JPRS ID: 9246 USSR REPORT ECONOMIC AFFAIRS

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000300020018-7
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• Document Creation Date: November 1, 2016
• Sequence Number: 18
• Content Type: REPORTS

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JPRS L/9246 -
12 August 1980
~SS~ Re ort
~
ECQi~OMIC AFFAIR5
CFOUO 12/80
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- JPRS L/9246
12 August 1980
USS R REPORT
ECONOMIC AFFAIRS
(FOUO 12/80)
CONTENTS
ECON~MIC POLICY, ORGANIZATION AND MANAGEMENT
Use of Economic Levers, Incentives Described
(S. Osadchenko; VOPROSY EKONOMIKI, riay 80) 1
UTILIZATION OF RESOURCES AND SUPPLX
Call for Constitutional Body To Monitor Plature Conservancy
(ri. Gokhberg; VOPROSY EKONOMIKI, .Tun 80) 12
INTRODUCTION OF iIEW TECHNOLOGY
Effectiveness of New Technology Scrutinized
(D. Palterovich; VOPROSY EKOPIOMIRI, Jun 80) 27
E
- a - (III - USSR - 3 FOUO]
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ECONOl+~C POI,ICY, ORGANIZATION AI~ID MANAGEMENT
USE OF ECONOMIC I~EVERS , INCENTIVF~ DF~CRIBID
Mosco*.~r VOPROSY EKONOMIKI in Russian No 5, May 80 pp 4~2-50
~Article by S. Osa,dchenko: "F~cperience in the Use of Economic Levers and
' Incentives"]
~Text] In the decree of the CPSU Central Committee and the USSR Council
of Ministers "On improving the pla.nning and intensifying the action of
the economic mechanism on increasing the effectiveness of production and
the quality of work" (1979) a system of ineasures is defined. for flzrther
iiaprovement of pla,nning and management and bri.nging them into correspon-
dence with the demands of developed socialism, Under talay's conditions
in order to strengthen cost accounting there is an increase in the sig-
nificance of the system of quality sanctioned and valuation indicators,
which describe an increase in the effectiveness of public production,
improvement in the quality of work and 3nsurance of full satisfaction of _
social demands, impelling the collectives of associations~ enterprises -
and the sector as a whole to the achievement of high end results for the
national economy.
Evalua,tion of the results of the economic activity of associations and -
enterprises, and also their economic incentives have been made dependent
on fulfillment of the plans for delivery of ou~gut for Froduction and
technical purposes and consumer goods according to nomencla,ture (assortment)
in the pariods in accoztiance with the contracts concluded. A new procedure
has been provided for approving the compulsory nomenclature for the
establishment of direct economic relations and conclusion of contracts
for the delivery of output, the fulfillment of which is possible with
complete coordination of the production plans wi.th the physical resources,
tha,t is, the balanced na.ture of them at the level of the px3mary unit.
Thus, the indicator of delivery of output characterizes in full the degree
of satisfaction of social needs regardir~ the volume and structure of
production.
Fer the purpose of more economical expenditure of physical ar~d labor
resources it has been recognized necessary to introd.uce the inriicator
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of net ou-tput (normative), which is aimed at increasing the effectiveness -
of prod.uction and im~oving the quality of the enterprise's work. It
reflects the contribution of the la.bor collectives to the newly created
praluct, elimina,tes interest in increasing the ma,terials-intensiveness
of production, and contributes to objective evaluation of the performance
af the association (enterprise).
An interest in putting aut more labor-intensive output has appeared at -
the enterprises with the introduction of the net output (norma tive)
ir~licator. The work experience of the Ministry of Heavy Ma.chine Building
showed that in the case of deviation from the assign ed nomenclature the -
enterprises should ha,ve produced. output to replace what was not produced _
with the same proportion of labor outlayso In addition they tried. to
find reserves for increasing the yield of labor. Use of the net output -
indicatcr improved the ratio between .growth in labor productivity and
wages, and Iowered the .outlays per ruble of commodity output, Thus, ~
during 1978 la.bor productivi.ty increased by 5.5 percent, but the average
wage increased by 2a5 percent, The wage expenditure taking into account
payments from the ma.terial incentive ~znd per ruble of net output (norma-
tive) in 1978 �+~as red.uced by 2.6 percent in corrrparison with 1977� The ~
relative savin~ of the wage fund in 1978 came to 2 million rubles.
iJti lization of the indicator of net output (normative) affected a reduc- .
tion of Expenditures per ruble ~f volume of output. For instance~ in
1978 the physical ou+lays per r~ible of comm aiity output were reduced by
0.2 percent, ar~d the outla,ys for purchased semi-manufactures were reduced.
by 0.4 percent.
The indicators for produced. output in physical terms are being improved.
In addition, the nomencl.ature to be approved. in the five-year and especially
in the annual plans will be expanded. Essential changes are taking place
in the system of ineasurements of physical indicators of output in a number -
of sectors, which will ma.ke it possible to account for the effectiveness, _
qua,lity and other consumption properties of output produced,
Provided by the new conditions of management .is the establishment in
- the five-~year and annua.l pla,ns for associations, enterprises and ministries
o#' systems of long-term norms: distribution of profit, outlays of wages
per 1 rubZe of output produced, deductions from profi.t into the economic
incentive ~znds and the unified. fund for development of science and
technology. The use of economic norms will create the conditions for -
_ improving the end results of the e conomic activ-ity of associations, enter-
prises arr7. ministries with simultaneous grow~th in the profit contributions
to the state budget. Such a system of indicators and norms is being used
at the present time in the Min~stry of Heavy Ma,chine Building, the Ministry
of Power Machine Building, tha Ministry of Agricultural Ma.chine Building,
the Ministry of Instru ment Building, and the Ministry of the Electrical
- Engineering Industry, and their many years of experience ha,s made it
possible to work out a number of positions regarding the development of
cost accounting.
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In the decree it is intended on the ~,sis of working out a five-year ~
- fira,ncial plan t~ establish not only the assignments for profit for the =
years of the five-year plan, but also to determine the absolute su:ns o~
payments to the budget and alioc.~,tions from it, and to approve the long-
term norms of deductions from profit ~o be zt the disposal of the mini-
stries, associations and enterprises. -
The normd,tive method of profit distribution ha.s its own merits in compari-
son with the existing system, since it strengthens the action of the prin-
ciples of cost accounting, creates the economic premises for introduction
oi' the system of self-backing with fina,ncial resources, increaGes economic =
interest in mobilization of internal reserves, increases cost accounting -
responsibility for payment obligations to the state, and establishes a
direct relation between the outla,ys fo_r expanded reproduction and the re-
sults of cucrent and long-term performa.nce of a production facility.
