THE TECHNOLOGICAL GAP: THE USSR VS THE US AND WESTERN EUROPE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP71B00364R000100190030-4
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 68
• Document Creation Date: December 20, 2016
• Document Release Date: May 1, 2007
• Sequence Number: 30
• Publication Date: June 1, 1969
• Content Type: IR

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DIRECTORATE OF
INTELLIGENCE
Intelligence Report
The Technological Gap:
The USSR vs the US and Western Europe
On file DO release
instructions apply.
Secret
Secret
ER IR 69-13
June.1969
Copy No. 18 0
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WARNING
1'his document contains intorrnation affecting the national
de-Iritse of the United States, within the meaning of Title
15, sections 793 and 794, of the US Code, as amended.
Its transmission or revelation of its contents to or re-
cuipt by an unauthorized person is prohibited by Iaw.
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CONTENTS
Summary . . . . . . .
Page
I. Introduction . . . . . . . . . . . . 7
II. The Current Size of the Gap . . . . . 8
A. Development of Soviet
Technology . . . . . . . . . 8
B. Measurement of the Technological
Gap . . . . . . . . . . . . . . 9
1. Overall Levels . . . . . . . 9
2. In Industry . . . . . . . . . 11
III. Trends in Technological Advance,
1950-68 . . . . . . . . . . . . 16
IV. Some Factors Bearing on the Gap . . . 22
A. Allocation of Relevant
Resources . . . . . . . . . . . 22
1. Education . . . . . . . . 22
2. Research and Development . . 23
B. Process of Diffusion of New
Technology . . . . . . . . . 24
C. The Effects of Different
Priorities . . . . . . . . . . . 28
V. The Likely Effects of Current
Reforms . . . . . . . . . . . . . . 30
A. Reforms of Planning and Incentives
in Industry . . . . . . . . 31
B. Reform of Industrial Prices . . . 32
C. Revamping of Organization and
Incentives in the Research and
Development Establishment . . . 33
D. Conclusions . . . . . . . . . . . 33
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Comparison of Major Branches of Soviet
and US Industry . . . . . . . . . . . . 35
1. Approximations of Relative Levels
of Technological Advancement of
the United States, Western Europe,
and the USSR in the Mid-1960's . . . 10
2. Comparison of Average Annual Rates
of Growth of Factor Productivity
of the United States, Western
Europe, and the USSR . . . . . . . . 17
3. USSR: Imports of Machinery and
Equipment from the Developed West 21
4. Comparison of Levels of Education
of the Labor Force of the United
States, Western Europe, and the
USSR in the Mid--1960's . . . . . . . 22
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
June 1969
INTELLIGENCE REPORT
The Technological Gap:
The USSR vs the US and Western Europe
Summa
The technological gap between the Soviet Union
and the developed West is large and is probably
widening. The gap apparently narrowed somewhat
during the 1950's but evidently has been widening
during the 1960's. Thus, except in the military
field, the Soviet Union has not shared in the post-
World War II technological revolution to the same
extent as have the United States and Western Europe.
The Soviet lag will probably become even greater,
as long as the USSR continues to preserve all of
the essentials of the present system of planning
and economic administration that have retarded in-
novation in the past.
The Soviet technological lag is reflected in the
large productivity gap that exists between the USSR
and the West. The productivity (output per unit of
capital and labor) of the Soviet economy is only
about one-third that of the United States and a
little over three-fifths that of Western Europe.
Because full allowance cannot be made for differ-
ences in product quality, this measure tends to
overstate the relative capabilities of the USSR.
Although the measure of productivity differences
reflects a number of factors -- notably differences
in the quality of the labor force, in the allocation
of resources, in management, and in natural endow-
ments -- the level of technology actually employed
Note: This report was produced solely by CIA. It
was prepared by the Office of Economic Research and
was coordinated with the Office of Scientific
Intelligence. The judgments on the technology in
use in military industries have been coordinated
with the Office of Strategic Research.
On file DOC release
instructions apply.
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is an important ingredient, but one that cannot
be quantified.
During the 1950's, productivity rose somewhat
more rapidly in the USSR than in the United States,
but considerably less rapidly than in Western
Europe. In the 1960's, productivity has slowed
markedly in the USSR, speeded up considerably in
the United States and continued at about the same
high rate in Western Europe. These data suggest,
but do not prove, that the technological gap is
widening; they indicate unmistakably, however, that
the Soviet Union is falling farther behind the West
in the efficiency with which it manages its economic
resources, including technology.
In the postwar period the USSR has borrowed
technology extensively from the West, particularly
from Western Europe. Total imports of machinery
and equipment from the developed West increased
from a mere $100 million in 1950 to nearly $800
million in 1968. In the 1960's the USSR imported
plant and equipment for the chemical industry
amounting to more than $1 billion and plant and
equipment for the consumer goods industries totaling
about $500 million. Contracts totaling more than
$1 billion have been let or are under negotiation
with Western firms in a massive Soviet effort to
modernize and expand the small and obsolescent motor
vehicle industry.
In the market economies of the West new technol-
ogies are spread rapidly, and the pace evidently
has quickened in recent years. Private business
firms, spurred by competition and profit incentives,
have been the innovators in this process and govern-
ments have provided tax incentives and financial
support. In addition, the multinational firms,
which have burgeoned in the West in the postwar
period, have greatly facilitated the international
transfer of technology.
In the USSR the development and diffusion of new
technology tends to be much more balky than in the
West. The USSR's centrally administered economy has
no automatic mechanism for bringing about techno-
logical change; the incentives that are intended to
do so are ineffective. Instead, new production
methods and products are "introduced" by admin-
istrative bodies through plans for new technology
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and new products. The required materials and equip-
ment are also planned. and distributed centrally. As
a concomitant, most research and development is
carried out in government institutes rather than by
enterprises. This bureaucratization of the innova-
tive process is a severe drag on technological change.
An even greater obstacle is the built-in reluc-
tance of plant managers to change technology, because
such changes threaten plan fulfillment, may result
in loss of bonuses, and bring on more demanding plan
assignments. Because of taut planning, there are
few reserve supplies and plant capacities to handle
bottlenecks and provide flexibility. Finally, be-
cause of the peculiarities of Soviet prices, there
is no accurate means for determining the payoff on
new technology. Even when new plants and equipment
are imported, licenses acquired, or foreign technol-
ogies merely copied, the modus operandi of the Soviet
system delays their introduction and reduces their
effectiveness in comparison with results that would
be obtained in the West.
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The ability of the USSR to manage technological
change (investment programs) evidently has deteriorated
in the past decade. Both the rate of productivity
growth and the return on invested capital have fallen
sharply during the 1960's in contrast to a stability
or rise in the United States and Western Europe.
The current Soviet leadership is relying on a series
of economic reforms to achieve a breakthrough in
coping with the chronic obstacles to technological
change. These reforms represent merely one more
attempt -- and an exceedingly cumbersome one -- to
make the system work better without changing its
essential features. The prospects for their speed-
ing up the innovative process in the Soviet economy
are not promising.
In the industrial sector the level of Soviet
technology relative to the West differs greatly
among the various branches, a direct reflection of
Soviet priorities over the years. These priorities
have favored the military sector above all. This
favored status, coupled with rigid secrecy policies,
has, in effect, resulted in a dual economic sys-
tem -- military and civilian -- with the former
having been protected from the frustrations in
resource supply that plague the latter. Consequently,
the USSR has achieved near-parity with the United
States in technology for producing many types of
weapons and space equipment, and even superiority
in a few areas.
Second priority has been accorded to the basic
industries whose output directly supports both mili-
tary production and the investment programs essential
to rapid growth -- steel, fuels, electric power,
producers' equipment, and more recently, chemicals.
Although these basic industries have equaled or even
occasionally surpassed the West in some technologies
in a few plants, the bulk of their output is produced
with technology obsolescent by a number of years
relative to that predominantly in use in the West.
Last in the scale of priorities have been the
industries catering to the population -- textile
and clothing, food processing, consumer durables,
and household products. Their low status has
resulted in an average level of production technol-
ogy that is woefully backward by Western standards --
by several decades in many cases. These industries,
by and large, also turn out products of a quality
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and assortment far inferior to those produced any-
where in the industrial West.
In no major branch of industry is the average
level of Soviet technology in use on a par with
that in the United States or Western Europe, and
the Soviet position does not appear to be improving
relative to the West:
The Soviet aircraft industry produces
high-performance fighters and interceptors
comparable with those in the West, but
civil transport aircraft now entering
production are inferior to similar Western
aircraft in range, payload, fuel consump-
tion, and engine life.
Soviet technology for producing computers,
peripheral equipment, and solid-state elec-
tronic components is behind that of the
West by at least five years, and the gap
is widening; Soviet comsat technology lags
three to five years behind the West and is
likely to remain so for the foreseeable
future.
The Soviet stock of machine tools is con-
siderably younger than in the United
States, but its technological composition
is inferior, because of its poor quality
and the preponderance of standardized,
general-purpose tools.
Both the production technology and the
product mix in the Soviet automotive and
tractor industry are obsolescent compared
with the West; many products are merely
copies of old US designs.
In almost all aspects of petroleum tech-
nology the USSR lags well behind the
United States, by as much as 10 years
in seismic exploration and offshore
drilling.
Soviet blast furnace technology is approx-
imately on a par with the West, but only
12 percent of Soviet steel is made by the
modern oxygen converter process, compared
with over one-fourth in Western Europe
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and over one-third in the United States,
and Soviet rolling and finishing facilities
are grossly inadequate and technologically
inferior to those in the West.
Although the USSR leads the world in con-
struction of hydroelectric powerplants and
in high-voltage long-distance transmission,
Soviet thermal power engineering lags at
least five years behind the United States
both in size of units and in other technol-
ogy-
In coal mining, Soviet longwall technology
is behind that of the United Kingdom and
West Germany, where natural conditions are
comparable, and the USSR lags behind both
the United States and Western Europe by a
decade or more in mechanical loading,
mechanization of surface work, and coal
preparation techniques.
The Soviet chemical industry is at least
five years behind the West in the tech-
nology used to produce most important
chemicals, and its product mix with its
relatively small production of synthetics
is obsolescent; no Soviet plant yet pro-
duces ammonia using the new technology
that is revolutionizing fertilizer produc-
tion in the West.
By and large, the technological level of
the Soviet food processing and textile
industries is a generation behind the
West; Soviet appliances and housewares,
often produced as sidelines in heavy
machinery and aircraft plants, are mainly
copies of obsolete Western models.
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I. Introduction
1. This report is intended as a preliminary
analysis of the current extent of the technological
gap between the United States and the USSR, and of
recent trends in the relative positions of the two
countries. Wherever possible, comparisons are also
made with Western Europe. The review is made on
two levels: (1) overall, by quantitative measure-
ments in the size and trends in the gap to the ex-
tent that it is reflected in total output per unit
of total inputs (factor productivity) in the two
economies and in other aggregate indicators, and
(2) in industry, by a series of brief summaries
of the differences in technological levels and
trends in the two countries in individual industries.
The relative commitments of resources to techno-
logical development are also discussed. Finally, a
summary and comparative description is given of the
innovative processes -- invention, diffusion, and
adaptation of new technologies in the two radically
different economic systems, followed by an assess-
ment of the USSR's near-term prospects for signifi-
cantly narrowing the gap.
2. Following more or less along the lines of
a recent, somewhat similar study of the gap between
the United States and Western Europe,* this report
defines technology simply as the methods of convert-
ting raw materials into semifabricants and final
products and the design of final products. Techno-
logical advance (innovation) means the introduction
of new methods and designs that, compared with
existing ones, either reduce costs or improve the
quality and services of existing products or yield
new products and services. Technological advance
in the narrower sense thus takes the form of new
products, such as video-tape recorders, and new
processes, such as the oxygen converter process for
steelmaking. In a broader sense, technological
progress also involves the application of advanced
management techniques for example, statistical
quality control -- and the use of efficient forms
of economic organization -- for example, the assem-
bly lines.
3. In comparing one country's technological
level with another's, it is important to distinguish
US Department of Commerce, The Nature and Causes
of the Technological Gap Between the United States
and Western Europe, FOR OFFICIAL USE ONLY. (To be
published.)
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between technological knowledge and technology in
use. At any given time, even in the same country,
a much greater store of technological knowledge
exists than is actually being employed to produce
goods and services. This storehouse of knowledge
about potentially economical designs and processes
is an amalgam of ideas in various stages of fruition.
Some may have been tested and await only the nec-
essary incentives for exploitation; others are
reasonably well worked out and close to operational;
still others are merely embryonic. Technology
progresses as these ideas become operational and
are put to use. These considerations apply to a
country?s domestically developing technology. In
addition, through trade and patent-licensing possi-
bilities, countries can borrow technology from one
another. This report considers only that Soviet
and Western technology actually in use. No attempt
is made to measure the gap in technological knowl-
edge. In the modern world, new technological knowl-
edge spreads very rapidly. Hence, the disparities
in the level of technological knowledge among coun-
tries are likely to be much smaller than the dis-
parities in the levels of technology in use.
4. Judgments about relative levels and trends
in technology in use (hereafter referred to simply
as technology) necessarily must be largely quali-
tative, because of the many qualifications that
must be attached to the various quantitative meas-
ures bearing on overall technological levels and
trends. With respect to specific industries, large
elements of subjectivity are involved in estimates
of how many years one country is behind or ahead of
another country in a particular area. Speculations
about the future are especially hazardous when they
concern such a complex matter as technological
change. The conclusions presented in this report
are tentative and provisional.
