Created: 2/1/1963

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INTELLIGENCE AGENCY Office of Research and Reports


Economic Intelligence Report




This material contains Information aflectlng the National Defense of the United States within the meaning of the espionage laws,SC,, theor revelation of which In any manner to an unauthorized person Is prohibited by law.

CENTRAL INTELLIGENCE AGENCY Office of Research and Reports


This report provides the detailed analysis and the basic statistics used in the preparation of CIA/RR, Recent Trends ln Soviet Economic Policy,ECRET. For the most part, data are derived from Soviet official announcements, technical journals, and statistical handbooks. omplete-list of source references is avail-

able in the files cf this Office.



Summary and

I. General

II. Economic Policy aad toe

of the Period9

Issues and Policy

III. Economic



Problems of Industry and Investment

F. Official Attitudes Toward Private

IV. Military Expenditures and Policy


of New Military Doctrine

V. Foreign Trade and

uropean Satellites


and AidUnderdeveloped Countries




USSR: Indicators of Economic

USSR: Distribution of Gross national Product (Adjusted

Factory End0

3. USSR: Average Annual Rates of Growth inProduction, by Branch of

Ik. USSR: Trends in Growth of the Labor Force,


5. USSR: Average Annual Rates of Growth ofProductive Investment,2 Plan



Cutout of Construction Materialsin Construction .

Average Annual Rates of Growth in New

Fixed Investment, by

Industrial Growth and Changes in Re-

source Use and


USSR; Average Annual Rates of.Growth in Real


Per Capita

Allocation of Mission-Related Military


Indexes of Resource Productivity in


Industry, Selected, and

Indexes of Industrial Production, by

3ranch ofO-6I

lgure 1. USSR: Growth of Gross National Product, Industry, and

Ture a. USSR: Growth ofO

re 3. USSR: Growth of Machinery Output,

Following Page


Summary and Conclusions

Although the economy of the USSR still is characterized by rapid growth of production, rates of growth have declined recently, in industry5 and in agricultureo. Meanwaile, _comr .petition for resources for use in the three main areas of economic activitydefense and space, growth, and consumptionhas become intensified, particularly competition for specialized high-grade resources.

The acceleration of the arms and space races, especiallyIas aad an appreciable retarding effect on the growth of tbe civilian economy of Che USSR. Continuation for theears of the recent accelerated rate of growth of expenditures forand space would perpetuate the present stagnation in agriculture and would cause considerable underfulfillment of production goals for industry. The Soviet leadership faces some difficult decisionsallocations to defense and within tbe defense sector itself. In particular, the leadership must decide how rapidly resources are to be directed to such expensive ventures as the antiballistic missile program or the program foran on the moon. There are tentative indications in3 budget and economic plan thatto the defense sector may increase less3 thanhus reducing to some extent the pressures on rates of growth and on consumption.

* The estimates and conclusions in this report represent the best judgment of this Office as of

Almost all Indicators of Soviet economic growthoderate slowdownnd lg62. Growth in industrial production averagedercent per year0I compared with an average ofercent per year5 Preliminary evidence2 does nottrong reacceleration in industry. Agricultural output1ercent above that0 butercent above that ven with the campaign to plow up millions of acre6 of grasslands, there appears to be no increase1 and possiblyecrease. The, increase in grossproduct (OHP) averagedercent_annually forearsdecidedly less than the averageercent for thc preceding

3 years. Those lower rates of growth, are still quite respectable by tbe standards of modern Industrial countries, although below vhat the Soviet leadership has come to expect and what is necessary tothe ambitious objectives of the USSR.

A number of_factorsQ..thls. slowdown in. growth. One has been the introduction of the Jtlahonr, workweek,(down from kjith the result that the total man-hours supplied to industryI waa practically the same as ore Important factor, however, appears to be thethe_trend spendingeclineifle.starti ngI Defense spending declinedhare of GNP7 percent5ercent0 and declinedby perhaps aa muchillion (new) rubles*5 In theharp reduction in the number of servicemeneduction in the procurement of arms madehe large allocation of capital and labor required, by the "new lands" and "corn"apid growth of investment ln industry,arge increase in the bousing construction These trends have been reversed Total deranges hfjaA nation or the armed forces vas halted 2 the estimated increase in spending for defense and space vas aboutercent, about double the rate of increase in CUP, and the increase ln arms procurement was greater than the increase in the total production of machinery and equipment.

12 the interplay of the demands for largeall maj or sectorsefense and space, growth, and consumptionin an

tautness ln the Soviet economy.2 the leadership reactedoliciesr.

Jthe. ror exampTeT meat prices were raised byercent, private housing construction suffered another cut,cheduled reduction in the personal Income tax was "postponed." Furthermore, theagnatlqn-ln agriculture2 reflected theunwillingness of tho leadership to give agriculture theand skilled manpower necessary to raise the level of output and technology.

* Ruble values in this report are given ln new rubles established by tbe Soviet currency reformominal rate of exchange based on tbe gold content of the respective currencies0 ruble to This rate, however, should not be Interpreted as an estimate of the equivalent dollar value of similar US goods or services.

* Jo

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