In addition, it stimuy.ates an increase in the effectiveness of production,
since part of the above-plan profit is put at the disposal of the mini-
' stries, associations and enterprises with consideration of their ccntrit-~u-
; tion to the overall results of economic activity.
It is pro vided by the decree tnat when determining the norm it is necessary
to re~kon all the outlays for in-house needss for fina,ncing reproduction
(for capital investments for constxuction, expansion, mod.ernization and
- mecha,nization of production), for upkeep of the management appaxatus,
- kindergaxtens, preschool institutions, fee~ for loans, for formation of a
unified fund for development of science and technology, economic incentive
f~nds and other expenditures connected with deveyopment of production.
Established by years of the five year plan, taking into account these .
outl.ays, are the norms of profit left at the disposal of the ministries,
and the a~solute sum of the profit going into the state budget is determined.
'do:c~ked out in order to increase the responsibility of the ministries was
, a~ cost a,ccounting mechanism oua.ranteeing con~pleteness of contributions
to the budget from the profit in the sums envisaged for the given year,
independent of the end results of financial-economic activity. This
mecha,nism operates as f~llows. In the ~ase of underfl~lfillment of the -
profit plan by the ministries, contribute:i to the budget is the sum of
profit written in the plan. In the case of overfulfillment, pa,rt of it
- remains at the disposal of the ministries, and the other p~,rt is
tra.nsferred to the budget. In this case, the greater the percentage of
overfulfillment of the plan with respect to profit, the smaller the share ~
of it left to the ministry. Such an economic lever forces the ministry, ~
the association, or the enterprise to take ~n more stepped-up plans.
, Cost accounting on the scale of the sector has incr ~,sed control over the
production and economic activity of production units, and has demanded a
qualitatively new approach to organi~ation of the management of associations,
enterprises and organizations, and it ha,s increased the interest of all
units of production in achieving hi gf~ economic indicators and ir~ a,ddition it
has substantially increased their responsibility for ~zlfillir.g the state plan.
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The Ministry of Instrument Buildirg, for instance, fulfilled. the quota
for the Ninth Five-Year Plan azld is continuing te operate successfully
in the Tenth F~ve-Year Plan. The growth in volume of produc~ion during `
1970-1978 with a pla.n f~gure of 136.2 percent was 136.6 percent, for pro-
fit it was respectively 178 and 195, for labor productiv;ty 129,1 and 131,
_ and the proportion of output in the highest quality category rose from -
8.5 percent in 1975 to 24.9 percent in 1978. In addition the number of
pla.nts not ~zlfilling the pla,ns was considerably lower than for industry
as a ~rhole.
~uring the period of aperating under the new conditions contributed addi-
tiona,lly to the budget from above-plan profit was about 80 million rubles.
The ministry used for development of production over 40 mill.ion rubles of
above-plan profit, even in the presence of factors complicating the work:
instability of the five-year plans basically for the reasons of their
lack of balance with respect to ma,terial supplies and capital investments;
ref~nement of the arulual and financial plans with respect to volume of
production and profit; the yearly change in wholesale prices for a con-
siderable part of the output prod.uced; the absence of the necessary re-
serves at different levels of ma,nagement, which would ha,ve guaxanteed.
stability of the plans. All this led to disruption of the stability of
long-term norms, which sha,zp.ly reduced. their incentive value.
_ Practical implementation of the measures outlined by the decree will
eliminate the shortcomings indicated above in planning and in the balanced
natvse of the plans and make it possible flzlly to disclose tr:e potentials
of the norma,tive method. of profit distribution,
Introduction of the normative ~r.ethod of profit distribui;ion ane~ guaxanteed
payments to the budget will force the ministries, associations and enter-
pr;.ses better to utilize fixed ca.pital, to uncover additional reserves and
notentials f.or creative activity af labor collectives, and to accept
stepped-up plans for all technico-economic indicators. Thus, worked out
in the Minis~ry of Agricultural Ma.chine Building was a system of stepped-up
plans whicn are determi.ned depending on the coefficient of utilization of
production capacities, loadir.~ uf equipmen~, increase in output due to the
introd.uction of orga,nizatiional and technical measures and ~wing to growth
in labor productivity, ana an increase in the proportion of new output in ~
the total volume of production. De~znding on the degree of intensity of
~ the plan adopted., the sum of incentive funds for the association or enter-
prise is increased. _
_ One of the conditions of switching over to the norma,tive method of profit
distribution should t~e the guarantee of cost-accounting compensation of -
all outlays~ including capital investment. In thdse cases when full comperi-
sation of outlays cannot be insured, the transfer of ministries and
associations to nozmative distribution of profit is carried out with the _
use of bank credits.
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The norma,tive methal of profit distribution cannot be limited to the
level of the ministry, or the ir.~iustrial association, as is occurring in
- the Ministry of Instrument Building. It should be introduced. at large
enterprises and in productior_ associations. However with a three-unit
system of management, determina,tion of the stable norms of profit distri-
bution does ha.ve its difficulties. They consist in the differing pro-
fitability of associations and enterprises. In the current year the
Ministry of Agricultural Ma,chine Building and the Ministry of Power
Ma.chine Building developed a system of converting to the normative method
of profit distribution for large production associations and enterprises.
Success ~.il operation of ministries, associations and enterprises according
to the norma.tive method of profit distribution also depends on how cor-
rectly the prices axe set, in which a11 the socially necessary outlays
should be ~ca.ken in~o account, ~.nd ~heir stability shculd be guaranteed.
Defined by th~= adopted decree was the procedure for working out sta,ble
prices for a cive-yeax period, and the conditions are created for ~zrther
improvement of them on the basis of more complete reflection of socially
nesessary outlays in them, F~zxther development of prices and consolidation
of cost accounting will be aided by the development of a system of technico-
economic norms and standards according to types of operations and outlays
(saving) of la,bor, raw materials, supplies and fuel and power resources.