II. The Current Size of the Gap
A. Development of Soviet Technology
5. From the outset of its industrialization
drive the USSR has used every device available to
keep abreast of worldwide developments in technol-
ogy, while simultaneously maintaining a policy of
cultural and political isolation. In the early
1930's the USSR borrowed technology from abroad on
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a massive scale via imports of machinery and equip-
ment to further its goal of industrializing at break-
neck speed. After a period of retrenchment that
lasted from the late 1930's until the mid-1950's
the USSR again went into the borrowing business on
a broad front. It did so primarily by sharply in-
creasing its imports of machinery and equipment
from the industrial West.
6. Soviet technology has been further boosted
by the purchase of foreign patents and licenses, by
the conclusion of scientific and technical agree-
ments with Western firms, and by the exploitation
of foreign scientific and technical literature. A
special institute under the Academy of Sciences
conducts a large-scale program of .abstracting and
disseminating such literature; in 1967 some 16,350
foreign periodicals and 6,500 books were abstracted.
Over the past decade the USSR also has actively
participated in a program of scientific and techni-
cal exchanges with the United States, from which it
must have benefited in terms of technological ad-
vance in civilian fields.
7. Finally, the USSR, particularly since 1955,
has built up a large domestic capability to develop
technology through a massive research and develop-
ment establishment, which has worked out its own
innovations and adapted foreign technologies to
Soviet use. As a result, Soviet technology may be
ahead of the West in a few military-related areas,
such as large helicopters. Nevertheless, although
the USSR now sells patents and licenses on its own
technologies to the West, the innovations emanating
from its research and development establishment have
been few.
B. Measurement of the Technological Gap
8. The average level of technology throughout
the Soviet economy can be compared with that in the
United States and Western Europe by using several
different quantitative measures that reflect the
general levels and trends in technological develop-
ment. The measurements and their limitations are
discussed in the following section.
1. Overall Levels
9. No precise measure of international differ-
ences in levels of technology has yet been devised,
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even assuming that the term itself could be defined
precisely enough to permit such measurement. An
assortment of aggregative measures can be used,
however, to give some quantitative content to the
impression obtained by all Western observers that
the USSR is not on a par with the West in overall
technology. The measures are: gross national
product (GNP) per unit of labor and capital (factor
productivity), GNP per worker (labor productivity),
and value of capital stock per worker. The measures
are summarized in Table 1. The data for Western
Europe relate to 1964, and those for the USSR are
for 1967; the estimate of factor productivity is
based on an estimate for 1960 made by Abram Bergson*
and extrapolated to 1967 by means of estimates of
growth of inputs and output.
Approximations of Relative Levels
of Technological Advancement
of the United States, Western Europe, and the USSR
in the Mid-1960's a/
GNP
of
and
per Unit
Capital
Labor
GNP per
Worker
Capital Stock
per Worker
United States
100
100
100
Northwest
Europe
55
48
45
Italy
35
33
31
USSR
34
33
31
a. All percentage comparisons of levels of GNP,
productivity, and expenditures for various purposes
given in this report are the geometric means of two
comparisons -- one carried out in US prices and one
carried out in the domestic prices of the countries
being compared.
10. Each of these measures has serious
tions as an indicator of relative levels of
limita-
* Bergson, Planning and Productivity Under
Soviet
Socialism, Columbia University Press, 1968,
p. 22.
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technological development among countries. The
measure "capital stock per worker" implies that all
technology actually available for use is embodied
in the capital stock, an assumption that would serve
to define technology in an essentially physical and
quite narrow way. Moreover, the technological com-
position (proportion of the old compared with new)
of the stock varies among countries, and in any
event international comparisons of values of capital
stock, to say nothing of domestic valuations of the
stock, are especially tenuous. The other two
measures -- GNP per worker and GNP per unit of
capital and labor -- pertain to relative produc-
tivity levels among countries. Obviously, produc-
tivity differences are attributable to many factors
other than technology in the fairly narrow way
defined in this report -- for example, differences
in natural resource endowments, levels of education,
and managerial methods in the broad sense. Indeed,
allowance for the effect of differences in the
quality of the labor force (level of education and
extent of female employment) reduces the "produc-
tivity gap" significantly, but the pattern is
essentially the same. The USSR and Italy are at
about two-fifths and Northwestern Europe is at
about three-fifths of the US level.
11. With all appropriate reservations, differ-
ences in the technology actually being employed
unquestionably constitute a major element in these
international differences in productivity. They
indicate clearly that the average level of technol-
ogy in the Soviet economy is far below that of the
United States and also well below that of Western
Europe. Moreover, these measures make inadequate
allowance for the quality of what the technology
produces. Were full allowance to be made for
product quality, the average level of Soviet
technology would be, comparatively, even lower
than the level indicated above.
2. In Industry
12. Although no attempt to quantify has been
made because of lack of data, the average level of
technology in use in the industrial sector alone is
probably somewhat, higher in the USSR relative to the
West than is that for the economy as a whole. There
are, however, enormous variations among the branches
of industry, and within individual branches, in the
level of technology vis-a-vis the West. Moreover,
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in all countries there are wide differences among
individual plants in the age of the technology used,
but the variation is much greater in the USSR than
in the West. Within a given branch of industry
some Soviet plants may use technologies equal to or
even superior to the average for that industry in
the United States or Western Europe. Within each
branch, also, the Soviet average level relative to
the West will differ widely among product groups.
In no major branch, however, is the average tech-
nological level on a par with the average level in
use in the United States or Western Europe. Roughly
speaking, Soviet technology probably comes closest
to Western levels in machinery (including electronics
and military equipment) and in metallurgy, and it
lags farthest behind in coal mining, forest products,
textiles and clothing, and food processing. Chemicals,
petroleum, electric power generation, and construction
materials seem to occupy a middle position. The
following sections are capsule assessments of Soviet
technology relative to the West in important branches
of industry.
Aircraft
13. The Soviet aircraft industry produces high-
performance fighters and interceptors, comparable
with those in the West, but Soviet civil transports
now entering production are inferior to similar
Western transports in range, payload, fuel consump-
tion, and engine life. Moreover, the development of
Soviet transport aircraft typically has required an
extremely long period between initial flight and
series production. The USSR leads the world in
development of rotor systems for very large heli-
copters and has also been first in many other features
of helicopter design. The United States, however,
has had a substantial lead in design and production
of high-speed tactical helicopters and associated
weapons systems.
14. Soviet production technology is behind that
of the West in computers by at least five years and
in solid-state-electronic components by at least
three years. Soviet computers now in production
are second generation machines using transistors
and capable of performing, at best, 1 million
operations per second. Some current model US and
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West European computers are third generation machines
using integrated circuits. The fastest US computer
is capable of performing 6 million operations per
second. Moreover, the United States now is moving
into fourth generation computers employing large-
scale integration that makes possible more complex
computers having greater speed and reliability. In
the production of auxiliary input/output equipment
and software, the Soviet Union lags even farther
behind the United States than it does in making the
computers themselves. Soviet communications satel-
lite technology lags three to five years behind
that of the United States.
15. Even though the Soviet inventory of machine
tools is considerably younger than in the United
States, its technological composition is inferior.
In the USSR a much larger percentage of the machine
tools produced are of the general purpose type than
in the United States, where the production of spe-
cially designed tools tailored directly to customer
requirements is the usual practice. For priority
customers, however, the USSR produces machine tools
equal in quality and accuracy to those produced in
the United States. The Soviet industry leads in
some nonconventional machining processes such as
electrodischarge machining, ultrasonic machining,
and in hot rolling of gears and shafts, but is far
behind in the use of numerically controlled machine
tools. The proportion of metalforming machine tools
relative to metalcutting tools is low in the USSR
compared with the United States, with a consequently
larger waste of metal.
Automotive and Tractor industries
16. The production technology used in the Soviet
automotive and tractor industries is, on the whole,
obsolete by Western standards. The same is true of
the product mix. In accord with Soviet priorities
the automotive industry emphasizes the production of
trucks, especially medium-size trucks with cargo
carrying capacities of 2 to 5 tons, rather than pas-
senger cars and light delivery and service vehicles
as does the West. Trucks now in production in the
USSR are still basically copies of old US designs.
New Soviet truck engines incorporate modern features
and have good performance characteristics, although
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they deliver less horsepower per cubic inch of dis-
placement than do US engines, because the low octane
ratings of Soviet gasolines dictate low compression
ratios. Soviet trucks have lower cargo ratings than
US trucks of similar weight and tire size, because
lower strength steels are used in frames and axles
and because Soviet trucks are subjected to severe
punishment by poor road conditions. Soviet tractors
are inferior by Western standards in weight-to-
horsepower ratio, service life, fuel consumption,
reliability, and ease of operation. Although fea-
tures such as four-wheel drive and power steering
for wheeled tractors and automatic transmissions
for wheeled and tracked tractors are now -being copied
from Free World designs, few such tractors are being
produced as yet.
17. Petroleum industry technology in the USSR
is behind that of the United States by perhaps as
much as 10 years in seismic exploration methods and
in offshore operations. The USSR also lags seriously
in deep drilling, in the design and engineering of
oil and gas producing equipment, and in secondary
refining including the use of catalytic cracking.
The Soviet industry appears to lead the world only
in water flooding to maintain the pressure of oil
reservoirs and in use of large-diameter pipelines
for both oil and gas. Future increases in produc-
tion of oil and gas will have to come largely from
deposits located at depths that will require the
use of improved drilling techniques and equipment.
A growing demand for higher octane gasoline and for
a wider assortment of high-quality low-sulfur petro-
leum products also will require more and better
secondary refining facilities.
Metallurgy
18. In metallurgy, Soviet mining enterprises,
relative to the West, use inferior mining, crushing,
and grinding equipment, slower and less durable
quarry trucks, and poor-quality chemical reagents.
Soviet blast furnace technology is more or less on
a par with the West. The USSR has built some of the
largest blast furnaces and open-hearth furnaces in
the world but has been slow in expanding the use of
new techniques, such as pelletizing of fine ore con-
centrates. In steelmaking, however, Soviet technol-
ogy lags considerably; for example, only about
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12 percent of its steel is now made by the oxygen con-
verter process, compared with a third in the United
States, one-fourth in Western Europe, and three-
fourths in Japan. The USSR lags grossly in the
availability and modernity of rolling and finishing
facilities. Although the Soviet steel industry has
been a world leader in development of continuous
casting, the West has diffused the process much more
rapidly. With the exception of a few large new
plants, Soviet nonferrous metals facilities are
inefficient and obsolete by Western standards.
Soviet technology for production of titanium alloys
and products, however, appears to be on a par with
that of the United States and the United Kingdom.
19. The USSR leads the world in construction of
hydroelectric powerplants and in high-voltage trans-
mission of large amounts of power over long distances.
Soviet thermal power engineering, however, lags at
least five years behind the United States, both in
size of units and in other technology. Supercritical
thermal power units are not operating at design
level or realizing anticipated economies in fuel
consumption. Boiler and turbine units have not been
able to stand the high temperatures and pressures
because of shortcomings in metallurgy and welding.
Coal Mining
20. Soviet longwall coal mining equipment is not
as dependable as that employed in the United Kingdom
and West Germany. The Soviet Union lags behind the
United States and Western Europe by 15-20 years in
mechanical loading of coal underground and by 10-15
years in mechanization of surface work at underground
mines. Soviet power shovels and draglines used in
strip mining of coal are not as large as those in
use in the United States, and disposal of overburden
is more costly in the USSR because of the techniques
employed. Soviet coal preparation techniques are
believed to be about 10 years behind those used in
the United States and Western Europe.
Chemical Industry
21. The Soviet chemical industry is the second
largest in the world, but the technology it employs
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to produce many chemicals is at least five years
behind that of the West. In the field of petro-
chemicals, for example, the USSR does not yet
produce synthetic glycerine on a commercial scale,
despite 10 years of research and development
whereas plants producing synthetic glycerine account
for 60 percent of US capacity to produce glycerine.
Problems in developing suitable domestic technology
and also in assimilating technology purchased abroad
account in part for the small Soviet production of
synthetic rubber, plastics, and manmade fibers,
relative to the United States. The Soviet lag is
particularly great in almost all aspects of ferti-
lizer production. The USSR as yet has no plants
producing ammonia (the principal ingredient of
nitrogen fertilizer) with a new technology that
reduces costs by as much as 50 percent. The United
States built its first such plant in 1965, and by
the end of 1968, approximately half of its total
capacity to produce ammonia consisted of plants
using the new technologies.
22. The technology of production in Soviet con-
sumer goods industries varies widely -- from highly
modern bread factories to archaic textile mills.
In other than bread products, the food industry of
the USSR lags 20-25 years behind the United States.
Soviet textile mill equipment is 25-30 years behind
that of the United States. Although efforts are
being made to modernize the mills with domestically
produced machinery, most of it differs little from
that produced 50 years ago. Technology in the USSR
for production of consumer durables lags far behind
that of the United States. Appliances and other
housewares are frequently produced as a sideline by
heavy machinery and aircraft plants, which have
little incentive to update their technology for
producing consumer goods. Household appliances are
smaller, less attractive, and less durable than their
US counterparts, and in most cases are merely copies
of obsolete Western models.
