sectors of the Soviet economy.

-4-

Annual Soviet expendituresnd space more than doubled0 (See table, the announced expenditures for science in current prices totaledillion rubles, or the equivalent ofillion dollars,' hese expenditures had increased to anillion rubles (equivalent1 billionutlays for science exclusive of capital investmentillion rubles announced by the Soviets plus anillion rubles for the investment category. Totalnd space7 billion dollars4 billion during the same period.

0 total Soviet spendingncreased at an average rate ofercent, with the highest annual2 and thelanned increase ofercent has been announced but recent price increases will probably limit the real increase to less thanercent.

The average annual rate of growth of Soviet expenditures of aboutercent compares withercent for similar expenditures in the US. Even with this disparity in rates, however, the Soviets will not quickly close the absolute gap in expenditures. Ineriod, totalnd space expenditures amountedillion dollars, while Soviet expenditures amounted to the eguivalentillion dollars, and 8 the US was still spending half again as much as the USSR.

Statistics on science expenditures are published only on an annual basis, and what little evidence of future funding trends exists consists of generalized statements by economists, scientific planners, and other Soviet officials. An example is9 speech by party chief Brezhnev at theCongress of Communist and workers Parties committing the Soviet union to an increase in the pace of its scientific activity. This statement

* Dollar values used in this report for Sovietare expressed in terms of constant6 US prices. Those for the US ore in current prices.

5-

Soviet and US Expenditures for Research and Development and

6 Dollar-

Soviet Expenditures a/

includingspace

Civil space

Civilj

includingspace) aj

Civil space d/

2567

7.6

2-2

2.6

0

3.7

6.5

7.0

1.6

6.0

Billion Curront40

8.1

Because of rounding, components may not add to totals aho US data are in fiscal year terms, Soviet in calendar year terms.

Soviet ruble expenditures for "science" are announced and th

size of the subcategories are derived from these and other

the announced science expenditures excluded capita

b.

a.

d.

; ercent of the ts estimat for8 only.

ational Soience Foundation data.

Includes Department of Defense total expenditures,usted to conform to /rational Science Foundation definition and Atomic Energy) for military purposes. Total of expenditures by National Aeronautics and Space (includingatellite Corporatio Department of Commerce, Department of the Interior, Atomic Energy Commission (civil space only}, and National Science Foundation.

-6-

igher growth rate thanoercent real increase in expenditures experienced during the past few years (after the effects of recent price have been discounted).

Trends in

The largest share of total Soviet expenditures for science is estimated to have gone toncluding military space (hereafter referred to as ccuived about two-thirds ofxpendituresndits share is declining it was still tho Largest category inhen it accounted for almost half of the total. (See chart, below.)

During theears the USSR has spent the equivalent of nearlyillion dollars on the qualitative improvement of its arsenal of weapon

SOVIET AND US EXPENDITURES FOR RESEARCH AND DEVELOPMENT ANO

-IS

'

rod

t

f

i i

<

i . ..

-7-

OECRET

systems. Although all military missions havefrom this effort, most of the resources have been channeled into upgrading the strategic attack and strategic defense forces.

Estimatedxpenditures haveonly slightlyhare of total estimated defense spendingrowing from about one-sixthurrent share of about one-fifth.

The trend inpending over this period has not been smooth. Estimated expenditures rose rapidly during the early Sixties, with large amounts of money flowing into the development of third generation ICBMs, an IRBM, new fighterand the ABM program. xpenditures apparently stabilized orslightlymphasis was shifted to the space effort and estimated expenditures on thecivil space program increased rapidly. Asin civil space spending began to slow down in the last three years, expenditures forgain increased, reaching the equivalent ofillion dollars (See the table on

The pace of activityumber of weapon systems now undertrajectory ICBMs, multiple warheads, high performance aircraft, submarines, air defense and tactical air systems, ABMs, and reconnaissancethat militarypending will continue to grow. The need for Improving the technological level of Soviet industry, much heralded in recent Soviet literature and highlighted by Brezhnev ot the Internationalin Moscow inill present serious competition unds, however, and may slow the rate of growth ofn the future. Given the Soviets' strong defense motivations,and thoir uncertainties about the prospects for and nature oftrategic arms limitation agreement, the final balance betweenndver the next several years has probably not yet been decided.