Their utilization will make it possible to establish prices taking into
ac~ount the effectiveness of the production-economic activity of associa-
tions, enterprises and organizations.
The economic mecha.nism provides incentives for the best use of production
capital, and increase in the yield on capital, ar.d rational utilization
- of material resovrces. For this purpose a fee for capital was established,
which, as an economic lever, ha,s not fulfilled its role in preceding
five-year plans, although in individual ministries it has contributed. to
an increase in the yield on capital, to acceleration of the turnover rate
of cixcula ting capital, and to reduction of the amount of equlpment not
submitted by the established deadlines. At the enterprises the fee for
capital was set in the amoun~s of from 1 to 6 percent, mar~y concessions
were.allowed, anri for a number of production funds the fea was not established.
at all. For industrial ministries the fee for capital came to from 11
to 15 percent.
The practice of profit distribution has shown that the norma,tive method
did not insure the due effectiveness of th~ fees for production capital.
The main shortcoming was that the amount of +_he f~e did not ha,ve due
influence on the sum of the profit left at the disposal of the ministry,
_ s~nce with centralized settlements with the budget an increase in the fee
_ for capital automatically entailed a red.uction in th,e amount of contribu-
tions to the budget from the free rema,inder of profit, and a reduction
in the fee increa.sed these contributions. Naturally wi~:h such an inter~
dependence of the two basic types of payments to the budget the economic
lever, the fee for capital, did not operate.
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These and other factors weakened the sti.mulating role of the economic
levero In connection with this the development of ineasures to strer~o hen
the role of the fee for capital was required. This work was conducted to
a certain deo ee in tne Ministry of Agricultural Machine Building, the
Ministry o~ the Electrica.l Ergine::ring Industxy and the I~ini stry of Heavy
A1a.chine Buildirg. In particular, the I~inistry of Agricultural Machine
; Building worked out and introduced a m~cnanism of an additional intrasector
fee for capital, the introduction of which greatly increased its incentive .
value. -
However these measures did r.ot affect the ~rowth ir. the effectiveness of
the fee for capital. An economic lever can operate optimally only if the
~ collective receives an incentive for good. work and is penalized for poor ~
work. Unf~rtunately, the given principle was vi.olated. The enterprise
was penalized only far poor utiliza~ion of production f~Zr_ds and ci.r~ ulating
capital, but T~rhen it attained positi~re results it did not receive an
incentive.
; The decree considerably increases the role of the fee for capital ~,s an -
- economic lever, stimula.ting effective uti;.ization of production capital.
- Established in addition is a single 6-percent rate of the fee for capital;
~ there is a reduction in the concessior.s for production capital f~r which
= a fse is not exacted; for above-plan and non-credited reserves of material ~
valuables and uninstalled equipment the fee for capital is contrihuted
to the budget owing to a red.uction of that paxt of the profit which is ~
left (according to the norm) at ~he disposal of the ministry~ association
or enterprise. And, on the contrary, in the case of f~lfillment of ro- ~
duction and profit with the least cost of capital (against the plan~ the -
, saving with respect to the fee for capital is left at their disposal with
a sim~ultaneous reduction in the sum of cont.r~.butions to the budget.
Introd.uced by the decree axe measures for rationa,l use of raw material,
supplies and fueJ. and power resources in the na,tiona,l, economy.
; In the outlays for production of industrial output the expenditure of raw
materials, supplies, fuel and power comprises about 75 percent on the
average. This means that with the modern scales of pr.oduction important
significance is taken on by their econo~y, by rational utilization and re-
duction of losses during productiony transport and storage, as well as the
effective action of economic levers and incentives. For instance, the
electric power engineering sector consumes up to 4~5 percen+ of all the ~el
expended in the national economy. In addition, a saving of each gram of
standazd f~,iel per 1 kilowati:-hour of output of electric power yields an
economic benefit of about 15 million rubles per yeax. Thus, the main task
_ of the electric power engineering ~ector is the maximum reduction in expen-
ditures of fuel for production of electrical and heat ener~y. For this
~urpose, established for power engineering enterprises of the USSR Ministry
of Power was ene of the basic indicators of operation--the reduction in
specific norms of ~el expendituY~e.
As a resuli of introduction of such a system in the 9th Five-Year Plan
: the Fxpenditure of fuel was reduced. by 26 grams, and for the whole
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- outDU+, of electric power this came to 21 million tons of standard fuel,
�~rhich yielded a monetary saving of about 350 million rubles. The collec-
tives of power enterprises participating in the saving received additional
bonus awards amounting to 57.1 million rubles.
In order to increase the ~nterest of associations and enterprises in the
use of ctreaper types of raw ma,terial, supplies, substitutes, and preserva-
tion of the qua~ity of output on the former leJel with an actua,l determi-
na.tion of the volume of production and the productivity of labor it was
authoriz�ed by the decree to keep the wholesale prices for this output
without change until the end of the five-year plan.
When approving a wholesale price for an item with a sr~aller materials-
intensity it is necessary to consider in the new price that profit which -
the enterprise earned. from the sale ef eaxlier produced output. Under ~
these conditions the profit of an ente~rise can only increase~ which
ultimately will lead to an increase in the effectiveness of production.
In tre decree it is envisaged to introduce at the Pxpense of the prime
cost of output a fee for water taken by industrial enterprisas from "
water ma.nagement systems. Considering the large consumption of water by
. all sectors of the na.tional econoirqr, it is necessa..~y to take measures for -
its economical expenditure.
Measures ha,ve been outlined for economical utilization of land resources.
La.nd. is the basic means of production in agriculture and requires a vezy
thrifty attitude towarcl it. However in connection with population growth,
with the withdrawal of land ~~r urban, industrial, and road construction,
for quarries for extraction of minerials and for other purp oses, in the
last 15 yeaxs about 10 million hectaxes have been taken out of circulation.
Introduction of new irrigated lands requires colossal expenditures. Und er
such conditions it is impossible to allow was-cefulness in land utilization.
~ This is why in the new decree it is planned along with technico-economic
substantiation of the construction o~ enterprises to consider the economic
valuation of land ~,rcels set aside for this construction.