III. Trends in Technological Advance, 1950-68
23. Within the conceptual and other limitations
already specified, the aggregative measures of
productivity can also be used to provide some notion
of relative rates of technological progress. Thus
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they can reveal something about whether the techno-
logical gap between the USSR and the industrial West
is widening or narrowing. Table 2 presents compari-
sons of average annual rates of growth of GNP per
unit of capital and labor combined (factor produc-
tivity) for the USSR, the United States, and Western
Europe for various periods.
Comparison of Average Annual Rates of Growth
of Factor Productivity of the
United States, Western Europe, and the USSR
1.951-60
United States 1.7 2.7
USSR 2.2 1.4
X950-64
1960-64
United States 2.0
3.0
Northwest
Europe
3.2
3.0
Italy
4.4
4.5
USSR
1.9
1.0
24. These data show that the rate of productivity
growth in the USSR exceeded that of the United States
during the 1950's, but was well below that for the
1960's. The Soviet rates were far below those of
Western Europe, and especially below those for Italy
and Western Germany, throughout the period. Indeed,
the Soviet rate of growth in productivity is well
below that for all major countries of Western Europe
except the United Kingdom for the period 1950-64 as
a whole. During 1960-64 the Soviet rate was less
than half the rates achieved in all countries of
Western Europe, including the United Kingdom.
25. Thus, assuming that trends in productivity
reflect trends in technological development, the
gap between the Soviet and US levels narrowed during
the 1950's but has been widening during the 1960's.
Compared with Western Europe, the relative position
of the USSR has been worsening steadily since 1950.
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The relative deterioration of the Soviet position
was greatest of all with respect to Italy, the coun-
try nearest to it in level of productivity in the
mid-1960's. In summary, the USSR apparently has not
shared in the technological revolution of the post-
war period nearly to the extent that Western Europe
has. The performance of Western Europe illustrates
the catching up that could be expected of industrial
countries which were temporarily behind in technol-
ogy because of the war. The USSR, even further
behind, has not caught up much, if any, military and
space-related technology excepted.
26. The relative technological levels and trends
among industrialized countries, at least in the
manufacturing sector, are also reflected in the
nature and extent of their trade with one another
in machinery and equipment. The machinery indus-
tries are probably the most "technologically inten-
sive" of the manufacturing industries. The indus-
trialized countries of the West and Japan carry on
a large trade in machinery with one another; each
country is both a substantial importer and a sub-
stantial exporter in this trade. Also, as indus-
trialization proceeds, the large surplus of machinery
imports over exports, characteristic of a developing
country, tends to decrease as the country develops
its own capability to produce and sell machinery
and equipment abroad. The pattern of trade for the
USSR shows no such characteristics. In Soviet trade
with the Developed West there is a large gap between
the share of machinery in total imports and its
share in total exports; machinery makes up one-third
or more of total imports from the Developed West
and a mere 2-3 percent of total exports to these
countries. This large imbalance has remained
essentially unchanged for the past decade. Its
persistence suggests no significant improvement in
the level of Soviet manufacturing technology relative
to that of the West, including the ability to diver-
sify and specialize production, as well as to pro-
vide service for the machinery. This imbalance also
persists, although to a lesser extent, in Soviet
trade in machinery with the industrialized countries
of Eastern Europe -- East Germany, Poland, and
Czechoslovakia.
27. In industry and among its various branches
the relative trends in productivity and techno-
logical advance undoubtedly varied widely among
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countries during this period. The comparative data
required to measure these trends are not available,
but some evidence bearing on them can be culled from
the descriptions of technology in the various branches
of industry included in the Appendix.
28. Since the mid-1950's the USSR has been making
great efforts to upgrade its industrial technology
both by substantially boosting expenditures on
domestic research and development and by importing
machinery and equipment from abroad. The former
was directed very largely toward the military-space
sector (see IV, A). During 1955-67 the USSR imported
nearly $4 billion in production machinery and equip-
ment (excluding ships and marine equipment) from
the West (see Table 3). Nearly 15 percent represented
imports of plant and equipment for the consumer goods
industries, and 30 percent represented imports of
chemical equipment. The USSR, however, experienced
considerable delay and difficulty in getting the
imported plant and equipment installed and operating
at capacity. The machinery and metalworking indus-
try experienced a much more rapid growth in produc-
tivity than did industry as a whole during 1951-67.
The rate of growth of capital stock in that sector
was more than twice the average for industry. Hence,
the average age of capital stock was declining rapidly,
and presumably the average technology embodied in
it was becoming more modern. The same above-average
growth of capital stock in the petroleum and chemical
industries, however, was not reflected in above-
average growth in productivity.
29. In summary, the evidence above, together
with the descriptive evidence presented in the
Appendix, suggests that the USSR may have improved
its technological position relative to the West
during the 1950's, but may not have done so during
the 1960's. The productivity trends show such a
pattern. As pointed out earlier, however, technology
is only one factor accounting for the international
differences in productivity trends, as measured in
this report.
30. The worsening of the Soviet position during
the 1960's relative to the West could reflect a
relatively greater lagging behind in technology.
It could, however, also indicate the following:
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(1) Divergent trends in the quality
of the labor force. Although the educa-
tional attainment of the labor force and
extent of female employment have increased
somewhat faster in the Soviet Union than
in the United States and Western Europe,
available evidence indicates that the
trends proceeded evenly throughout the
period.
(2) Disparate trends in management
of economic resources in the broad sense.
The Soviet Union has been considerably
less successful than the United States
and Western Europe in shifting labor
from agriculture to nonagricultural
sectors, but the timing of the shift
did not differ greatly among the coun-
tries.
(3) Economies of scale. All of the
countries compared evidently benefited
from this factor, the USSR perhaps less
so than Western Europe; but again there
is no evidence that this factor was much
more important in the 1950's than in the
1960's.
31. In short, a hodgepodge of variables with
divergent trends and effects are mixed up in the
measure of productivity trends.* Management and
* During 1950-62, both Italy and the USSR reduced
the share of agriculture in total employment by 14
percentage points (from 43 to 29 for Italy and from
54 to 40 for the USSR). Edward F. Dennison attrib-
utes about 1 percentage point in the growth of
Italy's GNP over this period to this "improved"
allocation of resources. If a similar gain can be
inferred for the USSR from the reallocation of labor,
very little of the productivity residual remains to
be explained by other factors. Indeed, it is possi-
ble that, if accurate allowance could be made for
quality changes in the labor force, economies of
scale, and misallocation of resources in the USSR,
their total would significantly exceed the produc-
tivity residual. If so, this would imply, not the
absence of technological progress, but a gross mis-
management of the technical progress (investment
programs) and probably a worsening of the degree of
mismanagement.
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1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
181.4
229.1
217.2
194.1
293.9
464.8
469.8
601.8
588.5
621.0
510.0
560.2
669.6
4.2
4.7
8.0
7.4
7.8
17.5
13.4
19.7
27.1
34.1
22.1
18.8
34.4
Equipment for the
food industry
3.9
7.7
15.4
8.7
7.4
63.5
29.1
69.9
28.8
4.1
7.7
10.9
34.5
Equipment for
light industry
17.3
6.8
8.1
6.2
8.1
25.8
24.5
20.7
16.2
19.8
22.9
33.4
63.3
CC
Chemical equipment
--
0.3
7.4
19.5
77.8
135.4
131.9
87.8
124.1
113.2
110.5
147.4
176.7
Wood processing
equipment
8.8
16.9
24.0
19.7
28.6
41.5
32.5
139.1
117.7
73.5
36.9
34.7
60.9
Instruments, bearings,
and tools
3.3
5.2
13.2
9.6
11.6
16.2
15.1
14.2
15.0
12.4
18.3
20.3
22.1
Ships and marine
equipment
96.8
137.7
86.5
72.0
77.8
57.0
101.5
144.1
159.1
253.5
194.4
190.0
127.4
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technology are important ones, however, and the
ones that seem most likely to explain the worsening
of the Soviet position vis-a-vis the West during
the 1960's. In particular, the Soviet ability to
manage investment programs seems to have deterio-
rated; there is evidence that the translation of
investment rubles into plants in operation has been
relatively more costly and has taken longer in the
USSR since 1960, whereas such evidently was not the
case in the United States and Western Europe. The
two factors -- management and technology -- are
closely intertwined, and their respective effects
cannot be separated.
IV. Some Factors Bearing on the Gap
A. Allocation of Relevant Resources
1. Education
32. Some part of the disparities in techno-
logical development reflects differences in educa-
tional attainment of the labor force, particularly
differences in the supply of college-trained man-
power. Comparisons as of the mid-1960's are given
in Table 4.
Comparison of Levels of Education
of the Labor Force of the
United States, Western Europe, and the USSR
in the Mid-1960's
Median Years Percent of Labor Force
of Education with College Education
Northwest
Europe 9.0 3.2
Italy 5.3
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33. The USSR has made great efforts to narrow
the educational gap since 1950. Total Soviet ex-
penditures on education relative to the United
States have risen rapidly, so that the USSR, with
a GNP half that of the United States, now spends
about three-fourths as much on education as does
the United States. The average educational attain-
ment of the labor force rose from about five years
in 1950 to about seven years in 1968 and will
probably be about eight years in 1975. The average
educational attainment of the US labor force was
10.7 years in 1950 and 12.3 years in 1967. The
proportion of college graduates in the Soviet
labor force rose from 1.7 percent in 1950 to 4.6
percent in 1968; comparable figures for the United
States are 6.4 and 11.4. During this period, the
educational attainment of the labor force in Western
Europe has risen less rapidly than in the United
States and the USSR.
34. In the postwar period the USSR, unlike the
West, has oriented its educational effort at the
college level toward scientific and technical
fields. This pool of technically trained manpower
fills a large part of the administrative-managerial
jobs, as well as purely scientific and engineering
jobs throughout the economy. Since 1955 the annual
number of college graduates in the USSR has doubled,
reaching about 525,000 in 1968. Close to half of
these graduates received degrees in scientific and
technical fields. The United States graduated
some 675,000 in 1968, one-fourth with majors in
scientific and technical fields. Although such an
orientation might seem favorable to technological
progress in the Soviet Union, much of the training
is narrowly specialized and makes for inflexibilities
in the pool of college-trained manpower.
2. Research and Development
35. Relative expenditures on research and devel-
opment differ considerably among the countries.
Although the data are not strictly comparable, the
United States devoted about 3 percent of its GNP
to research and development in the mid-1960's,
compared with an average of a little under 2 per-
cent for Western Europe and about 2.5 percent in
the USSR. Also, the proportion of the total devoted
to applied research, compared with basic research,
would have some connection sooner or later with
disparities in technology.
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36. Both the United States and the USSR have
devoted a rising share of total output to research
and development during the past decade, but the
proportion of the total allocated to the military-
space -sector has risen much faster in the USSR than
in the United States. The USSR devotes about three-
fourths of total research and development (R&D) ex-
penditures to military and space, compared with about
three-fifths in the United States. Since Soviet GNP
has been growing more rapidly than GNP in the United
States, Soviet expenditures on R&D, in absolute terms,
have been rising relative to those of the United
States and are now about two-thirds of the US level.
The United States has devoted a considerably larger
share of its total R&D outlays to development work,
in comparison with basic research, than either
Western Europe or the USSR; this emphasis on develop-
ment would facilitate a rapid translation of research
findings into new products and improved production
processes.
37. The size of R&D activities in various
countries is approximately indicated by the allo-
cations of scientific and engineering manpower to
that purpose. In the mid-1960's the United States
had more than twice as many scientists and engineers
employed in R&D as did all of Western Europe, and
perhaps about the same number as did the USSR.
According to estimates of the organization for
Economic Cooperation and Development (OECD), between
454,000 and 631,000 scientists and engineers were
engaged in R&D activities in the USSR in 1966, a
four-sixfold increase over 1950 and double the
number in 1960. According to National Science
Foundation estimates, 520,000 scientists and engi-
neers were engaged in R&D in the United States in
1966, three times the number in 1950 and over a
third more than in 1960.
B. Process of Diffusion of New Technology
38. In market economies new technologies are
developed and diffused throughout the economy
through a fast-acting, seemingly almost biological
process. Private enterprises, spurred by profit
incentives and by competition to the degree that
it exists, are the innovators in this process.
Profits provide a powerful stimulus for cost-saving
innovations, and competition encourages the speedy
diffusion of such innovations. These same stimuli
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also facilitate their speedy adaptation for use in
other industries. Likewise, profits and competition
provide the incentives for the introduction of new
products and for the quick development of imitations
or competing products. This almost invisible process
also ensures that obsolescent technologies disappear
from use expeditiously in most cases and that old,
less useful products go off the market. Governments
encourage and help to finance this process but, for
the most part, are not the prime movers. Even in
the military field, where governments are the only
customers, competition among profit-seeking potential
contractors serves to induce technological advance in
the military sector. Aided by the deliberate policy
of governments (at least in the United States), this
factor also ensures that there will be spin-offs of
military-space technology to the civilian sector
whenever this is technically possible and, moreover,
that such spin-offs will come sooner rather than
later. Finally, multinational firms, which have
burgeoned in the West in the postwar period, greatly
facilitate the diffusion of technology and managerial
know-how through their investments in foreign sub-
sidiaries. This is not to say that there are no
obstacles to innovation and its spread in the West.