Soviet and USxpenditures havearallel pattern in recent years. Both felt the short run impact of large civil .space expenditures in the mid-Sixties and both reflect steadily increasingxpenditures over the longer term.

Trends in Civil Space Expenditures

Estimates of annual spending on civil spacein the USSR, in US expenditure terms, reached the billion dollar mark From then5 the soviet space effort was the most rapidly growing category ofpending.

In its initial phases, the Soviet space program had achieved economies in large part by using boosters developed for the Soviet missile program. 2 the increased weights of payloads for future programs forced the development of large boosters specifically designed for space applications. This, coupled with the advent of manned space flights, drove space spending up rapidly during theears. 5 estimated annual Soviet civil space expenditures had reached a level that would equalillion dollars if the programs had been bought in the US-

58 civil space spendingto increase, butecreasing rate, as much of the developmental work on large space boosters and spacecraft for manned space flight neared completion. 8 expenditure level is estimated at the equivalent ofillion dollars. Civil space programs currently under way and projected in intelligence estimates willhold expenditures for these purposes at or near this level for the next few years.

As in, us and Soviet civil space spending patterns are quite similar. In the US, expenditures by the National Aeronautics and Space Administrationeaknd although Soviet spending on programs of this same general type is still going up the Soviet rate of growth is rapidly declining. Estimated Soviet spending on civil spaceotaled aboutillion dollars compared with aboutillion dollars for the US.

-9-

Trends__inxpenditures

The largest part of the gap in spending between the US and the USSR has heen in funds devoted to, where Soviet spending is believed to have lagged that of the US byillion dollars duringeriod.

Thia relative neglect of the depth and quality ofccurred in large part because of the heavy commitment of financial, personnel, andresources by the USSR to advanced military weaponry and space systems. Although estimatedfor theector havo increased steadilyhey are stillow level con-pared with those in the US. The equivalent of onlyillion dollars was spent in tho USSR8 onompared with aboutillion dollars for the US.

The low priority accordedn the past not only contributed to the slow rate of oconomic growth and the small increase in productivityin the USSR in recent years, but it has also probably made Soviet military programs more costly. Tho lackroad, adaptive industrial base has provonted the developmentalanced economy with depth in every sector to meet changing mil -tary demand 3.

Soviet authorities are now more aware than ever of tho adverse effects the lack ofpending has had on econoniic progress, and efforts aro currently under way to improve the situation. The Soviets have identified three approaches: First, an increase in the expenditure level for civils to take place during the next Five Year. hange in emphasis from research to development is being called for. By Soviet admission, this will move the USSR closer to US practice, which the Soviets admit is more efficient. Third, improvements are planned for the overall administration of fforts to eliminate bottlenecks and speed oconomic returnsxpenditures. Major changes are planned in every stage ofrocess, from initial planning to final pricing of new products.

Conclusions

Soviet financial outlays forto include spending for both military andnd spaceprobably continue to be spurred to higher levels by ambitious military and space goals and concurrent efforts to find ways to reverse the declining trend in industrial productivity

Total "science" expenditures, which are announced by the Soviets, have grown0 at an average annual rate of aboutercent. The largestincreases were registered03 when expenditures increased by an averageear. Since then the average annual rate of growth in expenditures has been onlyercent and no individual year's growth has deviated from this average by moreercent. Totalare likely to continue to grow at about the same rate in the near future.

Estimated outlays fornd military space, which grew rapidlynd then declined slightlyave shown signs of growth since then. Outlays for8 are estimated to beillion dollars.

rograms have grown steadilyut the absolute level of expenditures estimated for civilaboutillion dollars in still far below that of. Increased emphasis will probably be placed on this sector in the future, and its relative share ofxpenditures will probably grow.

Estimated civil space programgrew very rapidly in the earlyto level offnd will probably remain at about their present estimated levelillion dollars during the next few years.

- -1

Tho US devotes considerably more resources to military and civilnd space than the USSR. n comparable cost terms, the totals of all, three componentsncluding military space,, and4 billion dollars for tho US and4 billion dollars for the USSR. The major disparity is in expenditures for civil and. Although investment in space facilities and in some of the larger space programs has passed through the more expensive stages in both countries and nay slacken off in the future, the steady long-term growth innd space spending in the USSR will probably continue.

Original document.

Comment about this article or add new information about this topic:

CAPTCHA