The cha,ngeover of the economy to the intensive path of development ad- -
vances the task of strengthening the organic link between science and
production on the basis of deepening the processes of concentration and -
specialization of production, transforming production associations and
scientific orga_nizations i~lto a unified cost-accounting complex capable
of solving complex problems of scier.tific and technical progress. The
many years of experience in developm ~nt of the .econo~y indicates that only
- laxge associations and enterprises can insure the ~.ntroduction ~f signifi-
cant, individua.l capacities, more effective utilization of material, labor
and fina.ncial resources, and con~entrate an adequate numbpr of skilled
sp ecialists and contribute to considerable growth in production and a _
rapid yield o~ an economic ber~efit from new te~�nnolc~yr,
An iirrportant part in improving the economic mechanism was played by the
conversion in 1.969 of the Ministry of the Electrical Engineering Industry
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and in subsequen-E years 13 more industrial ministries, scientific reseaxch,
pla.nning and desio and technological or~,nizations, associations and
enterprises to the r~~ system planning and financing and economic -
incentives for .ror~ on new technology, On the basis of the accepted
scientific and technico-economic directions of development of the sector,
worked out and approved in these ministr3.es axe five-year pla,ns for scien-
tific research, experimental design and technological, work. Insured in
this way is continuity of tha conduct of a whole compl~x of projects on
each specific topic. ~chedule-orders axe compiled. including all stages
of development, the outla,ys, the ceiling price of the item, the qua.lity
category, sources of financing, the proportion of the economic benefit and
the sizes of the ince~tive funds of each executor.
The financing, beginning with the scientific research and ending with the
creation and assimilation in production of new types of items and with the
introduction of new equipment and technolog,ical processes, is carried out
at the expense of the unified ~nd for development of science and tech-
nology, which is formed in the ministries from the profit according to
_ the norms in percentages of the planned volume of commodity ~utput. The
uhified fund for development of science and technology has played a la,rge
stimulating role in acceleration of the whole "research-praluction" cycle,
it has unified science and production in a single whole.
Before the conversion of scientific institutions and associations to the
new system of pla,nning and economic incentive, formed at the industrial
enterprises wer~ funds for financing scientiiic and t~chnical projects,
~.nd fa; development of new equipment at the expense of deductions from the -
prime cost, and if there was a shortage of these budgetary allocations
were made for scientific research. With such a diversity of sources and
funds often the quality of the projects was worsened, and the times
for development and intreduction of new technology were drawn out.
Al1 these shortcomings are eliminated with the creation of a stable source
for fina,ncing the development and introd.uctior. of new technology. M~reover,
the sphere of utilization of the unified fund for davelopment of science ~
arri technology is expanded.. At present owing to this fund important
- scientific research pro jects wi.ll be fi:ianced, and in the case of ina.de-
qua,cy of the fund loans and ~neans from the state budget wi~l be used. In
case of need. some of the monies of the fund will be transferred to the
disposal of industrial associations and large production associations
and enterprises,
The cost of the operations connected with assimilation and introduction of
new technology and implemented at the expense of monies from the unified fund
for development of science and technology will be counted. in the total
volume of production with the entry of the normative profit according to
corresponding groups of items. Being introduced in the machine building -
sectors of industry axe one-time awa.rds for development and assimi].d.tion of
the production of especially inrportant and highly effective types of
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machines, equipment, and technological processes. Payment of the bonuses
~rill be secured owing to the money in the fund for development of science
and technolog,}r.
An important role ir_ accelerating the introduction of new equipment and
increasing its effectiveness has been pla,,yed Dy the change in t~he prin-
~ ciples of formation of the economic incentive ~znds in scientif'ic insti-
tutions, associations and enterprises. Now the incentive funds are formed
owing to part of the national economic benefit, and. not from the wages,
as was done previously, which makes it possible to ma,ke the incentives for
s cientific collectives dependent on ~he na,tional economic benefit, and to
elimina.te the levelling tendency in paying incentives to collectives and
individual workers.
As a result of the conversion of scientific organizations to cost accoun-
ting, the times for working on and in-troducing developments have been
reduced, Thus, in the Ministry of the Electrical Engineering Industry
thef were reduced on the average by 20-40 percent, and in the Ministry of
Fower Ma.chine Building and the Ministry of Heavy Machine Building they were
- reduced by 30 percent, In rela,tion to the first year of operation accor-
ding to the new system the total annua.l economic benefit increased in
the Ministry of the Electrical Engineering Industry 6,6-fol,d in 9 years,
in the Ministry of Heavy Machine Building and the Ministry of Power Machine -
_ Building it increased respectively 203- and 2.2-fold in 5 years, and in
the Ministry of the Chemical Industry it increased 1.2-fold in 3 yea.rs o
An important stimulus for speeding up the introduction of new equipment
is the establishment of incentive surcha,rges in the wholesale prices for
output of the highest qua,lity category. These surchaxges insur~ com-
pensation to the manufacturer of the outlays for producing output o=
improved. qiaality and an additiona.l profit directed to the incentive funds
of scientific institutions and enterprises, With the wholesale prices for
- output attributed. to the second qua~ity category, set for the manufacturing
enterprises are rebates subject to being contributed to the state budget.
The surcharges and rebates axe not taken into account in the plan, With
regard to actual fulfillment of the plan, when it is being evaluated. the
sums of the surcharges and rebates are taken into account, If output
of the second quality category is sold, the discount in the price is con-
sidered only for the supplier-manufacturer which has violated the plan of
removing out d,ated output from productiona The consumer pays for this
output according to the wholesale price.
Established. in the plan indicators for ministries, associations and enter-
prises is the proportion of output of the highest quality category in the
total. volume of commodity production, depending on which the in~entivr~
funds are fi~ured, Planning the quality of output, and certification of
it ~r categories in combina.tion with economic levers and stimuli have !
mar3e it possible even in the lOth Five-Year Plan to increase significantly
the release of output of the highest quality catPgory and to remove ,
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out-dated products from production. Thus, in the Ministry of the Electrical
Engineering Industry the proportion of output of the highest quality
category increased from 9~6 percent in 1969 to 42.7 percent in 1978~
in the Ministry of Power Machine Building and the Ministry of Heavy i�iachine
Building during 1972-i978 it increased respectively from 9.3 to 22,~ and
from 6.8 to 29.~, and in the Ministry of the Chemical Industry it in-
creased from 3.1 in 1974~ to 20.5 percent in 1978.