There are difficulties in obtaining the required
capital, and there are monopolistic practices, patents,
and corporate secrecy, to name a few. As deterrents
to technological progress, however, their adverse
effects tend to be short-lived.
39. In the USSR's centrally administered economy
there is no such automatic mechanism for fostering
technological progress; the incentives that are
supposed to help to perform this function are ineffec-
tive. New production technologies and new products,
therefore, have to be "introduced" by deliberate
actions of administrative bodies; likewise, obsolete
technology and old products must be taken out of use
or production in the same way.
40. This complex process is carried out, enter-
prise by enterprise, through annual and long-range
plans for the introduction of new technology and for
the output of new products. In turn, the materials
and equipment required to carry out these two key
parts of enterprise plans must be provided for, and
this, in turn, must be done by incorporating specific
requirements into the production plans of other
enterprises. Moreover, the innovations that are
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incorporated in enterprise plans are developed, by
and large, not by the enterprises but in research
and design institutes attached to government min-
istries and other organs. Then the whole process
has to be coordinated -- at the top by the State
Committee for Science and Technology and the State
Planning Commission, and at intermediate levels
among the numerous industrial ministries. Finally,
assorted other administrative bodies also get into
the act. In a word, the development and dissem-
ination of innovation in the USSR is an administered
process carried out by a cumbersome bureaucracy in
a centralized manner. As a result, innovations come
much less frequently and are spread much more slowly
than in the West. This generalization does not apply
to the military sector of the economy, which has been
protected from the obstacles to innovation that plague
the civilian sector.
41. The bureaucratization of the innovative proc-
ess is only one reason for the balkiness of inno-
vation in the USSR's civilian economy. An even
greater obstacle to rapid technological advance is
the fact that the key actors -- the producing enter-
prises -- tend to resist the new and cling to the
old, because of the incentives that are set for them.
Indeed, they are tacitly aided and abetted in this
footdragging by their bosses -- the ministries, whose
incentives are similar.
42. Until the recent reform the main success
criterion for enterprises was their performance with
respect to fulfillment of production plans, and
bonuses for managerial personnel were keyed to this
criterion. In practice, if not on paper, all other
performance criteria (including the "mandatory"
fulfillment of plans for new technology) played a
subordinate role. Hence, managers were reluctant to
innovate, because of the likelihood of interruptions
to production and the consequent threat to plan
fulfillment and bonuses. Moreover, plan assignments
were increased after an innovation had been adopted.
Plant managers tended not only to resist putting such
measures in their plans but also to delay putting the
new measures into effect after they became a part of
the plan. They could always lay the blame on failure
or delays in receiving the needed materials and equip-
ment. The supervisory agencies tended to condone this
attitude because fulfillment of the production plan
in the aggregate was the primary determinant of their
own success.
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43. The regime itself has long recognized that
the basic system of incentives was not conducive to
technical change. In typical Soviet fashion the
remedy has been sought in the issuance of government
decrees setting forth measures to speed up the intro-
duction of new technology, most of them amounting
merely to exhortations. In addition, special bonus
funds and arrangements were set up from time to time
to reward managers who adopted innovations. At one
time, fulfillment of the plan for new technology was
made a mandatory condition for payment of regular
bonuses to managers; this restriction evidently was
generally ignored, and later was rescinded. During
the past 15 years there have been at least a dozen
such decrees dealing directly with one or another
aspect of the problem, including special bonuses for
improving product quality and for fostering exports.
Evidently, their net effect has been small, if not
nil.
44. Other powerful drags on the rate of techno-
logical progress have been woven in the very warp and
woof of the Soviet system. By and large, innovations
are planned and developed by a hefty and burgeoning
research establishment quite separate from industrial
enterprises. All important supplies and equipment
are planned and distributed centrally. Taut planning
has prevailed, so that there have been no reserves
(supplies or plant capacities) to handle bottlenecks.
45. These features coupled with the inhibiting
system of incentives account for the deficiencies
perennially cited in the Soviet press. For example,
new plants usually take five to seven years to build
compared with one to three years in the West. Com-
pleted plants usually take several more years than
planned to attain capacity output. Some new products
take so long to develop that either they are obsolete
when finally produced or there is no demand for them.
Often the technology developed in scientific institutes
is not wanted by the intended user. An innovation
generated at the enterprise level frequently takes
so long to receive higher level sanction that it
becomes obsolete before it canbe implemented. New
designs or products often turn out to have serious
technical flaws. Even when new plants and equipment
are imported from abroad or licenses are acquired
or foreign technologies merely are copied, the
modus operandi of the Soviet system delays their
introduction and reduces their effectiveness in
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comparison with the results that would be obtained
in the West. On this point the Soviet press pro-
vides ample evidence.
46. Finally, technical progress has been inhibited
at all levels by the lack of a satisfactory means for
determining the payoff to innovation. Soviet prices,
being centrally fixed, inflexible, and based on
industrywide average costs, provide no accurate
guides to choice. Throughout the years, various
formulas have been used by the planners to calculate
the effectiveness of new investment, and academic
debates have been waged over those formulas for more
than a decade. Currently a debate is in progress on
how to measure the effectiveness of scientific
research. An eminent Soviet scholar recently asserted
that the yield on investment in "science" (R&D) is 3.5
times that of investment in industrial plant and equip-
ment. This assertion was primarily political in
intent, since there is no known way of separating the
yield of R&D from plant and equipment. Moreover,
Soviet ideology, besides eschewing marginal calcula-
tions, has long regarded the concept of obsolescence
as peculiar to capitalism. Hence, retirement policies
have resulted in plants being kept in operation far
longer than in the West and also in extraordinarily
long production runs for given products. Until very
recently, capital costs were largely ignored and
amortization charges have been purely arbitrary.
C. The Effects of Different Priorities
47. The wide disparities among branches of indus-
try in average level of technology vis-a-vis the West
directly reflect the longstanding priorities of the
Soviet regime. These priorities above all have
favored the military sector. This favored status,
coupled with rigid secrecy policies with regard to
military programs, has in effect produced a dual
economic system -- the military sector and the civil-
ian sector. The two sectors are administered by
separate bureaucracies that seemingly have as little
to do with each other as possible. The military
sector has had first claim on the best resources --
the brightest scientists and engineers, the most
skilled workers, the best quality materials and
equipment, and the best construction talent. Its
overriding priority has enabled it to break bottle-
necks quickly and to escape most of the frustrations
in supply that plague the civilian sector. The
scientists and engineers engaged in military and
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space R&D and production apparently have been
largely immune from Communist Party interference
in day-to-day affairs. They also have had the
advantage of a clear-cut, single minded goal --
achievement and maintenance of at least parity with
the United States in defense and space. With this
priority and protected status, the military sector
has flourished and has achieved near-technological
parity with the United States in many types of weap-
ons and space equipment and even superiority in a
few areas.
48. Second priority over the years has been
accorded the basic industries whose output directly
supports both military production and the investment
programs essential to rapid growth -- steel, fuels,
electric power, producers' equipment, and, more
recently, chemicals. Research and development
resources have been allocated to these industries,
and some world technical innovations have resulted.
A few Soviet innovations, such as continuous casting
of steel, have been quickly picked up and further
developed in the West but have spread at a snail's
pace in the USSR itself. Although these basic in-
dustries have equaled or even occasionally surpassed
the West in some aspects of technology in a few
plants, the bulk of their output is produced in
plants having technology obsolescent by a number of
years relative to that predominantly in use in the
United States and Western Europe.
49. Lowest of all in the scale of priorities
have been the industries catering to the population --
textile and clothing, food processing, consumer
durables, and household products of all kinds. Their
low status over the years has resulted in an average
level of production technology that is woefully back-
ward by Western standards -- by several decades in
many cases. By and large, these industries also
turn out products of a quality and assortment far
inferior to those produced anywhere in the industrial
West. The low level of production technology is only
one factor in explaining this disparity. Most of the
blame belongs to the low priority that the consumer
has had in the Soviet scheme of things, the disregard
for customers' wishes, and the planners' penchant for
concentrating resource allocations on a narrow range
of standardized mass-produced products.
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V. The Likely Effects of Current Reforms
50. Soviet leaders are fully aware of the USSR's
great technological lag behind the West. Clearly,
they must also be distressed about the small return
that the USSR has been getting in recent years from
the use of its traditional method of problem-solving --
the injection of massive resource inputs. In the
1960's the USSR has nearly tripled its outlays on
"science," and total employment in scientific re-
search and design organization has nearly doubled.
Gold reserves have been depleted to import plant and
equipment from the West. Investment has continued
to rise considerably faster than GNP, hence increasing
its share in total output. Yet the return on new
investment has declined sharply during the 1960's,
in contrast to stability or a rise in the United
States and Western Europe. Although stepping up
the rate of technological advance in the economy has
been recognized as the key need, how to achieve this
has been far from clear. The voluminous press re-
porting of the 1960's on the problems in developing
and introducing new technologies echoes the volumi-
nous reporting of the 1950's on the same theme.
51. The current Soviet leadership is hoping to
achieve a breakthrough in solving this chronic prob-
lem in a series of major economic reforms, some of
which have been introduced piecemeal during the past
three years and others of which are still in the
process of implementation. One explicit objective
of these reforms is to raise efficiency, primarily
by speeding up the introduction of new technologies.
One of them -- the restoration of the industrial
ministries -- was effected in 1965, with the declared
intent of restoring unity and direction to policy on
new technology; the diffusion of responsibilities in
this field was alleged to have been the major short-
coming of the system of regional economic councils
(sovnarkhozy) introduced by Khrushchev in 1957.
According to Soviet testimony, the benefits of the
reorganization in this area have yet to be realized.
Other reforms concern (1) revision of planning and
incentives, (2) reform of the industrial price
system, and (3) changes in organization and the
system of incentives in the research and development
complex. Infinitely complicated in detail, these
three reforms are fairly simple in intent and concept,
and tentative conclusions can be drawn about their
likely impact on the rate of technical advance in
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the Soviet economy. The conclusions about the
probable effects of the first two are based in part
on an assessment of the experience thus far; the
third one is still mainly on the drawing board.
A. Reforms of Planning and Incentives in Industry
52. The reform of planning and incentives,
launched by Kosygin in late 1965, has now been ex-
tended to most of the industrial sector. In brief,
the reforms broaden the authority of enterprise
managers with regard to plan formulation, establish
sales or profits and return on invested capital as
the main success criteria for enterprises and the
determinants of bonuses, and levy an interest charge
on invested capital. Among other things, the new
profit criteria and the interest charge are
intended to lead enterprises to reduce costs by
adopting new technologies and scrapping obsolescent
equipment. The emphasis on sales and profits, in
place of gross output, is supposed to spur the out-
put of new and improved products. By all accounts,
the new measures have had no such effect thus far,
nor are they likely to have in the future. The
reason is that the reform retains all of the features
long characteristic of the Soviet system that have
inhibited innovation in the past: centrally fixed
plans for output, investment, and new technology;
central physical allocation of key materials and
machinery; and establishment of success criteria
for enterprises that are based on fulfillment of
plans. Moreover, great emphasis continues to be put
on "tight" plans, and enterprise plan assignments
are boosted after technological improvements are
adopted. Finally, the greater independence of action
granted to enterprise managers on paper is already
being curtailed by the ministries, both through
direct interference and through issuance of a host
of detailed rules and regulations on how the new
freedom is to be exercised.
53. With bonuses linked to plan fulfillment and
with supply uncertainties undiminished, enterprise
managers are unlikely to be any more eager to adopt
new methods than before. Because of the perversities
of Soviet prices, the charge on capital may lead them
even to avoid the purchase of new machinery, whose
payoff remains as hard to determine as before.
Indeed, decisionmaking at the enterprise level is
made much more difficult under the reform, because
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the new success criteria are inconsistent and ex-
tremely complicated and because many of the old
arrangements were retained -- special bonuses for
introducing new technology, for adding new products,
and for upgrading the quality of old ones. In short,
the new so-called "economic levers" will not auto-
matically foster innovation; it will continue to
require "introduction" by the planners.
B. Reform of Industrial Prices
54. Along with these general reforms in planning
and incentives, the USSR has adopted a new set of
industrial prices and a new price system. The new,
higher prices include an allowance for interest on
capital for the first time. The new price system
consists of the establishment of an enlarged and
unified bureaucracy with broad price-fixing powers
and the declared intent to use prices to influence
enterprise behavior. The new Price Committees are
explicitly charged with "raising the role of prices
in promoting technological progress in all its many-
sided aspects."
55. Press discussion thus far indicates unmis-
takably that the committees have every intent of
carrying out this mandate literally. They are
attempting to set prices in great detail. Prices
fixed for individual machines and equipment are to
be those that will encourage enterprises to buy new
machines and get rid of old ones. Similarly, prices
on consumer goods and industrial materials are to be
juggled to accomplish the same objective. The prices
on new products are to be set high enough to encourage
their production, but not so high as to discourage
their purchase.
56. All this is to be done product by product by
the new government price fixers, and changes are to
be made as frequently as necessary. Already it has
been announced that "to stimulate technical progress"
enterprises will be informed that successive price
reductions on their products will be made on specified
dates. To set prices that will really accomplish
these intended objectives means, in effect, to set
market prices without markets. The magnitude of the
task defies description, but an army of government
clerks seems determined to take it on. The result
will be further complication of the decisionmaking
process and further bureaucratization of the system.
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C. Revamping of Organization and Incentives in the
Research and Development Establishment
57. The guidelines for far-reaching changes in
organization and incentives in the research and
development establishment are set forth in a govern-
ment decree issued in October 1968. The State
Committee for Science and Technology is to coordinate
the drafting of detailed instructions for implement-
ing these policies, and experimental changes are to
begin in 1969. The program, in effect, extends the
principles of the economic reform in industry to the
R&D sector. Wages and bonuses for individual scien-
tists and the profits of research institutes are to
be based in part on calculations of the economic
effectiveness of their work. Organizational changes
will be made throughout the establishment, as re-
quired, to reduce the cost of the program and to
link its work more closely with the needs of produc-
ing enterprises,
58. Although it is too early to evaluate the
full significance of the new program, its possible
favorable long-term results may be limited by
bureaucratic inertia and resistance to some of the
proposed new techniques. Delays, temporary confu-
sion, and much dissatisfaction are likely to result
from the numerous reorganizations and other changes
to be brought about by the implementation of the
resolution. It subjects academy and university
research institutes to periodic review using the
same criteria of effectiveness applied to industrial
research establishments. The research programs in
these institutions therefore can be expected to give
more emphasis to applied research.
59. The high status traditionally enjoyed by
scientists and engineers in the USSR and the absence
of economic success indicators and accountability
have led to a degree of independence of action for
the Soviet R&D community. The new program will tend
to decrease this independence, which may or may not
be beneficial.
D. Conclusions
60. In summary, the ongoing reforms represent
still another attempt -- and a very cumbersome one --
to tinker with the highly centralized system of
economic management to make it work better. The
reform adopts market-type concepts and criteria for
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efficiency -- prices, sales, profits, return on
capital -- but eschews the use of markets and
instead manipulates the economic variables by the
traditional means -- planning and administration.
Thus, the USSR has vastly enlarged its administra-
tive objectives, along with the size of the
bureaucracy.
61. How scientific and technological progress
can flower under these conditions is hard to see.
Technological change is a highly dynamic process,
requiring entrepreneurship and flexibility. There
are no entrepreneurs in the USSR except the state,
and bureaucracies are notoriously slow-moving and
resistant to change. Furthermore, Soviet higher
education continues to emphasize narrowly specialized
engineering and scientific fields -- training ill-
suited to producing graduates with entrepreneurial
ability, even should the environment be conducive
to exercising it.
62. In the technological race, countries whose
economic institutions permit fast action and rapid
adaptation to new things are likely to come off
best. In periods of particularly rapid technological
change like the present, therefore, the USSR seems
likely to be at an increasing disadvantage relative
to the West in the average level of technology in
use. This may be so even in the field of advanced
weapons and space.
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Comparison of Major Branches
of Soviet and US Industry
Introduction
63. This appendix provides a brief description
of the present level of technology in the major
branches of industry in the USSR relative to the
United States. Wherever possible, comparisons are
also made with Western Europe. The descriptions
are necessarily impressionistic, incomplete, and
summary in nature. Comparisons of technological
levels among countries in a given industry are ex-
tremely difficult to make, and to do so in detail
is beyond the scope of this report. By way of back-
ground, the industry summaries include information
about the general size of the industry relative to
that of the United States.
64. In these brief descriptions the attempt has
been made to restrict them as much as possible to
technological aspects per se. Nevertheless, more
than technologies are involved in the comparisons,
and precise distinctions cannot easily be made.
Thus, the low quality of Soviet products in general
relative to the West reflects not only technological
lags, but also unfavorable incentives, relative
priorities, and the results of pervasive shortages
and centralized control of supplies. Some of the
differences in production methods -- for example, in
the degree of mechanization of materials handling --
primarily reflect differences in relative costs of
labor and capital. In the USSR, labor costs have
been low compared with capital costs over the years,
whereas the opposite has been the case in the
United States; Western Europe resembles the USSR in
this regard. Therefore, production processes tend
to be much more labor-intensive in the USSR than in
the United States, but they are also more so than in
Western Europe.
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Electric Power
65. The electric power industry of the USSR is
the second largest in the world, but has an installed
capacity and annual production less than half the
level of that in the United States. The difference
largely reflects the much greater use of power in
the United States for nonindustrial purposes. Des-
pite the fact that the largest powerplants in the
world, both hydro and thermal, have been built in
the Soviet Union, Soviet conventional thermal power
engineering lags at least five years behind the
United States, both in size of units and in advanced
technology. The lag is even greater in use of
automation and computer control systems, both for
power generation and for transmission. Control and
data logging systems in use in major Soviet power-
plants, both conventional and nuclear, are of a
quality and type that has not been installed in the
United States for at least 10 years. No powerplant
in the USSR is under direct automatic control from
a computer system, whereas in the United States a
number of plants built since 1963 are controlled by
computers.
66. In the United States, thermal generating
units with a capacity of 500 megawatts (MW), operat-
ing at supercritical parameters of temperature and
steam pressure,* have been in operation since 1960,
and units of up to 1,000 MW are now going into
operation. In the USSR, units of only 300 MW are
the basis for the development of thermal powerplants
during 1966-70. In 1968, five years after the first
such units were installed, they were not operating
at design level, achieving sustained operation, or
realizing anticipated economies in fuel consumption.
Poor performance is due primarily to failures of
boiler units caused by metallurgical shortcomings in
boiler drums and tubes and by improper welding
procedures. Frequent turbine failures stem from
poor casting, heat treatment, and welding. Defects
* Pressure above 3,206 pounds per square inch and
temperature above 705?F., the point at which water
flashes into dry steam without boiling.
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in valves, pumps, and fittings have also caused
shutdowns. Although the 300-MW units are far from
perfected, during 1968 Soviet engineers conducted
operational tests of supercritical units having
capacities of 500 MW and 800 MW.
67. In the field of nuclear electric power, the
USSR has kept abreast of the most advanced technologi-
cal developments, doing research on or actually
experimenting with almost all of the same reactor
concepts that are of interest in the West. It has,
however, limited construction of demonstration or
commercial-size nuclear powerplants to a small number,
while waiting for technological advance to reduce
the capital and operating costs of nuclear plants to
a level competitive with those of conventional thermal
powerplants. In the United States, on the other
hand, competition of private industry led to con-
struction of a larger number of demonstration and
commercial-size nuclear powerplants, even though such
plants were not yet economically competitive. At
the end of 1968 the USSR had a total of more than
1,600 MW of electric generating capacity installed
in nuclear powerplants, compared with 4,200 MW in
the United Kingdom and 2,700 MW in the United States.
The costs of the more recently constructed Soviet
nuclear powerplants have been coming down, and their
operating record compares very favorably with the
record of the best and most modern nuclear power-
plants operating in the United States in 1968.
Soviet plants are now being built according to a
standard design consisting of two blocks of 440 MWe
(megawatts electric), each block comprised of one
pressurized water reactor and two 220-MWe turbogen-
erators. In contrast, the reactors in most nuclear
powerplants now under construction in the United
States will serve single turbogenerators with
capacities of 800-1,300 MWe.
68. The USSR is moving ahead of the United
States in construction of more advanced fast-breeder
reactors that are expected to produce more fission-
able material than they consume as fuel. The United
States pioneered in this field with the world's
first breeder, the small EBR-1 that began operation
in 1951, and also built the largest breeder to go
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into operation thus far -- Detroit Edison's 200-MWt
(megawatts thermal) Enrico Fermi-1 that operated
during 1963-66. The only breeder operating in the
United States at present is the EBR-2 that has a
design capacity of 17.4 MWe or 62.5 MWt but that
operates well below this level. This reactor, which
began operation in 1962, has approximately the same
designed capacity as the Soviet-built BOR-60, an
experimental 60-MWt fast-breeder that went into
operation at Melekess on 30 December 1968. However,
since mid-1964, Soviet technicians have been con-
structing at Shevchenko the BN-350 which is to have
a capacity of 350 MWe or 1,000 MWt. When completed
in 1970 or 1971, this will be the world's largest
fast-breeder and will be the main component of the
world's first large-scale nuclear power and desalina-
tion plant. The plant will have the capacity to
generate 150 MW of electric power and to supply 32
million gallons of fresh water per day. The USSR
also plans to construct at Beloyarsk an even larger
breeder, the BN-600 that is to have a capacity of
600 MWe or 1,430 MWt. The only fast reactor now
planned for construction in the near future in the
United States is the 400-MWt Fast Flux Test Facility
to be built during 1970-73.
69. The USSR leads the world in construction
of hydroelectric powerplants. The Bratsk hydro-
electric powerplant, on the Angara River in East
Siberia, has a capacity of 4,100 MW, more than
twice the capacity of Grand Coulee, the largest
hydroelectric powerplant in the United States. The
Krasnoyarsk hydroelectric powerplant, under con-
struction in Siberia, will have a capacity of 6,000
MW when completed. The generating units, five of
which were in operation by the end of 1968, have
a capacity of 500 MW each and are the largest hydro-
generators in the world.
70. The USSR also leads the world in high-volt-
age transmission of electric power, 330 kilovolts
(kv) and higher. Rapid advance in this field has
been stressed because of the need to transmit large
amounts of power over long distances. The Soviet
Union put the first 500-kv line in the world into
operation in 1959, and by the end of 1967 had in
use 10,000 kilometers (km) of 500-kv and 9,000 km
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of 330-kv transmission line. An additional 5,000 km
of 500-kv and 3,000 km of 300-kv line are under con-
struction. In the United States, use of high-voltage
transmission only began in the early 1960's, and the
first 500-kv line went into operation in 1965. By
the end of 1967, about 6,300 km of 500-kv transmission
line and 8,000 km of 345-kv line were in use. In
1962 the USSR commissioned a 475-km experimental
direct current (DC) transmission line from Volgograd
to the Donbas. This line, which operates at 800 kv
and has a capacity of 750 MW, is being used to gain
experience for a planned 1,500-kv DC line that is to
stretch 2,500 km from North Kazakhstan to the central
European region of the USSR. The planned line, which
is the world's most ambitious DC transmission project
thus far, is to have a capacity of 5,250 MW and is to
be commissioned in 1975. In the United States an
800-kv 1,330-km DC line is under construction in the
Pacific Northwest. This line, which is to have a
capacity of 1,440 MW, will be completed in 1969.
Coal Mining
71. The USSR leads the world in production of
coal, with an output of almost 600 million tons in
1968. The coal mining industries of the Soviet Union
and the United States are not comparable in most of
their major aspects because of the different physical
and geological characteristics of the coal deposits
exploited. Where Soviet mining technology and equip-
ment can be appropriately compared with that of the
United States or of West European countries, the
USSR lags considerably. The thin, faulted, and pitch-
ing seams frequently encountered in Soviet under-
ground coal mines inhibit use of the highly mechanized
room-and-pillar method of mining prevalent in the
United States. Instead, about 85 percent of the coal
mined underground in the USSR is obtained by the long-
wall method. The level of mechanization of longwall
operations in the USSR is relatively high, but the
equipment is not as advanced or as dependable as
that employed in longwall mining in the United King-
dom or in West Germany. Heading or tunneling machines,
used in longwall mining to bore entries or haulage-
ways, have only recently been serially produced in
the USSR and are probably inferior to their US
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counterparts, the "continuous miners" used in room-
and-pillar mining. The ultimate objective in major
coal producing countries using the longwall method
is to develop a fully automated self-advancing long-
wall-complex unit that mines the coal and conveys
it to the mine transport system. The United Kingdom
leads the world in development of such equipment.
The USSR lags behind but is actively working toward
the same goal.
72. The largest gap between Soviet and US technol-
ogy in underground mining occurs in ancillary sur-
face work. The fact that the more than 20 percent
of the Soviet labor force employed in underground
mining is engaged primarily in hand labor above ground
indicates that the USSR may be 10-15 years behind the
United States in the mechanization and efficiency of
surface work. Only about 70 percent of the coal mined
underground in the USSR is loaded mechanically, a
level equal to that in the United States about 1950;
at present more than 90 percent of all such US coal
is loaded mechanically. In Western Europe the
mechanization of surface work is close to the US
level, even though labor is cheap relative to capital
there, as it is in the USSR.
73. The USSR lags behind the United States, and
also East Germany, by perhaps 5-10 years in develop-
ment and application of modern equipment and tech-
nology for strip mining. The largest element of
cost in strip mining is the removal of overburden.
The cheapest method of overburden removal, used in
nearly all US strip mines, is the "direct dumping"
method whereby an excavator -- usually a power
shovel or dragline -- removes and dumps a load of
overburden in one continuous cycle. In the USSR,
only about 30 percent of the overburden is stripped
by the direct dumping method, primarily because of
the extreme thickness of the overburden at many
coal deposits. This method requires giant-size
power shovels and draglines. The largest US power
shovels and draglines have bucket capacities of
up to 200 cubic yards, whereas the largest Soviet
dragline, still in the design stage, has a bucket
capacity of only 105 cubic yards. The USSR also
is 5-10 years behind the United States in the manu-
facture and use of giant-size trucks forhauling
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coal from strip pits. As yet there is no known Soviet
equivalent of the US specialized high-capacity unit
trains used exclusively for transporting coal from the
mines.