The proportion of output of the second qua,lity category (output subject to
removal from production) was reduced: in the Ministry of the Electrical
Engineering Industry from 14,2 percent in 1971 to la2 percent in 1978, in
the Ministry of' Heavy Ma.chine Building respectively from 1.6 to 0.08 per-
cent, and in the Ministry of Power Machine Building from 1,7 to 0.01 percent,
In order to increase the role of economic levers ar~l stimuli in expanding
the release of high quality output and removing out-dated outptzt from
praluction, the decree provides for an increase in +.he sizes of incentive �
surcharges on the wholesale prices for new highly-effective output and
an increase in the period during which thEy are in effect. For output of
_ the second qua,lity category~ and also for output which has not been certi-
fied within the set deadlines there is a sharp increase in the size of the
disco;int (the discount will come to 50 percent of the profit), and after =
elapse of the deadline for removing output of the second quality category
from production the discount is set in the amount of the f~ll sum of the
profit, which is transferred into the budget.
Noted in the decree is a series of other measures for improving planr:ing
and strengthening economic levers and incentives for the purpose of
accelerating the introduction of scientific and technical progress,
It is planned in 1980 to complete the transfer o~ scientific institutions,
associations and enterprises of all industrial ministries to the cost
accounting system of organization of operations for creation, develop-
ment and introduction of new technology on the basis of schedule-on~ers
(contracts).
In the course of preparing the five-year plan, the praluction associations
(enterprises) work out and independently approve measures for technical
retooling of production: mecha,nization and automation,~replacement and
modernization of equipment, improvement of the or~anization of praluction
and labor, and others. All this is implemented from the mea,ns of the pro-
duction development fund, which is fo~med owing to in-house profit, deduc-
tions from amortization and earnings from the sale of withdrawn capital. -
The outlays for the indicated measures axe backed by the necessary capital
' investments, ma.terial resources and volumes of contracting jobs in the
~ limits of the ceilings set by the ministries and departments in the five-
year plans (with a breakdown by years). In those cases when in the course
of fulfillment of the annua.l plan the need. arises to conduct additional
measures, the correspon3ing outlays axe ma.de above the ceiling of the
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state capital investments at the expense of the unutilized mea,ns of the .
production development fund and the above-plan contributions to this fl.ind.
_ The important directions of the economic initiative of labor collectives
will receive further expansion of their cost-accounting rights in the
formation of economic incentive ~znds in relation to tne improvement of
the end results of the work~ including the production development fund,
In the new procedure for formation of the ma.terial incentive f~ nd more
significance is given to quality indicators, since the amoun}s of the ~
incentive ~znds in the five-year and annual plans axe ma,de directly depen-
dent on the growth in labor productivity and production of output with
the highest quality caiegory (or another indicator of the qua,lity of output
_ established for the given sector). Envisaged. during formation of the
ma,terial incentive fund is a sha,rp increase in the role of the profit
~ indicator in detPrmining the amounts of this fund. Money is put into
the material ince._.:lve ~.irxi according to norms established in relation to
profit. Thus, the profit indicator becomes the third ~.ind-forming indica-
tor, which to a significant degree determines the size of the ma.terial
incentive fund.
= The absolute sum of contributions to the material incentive ~znd alsowill
be increased (reduced) in relation to fulfillment of the .pla.n for
deliveries according to the nomencla.ture (the assortment and d eadlines in
accozdance with the economic contract-orders).
The fund for social and cultural measures anr3 housing construction will be
formed in the amount of 30-50 percent of the material incentive fund. In
some ministries incentive f`unds can be created accorr3.ing to the indicators
reflectii~g the specifics of the sectors of industry. Included in such
indicators are the saving of material resources, increase in yield on
capital and the shift in3ex, and red.uction of the prime cost of output,
and in the extractive se :tors the growth in produc;tion of output in physical
terms.
The experience in providing incentives for ministries, associations and
enterprises for indicators which consid.er the specifics of the development
of individua,l sectors in the 9th and lOth five-year plans has yielded its -
positive results. For instance, the electric power engineering sector re- .
quires a different approach to � establishr,ient of pla,n and fund-forming
indicators. In the Ministry of the Petroleum Industry and. the Ministry
of the Coal Industry the formation of the funds is done taking into account
the use of rates for each ton of' extraction of oil or coa1, which makes
it possible to insure the interest of the collectives of associations and
enterprises of the ministries in achievement of the final goa1. _
Translating the decree of the CF'SU Central Committee and the US~R Council of
Ministers into reality will create conditions for considerable expansion and
stren~hening of cost accounting and increasing the economic effectiveness of
indus rial production.
COPYRIGHT: Izdatel'stvo '"Pravda", "V~prosy ekonomiki", 1980
10908
CSO: 1820 11
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UTILIZATION OF RESOURCES AND SUPPLY '
CALL FOR CONSTITUTIONAL BODY TO MONITOR NATURE CONSERVANCY
Moscow VOPROSY EKONOMIKI in Russian No 6, Jun 80 pp 75-86
[Article by M. Gokhberg: "Regional Use of Nstural Resources"]
- [Text] The principles of the conservation and intelligent use of natural
resources characteristic of the period of developed socialism are reflected
in the USSR Constitution: "In the inter~sts of the present and future gen-
erations the essential measures are being adopted in the USSR for the con-
servation and scientifically substantiated, intelligent use of the land and
its interior, water resources and flora and fauna, preservation of the pur- f
_ ity of the aix and water, the reproduction of natural resources and an improve- `
ment in man's environment,"
A further improvement in the planning of the econo~ay is of importance for the
implem.entation of nature-conservation measures and the intelligent use of
natural resources. The CPSU Central Co~.i.ttee and USSR Council of Ministers
decree "An Improvenent in Plannin~ and an Intensif ication of the Impact of
- the Economic Mechanism on an Increase in Production Efficiency and Work Qual-
~ ity" provides for the systematic development of problems of the comprehensive
use of natural resources in the process of preplanning work. The USSR min-
istries and departments and union republic councils of ministers have been
~ charged with formulating and confirming in the 5-year plans natural and
environmental conservation measures ar_d also plans for the use of incidental
output and byproducts, secondary ~materials and other resources. It is also
planned in the said decree to formulate as a most important component of the
state long-term plans of economic ai;u 5~.^.ial development object comprehensive
scientiFic-technical, economic and social programs and also prt.grams of the
. development of individual regional and ter~ritorial-production complexes,
insuring these programs' essential linkage ~:.7ith tne ~Qrresponding sections
of the plan and with material and financial resources." Topical signifi-
~ cance is attached in this connection to a study of the economic problems of
the regional use of natural resources on the basis of a program-goal approach
presupposing trhe.interconnpcted examination of a number of m~dules: the f irst
would be mineral-raw material and fuel resources (geological prospecting,
- recovery, enrichment and final processing and the use of secondary resources);
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the second--forestry, timber, wood-processing and pulp and paper industry
and timber trans.portation; the third--water resources (surface and subter-
ranean, water supply and drainage, reclamation, hydraulic power, navigation,
fishing and the use and conservation of lakes ai~d small rivers); foarth--
land and its agricultural and nonagricultural use; fifth--the air (its
condition, sources of pollution and ways of purifqing harmful discharges
into the atmosphere); and the sixth would include landscapes and flora and
fauna preservation zones. Resources, requirements, comprehensive utiliza-
tion and methods of economic evaluation would be studied within the con-
fines of each module. The specified forecasts should have a p�recise region-
al aspect and be distinguished 'oy a differentiated approach which takes
account of the concrete singularities of each economic region (kray, ob-
_ last, ASSR) and territorial-production co~plex.
The scientifically substantiated, intelligent use of land and its conserva-
tion and the utmost increase in soil fertility is a nationwide task. But
there are certain shortcomings in this sphere. A trend toward a reduction
in agricultural land, including arable land, can be observed. Considerable
damage is being inflicted on agricultural land and its fertility as~a re-
- sult of contamination of the soil by solid waste and chemicals, the mining
= of minerals by the open method, the buildi.ng of supply lines and installa-
tions and the siting of d~,nping grounds.
Despite the constant detachment of fertile land for housing, development,
warehousing, industrial and other purposes, the nonagricultural territories
are being utilized insufficiently intensively. Thus approximately only 80
percent of industrial territories in the USSR's Central economic region is
built up and occupied by supply lines and sanitation-protective zones. How-
ever, even this section of territory is utilized inefficiently. The average
density of housing development per hectare of development territory of this
region's cities amounts to approximately 600 square meters because the propor-
tion of low apartment houses in the cities' housing amounts to 40-50 percent.
Over the last 10 years 60 percent of the urban communities of the said region
have been developed from the assimilation of agricultural land, 35 percent
from open areas and only 2 percent from recultivation. With a low density of
development, only 6-18 persons reside per hectare of development territory
of the villages in rural localities, whereas even with 1-2-story modern
capital development it would be possible to settle 40 and more persons
- (with a density of 600 square meters per hectare). Agricultural land is
frequently allocated for construction here.
Considerable shortcomings are typical of the current system of compensation
for economic loss in the detachment of land. The USSR Council of Ministers
decree "Compensation of Losses for Land Users and Losses of Agricultural
Production Upon the Detachment of Land for State or Public Needs" ti*as
adopted in 1974. However, the amount of compensation per hectare o�
detachable arable land does not exceed 10-50 percent of the actual summary
outlays necessary to recover the land and its fertility. The norms of the
development of new land to replace that detached for agricultural needs
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applicable since 1976 provide for compensation in the Central aconomi.c re-
gion of R5,790 per hectare af arable land and R3,120 per hectare of fodder .
land. Thus there is reimbursement, as it were, of outlays for the develop-
meizt of 1 hectare of new land. In nonchernozem zone practice they exceed
R10,000 (taking into account outlays on the recovery of soil fertility). T'.ie
process of the development of new land under the conditions of Moscow Oblast -
takes no less than 4 years. In this period the farm loses a harvest and the
gross income connected therewith of R5,600 per hectare (it amounts to ap-
proximately R1,350-R1,400 per year).1 The specific land users are not com-
pensated for the losses of agricultural products. Moreover, in the event of
a decision having been made on the detachment of land any amount of compen- ~
sation is in practice no barrier to the seizure of the land since it is
planned in the estimated costs of the new project, constituting a negligible
part thereof.2 The ministries and departments do not here transfer the
amounts of compensation to the accounts of the land user-farms which ran the
detached land. These new resources are put at the disposal of the union
republic Ministry of Agriculture arid may be used for any needs. Thus there
is a loss of the lower-level land users' responsibility both for the detacYl-
ment and also for the recovery ~f land according to the principle of "a
hectare for a hectare and a quintal for a quintal." As a result specific
fs~ms of a rayon and oblast lose a percentage of fertile land and the har-
vest~
Often the land user-farms do not object to the removal of some o`F the land,
particularly the less fertile land, since this spares them the need to im-
' prove it and enables them to lower the plan and reduce the work load. Mater- _
- ial of the interdepartmental co~issions for locating new industrial con- _
struction projects in the krays and oblasts shows that fertile land is fre-
quently detached without sufficient justification.
The shortcomings of the current system of coutpensation for the detachment
of agricultural land demand a quest for new ways of regulating this process.
A proposal of the All-;:nion Scientific Research Institute for Prices on the
introduction of a system of ineasures including the determination of a one-
time fee for detachments of land, annual payments for its use and fines for
the nonfulfillment of recultivation plans and an increase in the area and
vic,.lation of the density norms of the industrial development is very in-
terea;ting.
An enterprise's financially autonomous activity under these conditions re-
quires the planning of the necessary compensation amounts to cover the one-
time fe:s for detachments of land and the annual payments for its use. Ir-
respective of their magnitude, fines cannot appreciably influence enter-
prises' profit surplus and the economic stimulation funds being formed. It
seems to us that an extra-ecar.omic factor in the fozm of a system of judicial
measures combined with effective economic measures insuring the creation of
sources for the recovery of fertile agricultural and forest land could play
a decisive part in their protection in the i~ediate future. It is evidently
advisable to detach for nonagricultural purposes predo.minantly land which is
- the least fertile and which has an intricate relief and broken soil cover
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and which is barely suitable or unsuitable for agriculture. The transfer of
arable and other most valuable land for nonagricultural needs should also
be prohibited. Together with this it is necessary to step up work on in-
~ creasing soil fertility, combating wind and water erosion, on afforestation,
draining excessively moist land, recultivating peat soils, sand and sandy
loam soils and on fundamentally improving forests and pastures. In addi-
tion, a reduction in the need for additional territories is possible thanks
to the better use of land detached earlier, the development of subsurface _
areas, acceleration of the dimensions of reconstruction work in urban and
rural co~nunities accompanied by the extensive enlistment of "unproductive"
and vacant land and an increase in the density of housing-civil and indus-
trial construction by means of an increase in the number of stories in a
building, the demolition of 1-2-story buildings, the group location of
enterprises, the ordering of industrial areas on the basis of rational
layout p~.ans and the recultivation of broken land.3
These me~.sures are of particular significance for the highly developed and
completed economic regions (the Central, Donetsko-Pridneprovsk, Ural and
_ others, for example), where the possibilities of expanding agricultural .