74. In general, Soviet coal preparation techniques
are about 10 years behind those of the United States
as well as Western Europe. In 1967, only about 42
percent of total Soviet coal output was cleaned
mechanically, compared with approximately 64 percent
in the United States. The Soviet level of 42 per-
cent mechanical cleaning is about the same as was
achieved in the United States in 1950-51. Moreover,
a substantial part of the Soviet coal preparation
equipment would be considered obsolete in the major
coal-producing countries of the Free World. Another
area of great lag is in the application of computers
to management and engineering problems. In this
field the Soviet coal industry is probably 5-10 years
behind its US and West European counterparts.
75. The petroleum industry of the USSR is sur-
passed only by that of the United States in produc-
tion of crude oil and natural gas and in refining
capacity. Exploitation of the relatively accessible
and highly productive reserves that have been the
Soviet Union's major sources of petroleum since
World War II has not required the advanced technology
and equipment employed by Western oil companies.
Moreover, the requirement of the Soviet economy for
high-octane gasolines and other high-quality pe-
troleum products has not been sufficient to command
extensive investment in. secondary refining facilities.
Consequently, the USSR has generally lagged behind
the United States in seismology, in deep drilling
and offshore operations, and in the design and
engineering of oil and gas producing equipment and
of secondary refining installations. Only in two
aspects does the Soviet petroleum industry appear
to lead the world: in the use of water flooding
for maintaining the pressure of reservoirs, and in
transmission of oil and natural gas through pipe-
lines of very large diameter.
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76. The Soviet Union is about 10 years behind the
United States in exploration methods, especially in
applied seismograph techniques and ability to map
deep drilling prospects. Gravity and magnetic read-
ings are used to delineate areas for seismograph
prospecting, but the accuracy of Soviet gravity
meters is less than that of US instruments because
Soviet engineers have been unable to make reliable
quartz elements. The low quality of Soviet geophones
and seismic cable prevents reception and transmis-
sion of low-frequency signals reflected from deep
lying structures, and lack of computer hardware and
software precludes automatic processing of seismic
records, display of variable density cross sections,
and "stacking" or integration of seismograms. The
application of computers to seismograph procedures
in the United States since 1963 has revolutionized
deep exploration for petroleum.
77. About 85 percent of all the oil and gas wells
in the USSR are now drilled by the turbodrill method,
which is exceptionally well suited for drilling in
shallow hard rock formations such as those encountered
in development of the Urals-Volga region. The turbo-
drill is inefficient, however, in the deep soft rock
formations found elsewhere in the country, from
which most future increases in production must come.
In the United States, rotary drilling is used about
99 percent of the time because it is much more
efficient than turbodrilling at depths of more than
2,000 meters and in soft rock formations. Soviet
use of rotary drilling below 2,000-meter depths has
been limited by shortages of related oilfield equip-
ment. In recent years the USSR has been a net im-
porter of rotary tools, tricone and diamond drill
bits, high-pressure mud pumps, blowout preventers,
high-quality drill pipe, and cementing equipment.
78. Production methods in the USSR are similar
to those used in the West except that Soviet tech-
nicians begin water flooding inside new fields to
maintain reservoir pressures from the outset of
primary production. In the United States, water
flooding is regarded as a secondary recovery tech-
nique and is restricted to the outer edges of old
fields where the primary reservoir drive has been
exhausted. The Soviet practice increases the share
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of reserves ultimately recovered from high-yield
flowing wells and results in the drilling of a small-
er number of wells. However, it also has led to
early encroachment of water into some producing wells.
79. Offshore technology in the USSR is quite
primitive and more than 10 years behind that developed
in the United States and in use throughout most of
the Free World. Petroleum deposits located offshore
in the Caspian Sea in water depths exceeding 40
meters have been inaccessible, except by directional
drilling from onshore locations or by drilling from
manmade islands connected to the mainland by trestle-
supported roadways. At least a half-dozen.mobile
offshore platforms will be required to explore these
offshore deposits which Soviet geologists believe are
extensive. Thus far, the USSR has built one such
platform, has another under construction, and has
imported one from the Netherlands. The Soviet-built
platform is capable of drilling wells 2,000 meters
deep in 20 meters of water, only about one-third of
the depths for which the Netherlands platform was
designed. The United States has several hundred
offshore platforms, some of which are capable of
drilling wells to depths of more than 6,000 feet in
300 meters of water.
80. The USSR uses the largest pipe in the world
for transporting crude oil and natural gas, but auto-
mation of pipeline systems is less advanced than in
the United States. Oil and gas pipelines 48 inches
in diameter currently are being laid in the Soviet
Union, whereas the largest line pipe in use in the
United States is about 42 inches in diameter. Soviet
plans call for use of line pipe with diameters of
56, 80, and 100 inches. Some equipment installed
on sections of Soviet pipeline systems, however, is
not adequate for the size of the line pipe employed.
For example, undersize valves used on the 40-inch
central Asia-Urals gas pipeline reduced its capacity
by 10 percent. In general, Soviet natural gas pipe-
lines operate at lower pressures and throughput
capacities than US pipelines of the same diameter,
because of weaker pipe and the lower number and
capacities of Soviet compressor stations.
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81. No new oil refinery has been started in the
USSR since 1961. Although most of the refining
processes employed in the West are in use somewhere
in the USSR, Soviet operational experience with some
of them is quite limited. Secondary refining capac-
ity (catalytic cracking, catalytic reforming, hydro-
cracking, hydrogen treating, and alkylation) in the
USSR is equal to only about 20 percent of primary
crude oil charge capacity, whereas in the automobile-
oriented economy of the United States, with its
greater demand for high-octane gasoline, secondary
capacity exceeds primary capacity. Secondary facil-
ities are necessary to improve product quality and
product mix.
82. In recent years the USSR has begun to install
a catalytic reforming process using platinum catalysts.
This process has been in use in the United States and
other Western countries since the mid-1950's. Soviet
production of silica-alumina catalysts for fluid
catalytic cracking units is believed to be adequate
to satisfy domestic needs and to permit exports to
Eastern Europe. Moreover, the USSR is conducting
research on zeolite-type catalysts, now in wide-
spread use in the United States for increasing yields
of gasoline. Whether these catalysts are in actual
use is not known.
Chemical Industry
83. The Soviet chemical industry is the second
largest in the world, but the technology it employs
for production of many chemicals is five or more
years behind that in the United States or in Western
Europe. The lag in Soviet technology is reflected
in continued use of inferior and outmoded processes,
in the low quality of products, in the small produc-
tion of many newer chemicals, and in the low level
of mechanization and automation. This situation
reflects the inadequate attention given to develop-
ment of chemical technology during the 1950's and
early 1960's and the failure to make effective use
of available domestic and foreign technology.
84. The USSR is far behind the United States in
almost all phases of fertilizer technology, including
basic process engineering, design and fabrication of
equipment, and final treatment of fertilizer to im-
part desirable properties. The lag is particularly
evident in development of concentrated and complex
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(multinutrient) fertilizer and in processes for
production of ammonia, the major intermediate in
manufacturing nitrogen fertilizer. The average
nutrient content of Soviet fertilizer was planned
to reach 28 percent in 1968, whereas in the United
States it was 38.5 percent in the year ending in
mid-1968. The United States has a lead of four to
five years in construction and operation of large
integrated ammonia plants that make possible sub-
stantial savings in costs. These plants use more
efficient purification processes for the raw material,
better catalysts, and superior centrifugal compres-
sors. By the end of 1968, approximately one-half
of US capacity to produce ammonia was provided by
plants of this type, whereas in the USSR the first
few plants employing similar technology were still
under construction. The United States also has
better techniques for granulation to make fertilizer
less susceptible to loss of nutrient during trans-
port and storage and easier to apply with seed.
85. In the field of petrochemicals, the United
States has a substantial lead over the USSR. In
1966, despite 10 years of development work, syn-
thetic glycerine was not yet produced in the USSR
on a commercial scale, whereas, in the United States,
plants producing synthetic glycerine accounted for
60 percent of all glycerine capacity. In 1967,
almost 90 percent of the total output of benzol in
the United States came from petrochemical sources,
compared with less than 15 percent in the USSR. In
1968 the largest known units for production of
ethylene in the USSR had annual capacities of 60,000
tons, and at least some of these units had been
purchased from Free World firms. In the United
States, many ethylene units have annual capacities
of more than 200,000 tons. Soviet efforts to
develop petrochemical processes comparable in
efficiency to those used in the United States for
producing acetylene, acrylonitrile, ammonia, buta-
diene, ethylene, synthetic glycerine, propylene,
and many other chemicals have been hampered by the
lack of effective catalysts for unit operations
such as dehydrogenation, and by inability to produce,
in the required quantity and assortment, some types
of highly productive pumps, compressors, and other
equipment.
86. Differences in levels of production of major
synthetic materials in the USSR and United States
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reflect in part the Soviet failure to develop effec-
tive production technology. In 1967, output of
plastics in the USSR was only 18 percent, manmade
fibers only 30 percent, and synthetic rubber little
more than one-third the level of production of these
products in the United States. Soviet technological
lag has been apparent with respect to processes for
production of polyester and acrylic fibers, butadiene-
styrene and polybutadiene rubber, and plastics such
as polyethylene and polyvinyl chloride. The USSR
has also been slower than the United States in de-
velopment of products such as fluorocarbon plastics
and thin polyester film that have important strategic
uses in the nuclear, aerospace, and electronics
industries.
87. Continued use of outmoded technology is
responsible for the substandard quality of some
Soviet synthetic materials. The fact that the
service life of many Soviet rubber goods is only
one-half that of similar products made in the United
States probably reflects not only poor Soviet process
technology for synthetic rubber but also inferior
fabrication equipment and a lack of high-quality
additives and stabilizers.
88. During 1958-67, deficiencies in Soviet
technology led to imports of plant and technical
data from the Free World valued at about $1.1 bil-
lion. Most of the imported equipment was for the
manufacture of synthetic materials and agricultural
chemicals and associated intermediates. Many of the
imported installations were more highly instrumented
than models developed in the USSR. Frequently,
however, the purchased technology failed to provide
the anticipated benefits, because of Soviet ineffi-
ciency in building and operating the imported
installations.
Metallurgy
89. In the mining of metal ores, the level of
Soviet technology lags well behind the West, although
advanced specialized techniques such as mining under-
water and in coastal placers have been developed to
meet particular Soviet conditions. The Soviet mining
industry uses inefficient and obsolete trucks of
12-25 ton capacity, while in the West, trucks of
70-100 ton capacity are in use. The technical
level of Soviet ore crushing and processing equipment
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is very backward relative to the West; the USSR
recovers only 70-85 percent of the copper in the
ore, compared with 90 percent or more in the United
States, and the USSR recovers only 35-40 percent of
byproduct gold, compared with 65-70 percent in the
United States.
90. Although the USSR has made notable advances
in production technology in some sectors of the
metals industry, metallurgy technology in general
lags considerably behind the West. The USSR has
become a world leader in blast furnace technology
by constructing some of the largest furnaces in the
world and by extensive use of advanced operating
practices, notably efficient preparation of the
blast furnace charge by sintering iron ore concen-
trates. However, the USSR lags far behind in the
use of the newer and more effective technique,
already employed extensively in the West, for pel-
letizing fine iron ore concentrates. In 1968,
Soviet production of pellets amounted to about
3 million tons, compared with 50 million tons in
the United States.
91. In the steelmaking sector, the USSR has
constructed the largest open-hearth furnaces in the
world but has been slow in adopting the capital-
saving oxygen converter process which is coming
rapidly into use in the West. In 1968, Soviet
production of oxygen converter steel amounted to
only 12 percent of total steel production, compared
with 74 percent in Japan, about 25 percent in
Western Europe, and 37 percent in the United States.
Although the USSR has been a world leader in develop-
ment of continuous casting, less than 3 percent of
the steel is processed with this technology. Recent
indications are that the United States will soon
move rapidly ahead of the USSR in industrial use
of the new process.
92. The greatest technological lags in the
Soviet steel industry are in rolling and finishing.
Not only is much of the equipment inefficient and
obsolete by Western standards, but also the USSR
has inexplicably failed to balance its steel produc-
tion capacity with suitable rolling and finishing
facilities. Particularly lacking are adequate and
modern cold rolling mills, heat treatment facilities,
and continuous electrolytic tinning and galvanizing
lines. These deficiencies result in poor assortment
and quality of steel products, causing large waste
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throughout the economy. For example, the failure
to produce adequate quantities of grain-oriented
electrical sheet forces the electric power industry
to use hot rolled silicon sheet, which is less
efficient, and raises the cost of power transmission.
Most Soviet tinplate is produced by the obsolete
hot-dip process, whereas in the West the much cheaper
electrolytic process is almost universal.
93. In expanding its aluminum industry, now
second in size only to that of the United States,
the USSR has constructed modern smelters that com-
pare favorably in size and operating characteristics
with any in the Free World. Electrolytic cells in
new Soviet plants operate at 150,000 amperes, while
cells in the newer US plants operate at only 120,000
amperes. Soviet aluminum fabricating technology
for strategic and some industrial applications is
well advanced, but the overall level of technology
in plants producing consumer products, such as
aluminum foil and kitchen wares, lags far behind
that in the Free World, reflecting the continued
Soviet use of old and inefficient rolling and
fabricating equipment.