land are not great. In these regions it is important to reduce detachments
of agricultural land to a minimum and to rule out detachments of arable land
and state forestry land altogether and to establish increased economic penal-
ties for the irrational use of land resources, arbitrary seizure, c4ntamina-
tion and harm caused to the fertility of the land.
. -
Detachments of agricultural land permitted as an exception should be com-
pensated o.i the basis of the principle of economic evaluation envisaging
the need for the reimbursement not only of one-time outlays on the recovery
of land of an analogous area and fertility but also of the gross income lost
in the period from removal of the area to the introduction of the new land.
It would be expedient here to allow for an 8-year period, which corresponds
to the average normative coefficient of the effectiveness of capital invest-
- ments of 0.12.4 The following formula may be adduced to determine the over-
, all amount of compensation (C):
- ~ _ Ya . AS . PZ + .Cei ~I)
1.12
where Ya is average yield per hectare (in accordance with the figures of
the region's best farms); AS is the area of the seized plot; PZ is the
zonal purchasing price, which takes account of location and soil fertility
(with the land quality being defined on the basis of the land evaluation
register); and Ce is the estimated cbst5 of the recovery of the land,
including outlays on reclamation and agricultrual development. Calculations
show that with a gross income of R1,400 per hectare the amount of compensa-
tion according to the above formula equals R17,000 per hectare (in accordance
with the established norm, it amounts to R5,790 per hectare of arable land
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for the Central economic region). It would appear advisable to pass on the
amounts of compensation to the farms (or local agriculttlYal authorities)
which used the detached land and strictly monitor the use of these resources
for the purpose of introducing new land in a specific region. We believe =
that it is better to detach recently reclaimed land for construction rather
- than developed and more productive land (when there are no other alternatives). _
The quest for areas of the conservation and intelligent use of land resourc~s
and finding opportunities for expanding agricultural land.-and Pconomizing
on land detached for nonagricultural purposes are important tasks of region-
al preplanning research. It is advisable in the course of this work to study
. ways of intensifying the use of agricultural land on the basis of optimi-
zation of its structure and the introduction of progressive crop rotations -
and efficient agrotechnical methods. It is also necessary to study the
possib i~.ities of expanding land resources thanks to druir_age, irrigation, _
the implementation of anti-erosion measures, the clearing of stones and
shrubs and recultivation. Determination of the paths of the efficient use
of assimilated Iand should be based on calculations which take into con-
sideration in a package the singularities of the specific region. For ex-
ample, the i.mplementation of such measures is marked by high effectiveness
- under the conditions of the RSFSR's nonchernozem area: the yield on re-
claimed and recovered land frequently amounts to 200-40A quintals per hec-
tare of potatoes, 400-800 quin~als per hectare of cabba:~ge, 400-b00 quintals
per hectare of fodder root crops and 120-400 quintals per hectare of green
bulk (on irrigated land), and the time neede~i to recoup expenditure is 3-4
years. In addition, it is necessary to formulate proposals on protecting -
land against contamination and irrational use and on locating industrial =
and housing-civil construction on unsuitable or barely suitable land and
also to reduce territory requirements thanks to the concentration of develop-
~ mental buildup and an increase in the number of its stories and rational use.
We believe it necessary in the long-term for~casting of the regions t~ pay
particular attenti~n to an analysis of the balance sheet of land resources
and agricultural land for uncovering reserves of unutilized land. Such
reserves exist, for example, in many oblasts of the Central economic region,
and their amounts fluctuate between 2,000 and 10,000-plus hectares. It is
essential in the elaboration of long-term forecasts to study the dynami.cs
of land detachments for nonagricultural purposes and the amounts of compen-
sation for the removal of land and its use. It is advisable through the
efforts of specialized organizations to formulate for each economic region
(kray, oblast and ASSR) long-term outlines of the comprehensive application
of land, the basis of which should be the Master Outline of the Use of the
USSR's Lazid Resources.
The problem of the rational use, preservation and reproduction of forest
resources is urgent for all regions of the country and particularly for the ~
European part of the RSFSR, which has less than 20 percent of the econcmical-
ly practicable forest resources of the entire republic and a volume of tim-
ber procurement in excess of SO percent of the all-union volume. Excessive
~ G.
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felling of designed forest areas of coniferous species is leading to their ~
gradual diminution, while a large amount of deciduous timber remains in the
forest cutting areas. A reason for the ~epletion of the European part's
forest resources is the big timber requirement, which we have not yet suc-
ceeded in s~ .isfying from heavily wooded and forest-abundant regions on
account of their insufficiently rapid assimilation. The inefficient utili- -
zation of deciduous timber is engendered by its inferior quality compared
with coniferous timber and a shortage of processing capacity. The shortage
of tinber is alsocaused by the low level of i�ts industrial~ application, which
frequently does not exceed 20-25 percent. Insufficient use is being made _
of waste, although it is known that out of 1,000 cubic meters of timber
; waste it is possible to obtain products wrSYth R44,000, that is, no less than
from the same quantity of finished timber. Preservation of the ecological _
balance in the regions of the co~mtry suffering from inadequate forests de-
mands that forest resources' habitat-forming, hydrometeorological and sani-
tary significance be adopted as chief criteria of the~r use. In the inter- _
ests of protecting the surrounding air of highly developed econoinic regions
it is important that this principle prevail over the category of the in-
dustrial value of the forest and its proximity to the consumer. An overall
magnitude of maintenance felling and sanitary felling and of the use of
- mature and overmature forest is proposed as the quantitative criterion of
determination of the size of the effective cutting area and the felling
volume. It is advisable to put an end to excessive felling of the designed
cutting areas in coniferous forests and primarily water-prot~ction forests
and improve the consumption of deciduous timber and the entire timber raw
_ material complex. In addition, it is proposed to plan in the regions of the
European part of the country suffering from insufficient forest areas, parti-
cularly in the Central, Donetsko-Pridneprovsk, Ural, North Caucasus and other
regions, a radical increase in the scale of forest restoration and forest
cultivation, making it possible to compensate for annual losses and under-
take the expanded reproduction of forest resources at an accelerated pace.