94. In the other major nonferrous industries --
copper, lead, and zinc -- the USSR in recent years
has constructed a few large plants with technical
standards equal to those in the Free World. In
general, however, the technological level of these
industries is well behind the Free World because
Soviet plants are older, less efficient, and fre-
quently obsolete. For example, the USSR is only
now introducing byproduct recovery of sulfuric acid
at nonferrous metals plants, a practice in use for
many years in the United States.. The USSR lags
considerably behind the United States in developing
techniques for the leaching with acid of material
in copper waste dumps and the flotation processing
of copper oxide ores, both of which account for
significant shares of US production.
95. The USSR is a world leader in the development
and production of titanium. Soviet technology for
the production of titanium alloys and products is
about an a par with that of the United States and
the United Kingdom. The USSR has produced some of
the world's largest titanium forgings for aircraft.
96. The USSR has made notable progress in research
in metallurgy and has attained world leadership in the
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determination of equilibrium phase diagrams for
metallic systems. Practical difficulties have been
encountered, however, in translating research results
into suitable production technologies. In the use
of vacuum metallurgical techniques, for example, the
USSR has less competence and experience than the
United States. The USSR is improving in this field,
however, benefiting from the importation of electron
beam furnaces from East Germany as well as from its
own developmental programs in vacuum metallurgy.
The USSR also has become a world leader in the
development and use of the electroslag remelting
technique, which it employs as a substitute for
traditional vacuum processes in some applications.
However, in advanced rolling techniques, involving
the use of such specialized equipment as Sendzimir
mills, the USSR lags behind the United States.
97. Notwithstanding its general inferiority
compared with the United States in,advanced metal-
lurgical capabilities, the USSR has been able to
produce the special metals and alloys required for
military and strategic uses. For these priority
customers it produces a wide range of high-strength
steels and stainless steels, including precipitation
hardening types. Soviet work on mar-aging* steels
is largely experimental and not as advanced as that
in the United States, although the USSR has announced
that tonnage quantities of mar-aging steels have been
produced.
98. In production technology for superalloys the
USSR is about on a par with the United States. The
USSR also has devoted considerable attention to the
development of high-temperature corrosion-resistant
metals, such as tantalum, niobium, tungsten, molyb-
denum, rhenium, and zirconium, but has not attained
results fully comparable to those in the United
States with respect to the assortment or quality of
products.
99. The USSR is ahead of all other countries in
development of the thermomechanical treatment of
metals -- a technique for simultaneous deformation
and thermal processing which can improve mechanical
properties of metals quite radically. As yet,
* Mar-aging steel is a nickel steel of ultrahigh
strength obtained by special heat-treating and aging
processes.
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however, little industrial use has been made in
the USSR or elsewhere of this technique.
Automotive and Tractor Industry
100. The automotive industry of the USSR was
established in the early 1930's with the technical
assistance of US automotive firms, and even now
its products are copied from old US designs. In
1968 the Soviet automotive industry produced about
500,000 trucks and 280,000 passenger cars, compared
with about 2 million trucks and 9 million passenger
cars in the United States. Moreover, compared with
the United States, the USSR has a very small assort-
ment of special body styles for trucks, restricted
primarily to ordinary dump bodies, fire apparatus,
tank wagons, cranes, and standard vans. Such
specialized truck bodies as those for mechanical
refrigeration, transit cement mixing, trash removal,
powerline maintenance, furniture moving, and the
like are produced in negligible amounts or not at
all.
101. From the end of World War II until 1963,
most of the investment in motor vehicle production
facilities in the USSR was devoted to the production
of 4- and 4/-ton trucks at the ZIL plant in Moscow
and 2- and 2/-ton trucks at the GAZ plant in Gor'kiy,
essentially copies of US trucks built during World
War II. Today, the ZIL trucks of 1946 have finally
been replaced by modernized vehicles, and new models
have been introduced at GAZ. At GAZ, however, the
1946 model of the GAZ 2/-ton truck is also still
being produced.
102. Soviet trucks now in production incorporate
a number of modern features such as pneumatic or
vacuum boosted brakes, power steering, oil coolers,
and radiator shutters for better engine temperature
control. Engine designs are copied from US engines
and incorporate modern features such as chromium
plating of upper compression rings, sodium filling
of exhaust valves, and replaceable cylinder liners.
The new Soviet truck engines are V-8's with good
performance characteristics. They typically deliver
less horsepower per cubic inch of displacement than
do US engines because the low octane rating of Soviet
gasoline dictates low compression ratios. Octane
ratings of fuel for motor vehicles are on the average
about 20 percent below US ratings. Compression
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ratios for Soviet truck engines are between 6.0:1
and 6.5:1, compared with between 7.5:1 and 8.5:1 in
the United States.
103. Soviet trucks have lower cargo ratings than
US trucks of similar weight and tire size. The
fairly modern ZIL 130 carries 4-5 tons, depending
on road conditions, whereas a US truck of about the
same gross vehicle weight (truck plus cargo) carries
more than 7 tons. This limitation on the loading of
Soviet trucks is necessary because lower strength
steels are used in frame members and axles and
because severe punishment is imposed on Soviet
trucks by poor road conditions. Some progress is
being made in lowering the weight-cargo ratio in new
types of heavy dump trucks (25 tons and higher), but
for most heavy trucks this ratio lags behind com-
parable US models.
104. Until very recently, passenger automobile
production was treated as a regrettable necessity
and has been the most backward area of the Soviet
automotive industry. Now, however, an expansion
program is under way that is supposed to raise
annual passenger car production from about 250,000
in 1967 to over 1 million in 1973. Soviet passenger
car production has consisted principally of the
microsize four-passenger Zaporozhets (analogous to
the FIAT-600), the small. four-passenger Moskvich
(analogous to the Opel Kadet), and the compact-size
Volga (analogous to the Chevy II or the Rambler
American). A few limousines of the GAZ "Chaika" and
the ZIL-111 types are made, practically by hand.
Except for the Chaika and the ZIL-ill, no Soviet
passenger car engine has more than four cyclinders,
and all these engines have less horsepower than
engines used in analogous Free World cars.
105. Soviet passenger cars are designed to accom-
modate the severe winter climate and the rough roads
in the USSR. Because of stiff springing, they have
a hard ride. Engine noise levels and vibration are
high by modern standards. Typical complaints of
Soviet owners refer to the poor grades of rubber
used for sealing doors and windows, short life of
upholstery materials and paint, and inadequate heat
and sound insulation. The poor quality of Soviet
cold rolled steel sheet results in auto bodies that
are excessively heavy and have a poor surface finish.
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106. The level of production technology used in
the Soviet automotive industry is on the whole as
outmoded relative to the West as is the product
mix. Much of the machinery, although well main-
tained, is old. A Western observer has described
the Soviet auto industry as "incredibly obsolete
and inefficient" by Western standards. The USSR
is relying on imported plant and equipment to narrow
this enormous technological gap. A gigantic auto-
mobile plant at Tol'yatti is being erected under
contract with FIAT of Italy, and Renault of France
is supplying equipment and technical help to refur-
bish and double the capacity of the Moskvich car
plant in Moscow. Negotiations are now under way
to buy processes and equipment in the United States
to increase the production of ZIL trucks and to buy
from France a complete plant to produce 180,000
trucks a year.
107. The USSR has held first place in the world
in volume of tractor production since 1960. It
produced about 405,000 units in 1967, compared with
about 262,000 units in the United States. However,
despite great improvements in the last 10 years,
Soviet tractors are inferior to US tractors in
weight-horsepower ratio, transmission efficiency,
reliability, service life, and ease of operation.
The excessive weight of Soviet tractors results in
part from a need to compensate for low-strength
metals and from neglect of quality control in foundry
practice. The poor reliability and short service
life results in part from the low quality of even
such ordinary items as bolts and other fasteners,
paint, and rubber parts. Short life, by US standards,
is common for the track and suspension parts of Soviet
tracked tractors because their design does not provide
for adequate lubrication, the sealing of bearing sur-
faces against abrasive dirt, and the proper hardening
of wearing surfaces.
108. The transmissions of Soviet farm tractors
are much less efficient than those of US tractors.
Drawbar horsepower of the typical Soviet wheeled
tractor is 60-65 percent of the engine horsepower,
compared with 90 percent for US tractors. Conse-
quently, the fuel consumption of Soviet tractors is
high by Western standards. Although modern features
copied from Free World designs -- such as four-wheel
drive and power steering for wheeled tractors and
automatic transmission for wheeled and tracked
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tractors -- are now included in some models, they
do not embody the latest advances nor is their
reliability and performance equal to Free World
equipment.
109. The Soviet tractor industry does not
produce tractors with the horsepower and produc-
tivity of the D-9G Caterpillar, which is highly
effective in mining and construction, nor has it
yet developed the necessary engines and powershift
transmissions. The USSR has imported a number of
Caterpillar D-9 tractors which, because they can
rip deeply frozen earth at a high rate, are extend-
ing the gold mining season in Magadan by several
weeks. In 1968, one of the world's most prominent
civil engineering firms attempted to use five
DET-250 tractors, the largest made in the USSR,
in bulldozing work on a canal site on the US-
Canadian border. The tractors proved to be un-
wieldy, oversized, and underpowered, with high
fuel consumption. Moreover, rubber parts and
track links wore out rapidly, and the oil had to
be changed very frequently.
Machine Tools
110. Although the USSR is the world's largest
producer of machine tools, its product mix is
heavily weighted with general purpose machines,
and in almost all categories -- both general and
special purpose -- its tools are equaled or ex-
ceeded in efficiency, durability, and accuracy by
those of the United States. Because of its large
output, the average age of the USSR's machine tool
inventory is considerably younger than that of the
United States, but because of the emphasis on
standard models, the technological composition
of the stock is much less advanced than that of
the United States.
111. The USSR is far behind the United States
in the use of numerically controlled machine tools.
While the United States produces numerically con-
trolled machines with continuous path control on
five axes and with automatic tool changing devices,
the USSR has achieved only point-to-point control
on two and three axes without automatic tool
changing. The production of numerically controlled
machine tools accounts for no more than 1 percent
of the value of output of Soviet machine tools,
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whereas, in the United States, this share amounts
to about 20 percent. The use of numerically con-
trolled machine tools is still confined generally
to the aerospace industries in the USSR but is
now widely distributed throughout the US machine
building industries. A unique numerically con-
trolled machine tool of US manufacture is an auto-
matic transfer machine which can completely machine
tractor engine blocks of both in-line and vee
configurations according to a numerical program.
This installation combines a high degree of auto-
mation with the versatility to handle a wide
assortment of product. The Soviets are years
away from achieving this degree of automation and
control of the machining process. The USSR has
produced automatic transfer machines for industries
with high volume production -- for example, the
automotive and tractor industries -- but this
production capacity is very small, delivery lead-
times are very long, and the Soviet Union therefore
is dependent on imports from the Free World for
tooling for substantial investment programs like
the new passenger car plant at Tol'yatti.
1.12. An outstanding example of the technological
lac that the USSR is building into new plants be-
cause of the long leadtime they require is the
procurement for the Tol'yatti Motor Vehicle Plant
of $8 million worth of gear-cutting equipment for
rear axle gears for the Soviet FIAT. The equipment
was supplied by the Gleason Works of the United
States before the end of 1968, will not be installed
until 1970, and will not be in full production until
1972. Meanwhile, Gleason is now selling machinery
for cutting bevel drive gears that includes a
machine costing $400,000, which replaces five
roughing cutters and ten finishing cutters sold to
the USSR at a price of $825,000. The new machine
raises labor productivity in this operation by
more than seven times and requires less than half
the floorspace of the older machines.
113. The USSR is the world leader in electro-
discharge machining (EDM) and ultrasonic machining
and produces 40-50 percent of world output of these
machines. The United States has put little effort
into the development of these machines but appears
to lead the USSR in the development of electro-
chemical machining (ECM) and electron beam machin-
ing and welding, both techniques of considerable
value in the aerospace industries.
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114. The USSR produces and uses far fewer metal-
forming machines than the United States, and as4 a
result wastes a much larger percentage of its steel
and nonferrous mill products in the form of chips.
In isolated instances the USSR appears to lead the
United States in metal.forming technology. One
example is the unique Soviet process for rolling
gears and shafts from heated steel billets at a
much higher rate than cutting tools can achieve.
Moreover, the USSR currently possesses two 75,000-
ton forging presses, the world's largest, which
give the USSR significantly increased capabilities
for forging large parts for large high-performance
and supersonic aircraft, compared with the United
States. The largest press available to the US
aerospace industry has a capability of only 54,000
tons.
Aircraft
115. Although the Soviet aircraft industry is
the world's second largest, it produces only about
one-fifth as many planes as the United States but
about three-fifths as many military aircraft.
Because the USSR long has stressed research on
supersonic and hypersonic flight, the industry can
produce fighters and intercepters equal in perform-
ance to any in the world. Because of engine defi-
ciencies, however, the performance of Soviet trans-
port aircraft lags somewhat behind that of the West.
The new Soviet civil transports now entering pro-
duction are considerably better than their pred-
ecessors, but because of these deficiencies they
are still inferior to similar Western aircraft in
range, payload, fuel consumption, and engine life.
Passenger accommodations on the largest transports
are also inferior to those on comparable Western
aircraft.
116. At any point in time, Western transports in
service lead those produced by the USSR. For
example, the IL-62, the only Soviet jet transport
comparable in load and range to the 707, the DC-8,
and the British VC-10, first flew in 1963, but
because of delays attributable to a number of defi-
ciencies in design did not enter regular service
until mid-1967. Similarly, the TU-134, a Soviet
transport similar to the DC-9, made its first flight
in mid-1963, but because of control problems and
structural deficiencies was not placed in series
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production until late 1967. In comparison with
the slow pace of the TU-134 program, 40 DC-9's
were delivered within 18 months of its first
flight.
117. Soviet aircraft technology closely
approaches Western technology in its applications
to supersonic flight. In some cases the US has
achieved a production capability sooner than the
Soviets. The new Soviet interceptor, Foxbat, prob-
ably now nearing series production and constructed
primarily of titanium, is capable of sustained
speeds near.Mach 3, while carrying a large payload
on long-range missions. Its capabilities exceed
those of any operational aircraft other than the
SR-71, a US strategic reconnaissance aircraft.
The Soviet Flagon, a twin-jet Mach 2.5 intercepter
now in production and service, has better perform-
ance capabilities than any US intercepter now in
service. Although the USSR is testing aircraft
with variable geometry wings (VGW) like the US
fighter/bomber F-111, the best of these, the
Flogger, requires two or three more years of test-
ing before it can become operational. It is much
lighter than the F-111 and not likely to serve in
so many different roles.
1-8. Experience with the Mach 3 XB-70 has given
the United States a broader technological base
than the USSR for the development of advanced
strategic bombers. There is no evidence that such
large fast aircraft are under development in the
USSR, although test data from the slower (Mach 2.2)
TU-144 supersonic transport (SST), which recently
made its first flight, will add to Soviet capa-
bilities in this area. Based on -experience with
the XB-70 and the SR-71, US industry is able to
undertake the design of SST's with speeds in the
Mach 2.7-3.0 range.
119. The USSR leads the world in the development
of rotor systems for very large helicopters. The
USSR also was first in such features of helicopter
design as rear ramp loading, electrical bonding on
external controls, ice detector systems, rotor
blade deicing system, autopilot, stubwing, oxygen
system, and blade tip lights. On the other hand,
the United States has had a substantial lead in
the design and production of high-speed tactical
helicopters and associated weapons systems, as well
as in rigid rotor and compound helicopters.
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120. The Soviet electronics industry, officially
classified as a defense industry, shares with the
missile, nuclear weapons, and other strategic indus-
tries a priority claim to Soviet economic resources,
and most of its output is defense-related. From a
relatively small base in 1955, it has become the
world's second largest electronics industry, and its
level of production of military electronics closely
approximates that of the United States.
121. The level of technology embodied in Soviet
electronic equipment, however, is generally below
that of the United States. For at least 10 years
electronic equipment manufactured in the United
States has been transistorized -- that is, designed
around the use of transistors and semiconductor
diodes. In the USSR, the wide-scale application of
transistors to electronic equipment, even in the
area of military electronics, has become noticeable
only during the past two or three years.
122. There are significant disparities in the
technology embodied in the basic semiconductor com-
ponents themselves: the United States manufactures
mainly silicon devices using epitaxial planar manu-
facturing techniques, and the USSR produces mainly
germanium transistors and apparently has only recently
achieved a capability for the mass production of
silicon planar devices. Thus US electronic equipment,
thanks to the inherently superior indices of silicon
planar devices, tends to exceed its Soviet counter-
part in all important operational parameters.
123. Moreover, in the area of military electronics,
the USSR continues to use equipment containing hybrid
packages -- that is, both transistors and obsolescent
electron tubes. Thus, even in the few high-priority
military areas -- for example, missile/space guidance
and control systems and strategic early-warning radar
systems -- where the USSR has achieved a rough parity
with the United States in terms of equipment perform-
ance, Soviet equipment. tends to be larger, heavier,
less transportable, more difficult to maintain, and
less reliable than similar US equipment.
124. The gap in component technology is widening.
In the United States the transistor is giving way
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increasingly to integrated circuits which are still
largely experimental in the USSR. The USSR lags at
least four years behind the United States in micro-
electronic technology. In some areas the relative
inferiority of Soviet electronic technology has
prevented the USSR from achieving even a rough parity
with the United States in equipment capabilities --
for example, computers, electronic instrumentation,
telephone equipment, and color television.
125. US computers are substantially superior to
Soviet computers in reliability and in all major
operational parameters such as speed, memory size,
and multiple access capability. Moreover, the
associated software and the electromechanical
peripheral equipment supplied by US industry are
substantially superior to their Soviet counterpart-s.
Soviet computers in current production are based
on transistor technology; many computers now made
in the United States incorporate integrated circuits,
which improve performance, reduce the size of equip-
ment, and lower manufacturing costs.
126. The gap in computer technology is widening;
the United States is now moving into fourth gener-
ation machines based on large-scale integration
characterized by greater speed and reliability. The
highest speed yet attained by a Soviet computer --
the BESM-6 -- is 1 million operations per second,
compared to about 6 million operations per second
for currently produced IBM models. Although intro-
duced as far back as 1965, only a handful of BESM-6
machines have been produced. The USSR is making
great efforts to reach US state-of-the-art in
computer technology, but the prospects of doing
so are remote without direct access to US technol-
ogy. The USSR currently is trying to obtain a
license from a firm in the United Kingdom to produce
British computers that incorporate US technology.
127. In the technology of industrial and scientific
instrumentation, the USSR lags well behind the United
States. Soviet oscilloscopes, representative of the
Soviet state-of-the-art in electronic instrumentation,
typically are inferior to those of the United States.
For example, measured by bandwidth (the most signif-
icant single index of complexity, flexibility, and
overall capability), oscilloscopes capable of sensing
radio frequencies above 30 million cycles per second
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are in very short supply in the USSR, whereas oscillo-
scopes with capabilities of 150 million cycles per
second are quite ordinary in the United States. For
exacting scientific research, the USSR has to import
such instruments as electron microscopes and nuclear
magnet resonance spectrometers from the Free World.
US instruments of this kind are among the best in
the world.
128. In the technology of commercial telephone
communications, the USSR lags several years behind
the United States. The USSR has only recently
developed, for example, crossbar telephone exchanges
of 1,000-line capacity, whereas crossbar exchanges
of several thousand lines have been commercially
available in the United States for many years.
Moreover, the United States is now moving rapidly
into electronic switching systems. In the technol-
ogy of carrier (multiplexing) systems for cable and
radio relay communications, the capacity of commer-
cially available systems in the United States is at
least 10 times greater than those produced in the
USSR.
129. Finally, color television provides a con-
spicuous example of deficiencies in Soviet produc-
tion technology in the consumer area. Although the
USSR successfully developed a color picture tube in
the laboratory as early as 1959, it failed to evolve
a technology for series production in the factory.
As a result, Soviet plans to introduce color tele-
vision on a commercial scale have been delayed for
several years. Recently, the USSR purchased the
crucial color tube manufacturing know-how from the
United States to ensure volume production of color
television receivers by 1970.
130. The USSR currently lags perhaps three to
five years behind the United States in communications
satellite technology. The US Army's Score satellite
first transmitted prerecorded messages in 1958, and
in the early 1960's the United States followed up
this early success with the Courier, Telstar, Relay,
and Syncom satellites which paved the way for the
successful US launching in April 1965 of Early Bird,
the world's first satellite to be deployed opera-
tionally and used regularly for commercial communi-
cations. During that same month, the USSR conducted
its first successful tests of a satellite specif-
ically designed for communications relay. The USSR
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called this comsat "Molniya" and did not remove
its "experimental" label until the sixth launching
was completed in 1967.
131. The USSR has yet to orbit a satellite with
a satisfactory active lifetime. The short useful
lifetime of the Molniya satellites is due in part
to the USSR's choice of a highly elliptical orbit.
This type of orbit provides excellent coverage of
the Soviet Union, but is hard on satellite compo-
nents owing to the repeated passage of the space-
craft through the Van Allen radiation belts and
requires correcting the lateral drift inherent in
an elliptical orbit. Since 1965 the USSR has
successfully orbited at least 11 Molniya satellites,
but only three of these are fully operational. In
contrast, the Early Bird satellite was still oper-
ating satisfactorily when "retired'"' from active
service in early 1969. Likewise, three Intelsat II
satellites successfully injected into stationary
orbit by the United States in 1967 are still fully
operational.
132. On-board transmitter power of the Molniya
satellites is much higher than that of any US-
developed satellite, but the traffic-handling
capacity of all Molniyas has been confined to only
60 two-way telephone channels. In contrast, Early
Bird and the Intelsat II series were designed for
240 channels, and the two Intelsat III satellites
recently orbited by the United States have an oper-
ating capacity of 1,200 channels. Thus, while the
channel capacity of Soviet comsats has remained
static since 1965, US technological advance has
produced a 500-percent increase in comsat channel
capacity in the same period.
133. The USSR has progressed rapidly in developing
the ground segment of its comsat program during the
last two years. Until late 1967, the ground segment
used to handle Molniya transmissions consisted of
only two common carrier ground stations, one at
Moscow and the other at Vladivostok. However, in
November 1967 the USSR put into operation a network
of more than 20 so-called "Orbita" ground stations
capable of receiving one channel of television
relayed from Moscow via Molniya. Unlike the terminals
at Moscow and Vladivostok, none of the Orbita stations
is currently able to receive telephone and telegraph
traffic or has a ground-to-satellite transmission
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capability. The United States has now put into
operation six Intelsat. ground stations on its own
territory, and US technology is directly or indirectly
responsible for most of the 16 Intelsat ground
stations now operating in other Free World countries.
All Intelsat ground stations have full-range capa-
bilities -- that is, they are able to transmit and
receive all types of communications.
134. Measured against present accomplishments,
Soviet comsat technology can be expected to reflect
much greater sophistication during the next several
years. There are indications, for example, that the
USSR intends to put a comsat into equatorial syn-
chronous orbit, possibly some time late in 1969. In
addition, the USSR almost certainly will attempt to
provide its future comsats with increased channel
capacity and a capability for simultaneous relay of
both television and multichannel voice communications
(this latter capability is already a feature of the
Intelsat III satellites). If achieved within the
next year or two, these advances could narrow the
comsat technology gap between the USSR and the
United States in the short run. However, US tech-
nology is also moving rapidly ahead. The fourth
generation of Intelsat satellites, for which the
United States is prime contractor, is already under
development. This new satellite is being designed
for 5,000-6,000 two-way voice channels, for simulta-
neous access by a large number of ground stations,
and for a useful lifetime of seven years. If the
Intelsat IV series is deployed as scheduled, begin-
ning in 1971, a US lead of at least three years over
the USSR in comsat technology is likely to be main-
tained for the foreseeable future.
Consumer Goods
135. The technology of production in Soviet con-
sumer goods industries varies widely -- from highly
modern bread factories to archaic textile mills.
The typical Soviet bread factory employs a contin-
uous flow process that starts with the mixing of
ingredients in large vats on the top floor of the
multistory building. As the product descends, floor
by floor, the dough is processed into a variety of
bread products, baked, and delivered unwrapped to
special trucks at the ground level which transport
it to the distributing bakeries. The process is
distinguished by the small number of employees
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required and the precision of the quality control
maintained. Such mass-production processes are
far less common in the West.
136. In products other than bread, the techno-
logical level of the food industry in the USSR lags
20-25 years behind the United States. Some of the
best equipment in current production is copied from
US equipment of the 1930's and does not apply the
advanced methods developed in the United States and
Western Europe or even in East Germany. Freezer
storage is not yet widely available in Soviet house-
holds, and the USSR processes very little fresh
frozen produce and meats. Considerable effort is
being directed toward developing processes for the
preservation of food by freeze-drying and irradia-
tion, but the principal process for preserving
foods is canning in glass jars. The USSR is partic-
ularly deficient in equipment for automatic packaging
of liquid dairy products in paper containers and for
automatically wrapping and packaging butter and
cheese.
137. Soviet textile mill equipment is 25-30 years
behind that of the United States. Efforts are being
made to modernize the mills with domestically pro-
duced machinery, but most of it differs very little
from that produced 50 years ago. For the production
of textiles from synthetic fiber, the USSR is depend-
ent on imported machinery. Soviet textile plants
lack modern finishing equipment, and the quality of
fabrics is therefore very poor by Western standards.
Preshrinking machines are few. Steaming of expensive
woolen fabric at some dressmaking factories is now
being introduced, but equipment to make wrinkle-free,
no-iron, and permanent-crease materials is not yet
being produced. Because bleaching machinery is
lacking, most Soviet cotton fabrics are dyed without
first being bleached, thus giving them a drab appear-
ance.
138. In the footwear industry, less than 65 per-
cent of the operations are mechanized and 30 percent
of the equipment is obsolete, according to Soviet
statements. In leather processing, 65 percent of
the machinery in use is considered obsolete, and new
domestically produced machinery is below world stand-
ards. Technology in the Soviet clothing industry
is geared to mass production of a small range of
simple styles, and evidently is as backward relative
to the West as are the textile and footwear industries.
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139. With respect to consumer durables, household
appliances produced in the USSR are undersized, old
fashioned, and inefficient, compared with those in
the United States. Most of them resemble models
produced in the West before World War II. Appliances
and other housewares are often produced as a sideline
by plants that produce heavy machinery or aircraft.
The production technology undoubtedly is as obsoles-
cent relative to the West as is the design of the
product. Radios and television sets are produced
by the electronics industry, using production tech-
niques that lag considerably behind those of the
West.
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