It is essential to rule out entirely the use of forest areas in these re-
gions for construction needs.5
The limi.ted nature of the forest resources and the ir.crease in outlays on
their protection and reproduction presuppose an increase in the fee charged
for use of the forest on the basis of differentiated forest rates (in the
form of a ~.~r_-stump or per-root payment:~~hich takes acGOUnt of the complex -
of the natural and economic singularities of the use and reproduction of
these resources in given regions and the actual outlays conditioned by these
factors and also the diffe.rentiated revenue determined in accordance with
the conditions not of the average but of the worst areas).6 This provision
is particularly important for the regions which suffer from inadequate forest
areas. The forest land register, which reflects the qualitative regional
characteristics of the forests and the singularities of their increase and
location, should be made the basis of an evaluation of. forest land.
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An analysis of the forest land o� krays, oblasts and ASSR's, a study of the _
paths ~f its conservation and reproduction, an improvement in the use of
timber and an improvement in the territorial organization and location of
timber, wood-processing and pulp anr': paper industry are an inalienable part
of the long-term forecasting of thP 3evelopment of the economy of economic
~ regions.
It is necessary to seek paths for the intelligent use of water resources as
a consequence of the shortage thereof in a number of regions of the country.
Thus the western~-�and southern regions, which are the most developed and -
densely populated, have only 14 percent of them. The European regions of
the RSF.SR have approximately 23 percent of total water resources, while the
amount of water consumption in them is as high as 80 percent of republic-
wide consumption. This is explained by the insufficiently rational consump-
tion of water in the economy. The position with regard to water supply is
frequently exacerbated on account of the unsuitablity of surface waters for
this purpose. A study of hydroeconomics at the regional preplannii~g re-
� se,zrc,h stage should include: an evaluation of the resources of surface and
suUterranean waters and the~.r correspondence with the economy's r~quirements
on the basis of a hydroeconomic balance sheet (with regard for the quality
of the water) and the disclosure of territories which are deficient in water
resQUrces. Urgent significance is attached to the interconnected examina-
tion of the problems of hydroeconomics, the comprehensiveness of the use and
protection of water sources, the conditions of water supply and drainage,
and the purification and repeat use of effluent in connection with the in-
terests of hydraulic power, navigation and fishing and land reclamation in
each region. As experience shaws, it is advisable to study water resources
with respect to water basins as a whole, krays, oblasts and ASSR's, terri-
tori3l-production complexes and industrial centers and agricultural zones. -
In studying regions' provision with water resources it would appear import-
ant to examine the position ot the principal water consumers and areas for
- the location of new facilities with respect Co sources of water supply. An
evaluation of surface waters will be made here in accordance with the fol-
lowi.ng indicators: overall resources in years of average water content,
including natural and transit flow; proportional water resources per square
kilometer and per inhabitant; and dimensions of the flow being built up with- `
in the confines of a region (absolute amount of the flow in cubic kilometers
in anerage and high-water years; its specific indicator in liters per second
per square kilometer; and minimum average monthly discharges in the summer-
fall and winter seasons). An evaluation of the resources of subterranean
waters presupposes a study of artesian basins (magnitude of the resources,
quality of the water, depth of occurrence, capacities of tr~e aquiferous
lines and possible amounts of the qield and daily flow of the wells).
'Pogether with this it would be advisable to analyze the dynamics of outlays
~ on hydrogeological and hydrological work, which are still insufficient in
many regions. ~
The growing deficit in the balance sheet of subterranean waters demands that
we limit or rule out their use for industrial purposes. For this reason it
is necessary to study the areas of the use of subterranean waters and paths
of improving them in preplanning regional research. A high-quality analysis
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of water resources presupposes the study o~ the composition of subterranean
and surface water from the viewpoint o~ their suitability for industrial
and household-drinking water supply and also disclosure of the principal
sources of pollution and the nature of them.
In analy;:ing the problem of protecting water resources it is advisable to
employ the following indicators: the relation of the volume of the flows
requiring purification to the overall quantity of polluted water; the rela-
- tion of the volume of the tlows which have un3ergane purification (chemical,
mechanical and biological) to the .~verall volume of dischargeable sewage;
- the relation of the capacity of the purificiation installations providino
for the total purification of the f~.ows to the total capacity of the purifi- _
cation installations; and the relation of the actual capacitq of the purifi- -
cation installations to the volume of polluted effluent. This analysis will =
be supplemented by a study of the progress of fulfillment of the plans for
the assimilation of capital investments and the introduction of purification
installation capacities. These indicators characterize, we believe, the
state of the system of the purification of effluent in the region (city).
A comprehensive approach to an investigation of regions' water resources pre-
supposes a study of the conditions of the preservation and reproduction of
flora and fauna, ways of improving navigation and the intelligent use of
coastal land in the regions. The problem of the resources of lakes and
small rivers, which ma.y be employed for water supply, hydraulic power, local
_ navigation and the organization of fishing and their bottom land for obtain-
ing big stable harvests of fodder grasses and vegetables, merits particular
attention.
Redistribution of the flow of the northern and Siberian rivers will be neces-
sary in the future as a source of replenishment of the water resources of
" the European and Central. Asian regions. Importance is attached in this
connection to a study of the natural, climatic, economic and nther conse-
quences for a number of regions of the country and also of the problems of
the intrabasin and interbasin distribution of the flow within the European
and Central Asian regions.
The growing need for water and the limited nature of resources of it demand
regulation of the water supply with the aid of economic levers. The estab-
lished charge for water in a number of sectors and regions does not fully '
take account of the expenditure of socially necessarq la.bor on the imple-
mentation of hydroeconomic measures in the countrq as a whole. We do not -
practice differentiated amounts of the charge for water per region with re-
gard for the quality of the water and its critical nature and efficient
utilization. This expenditure can be taken into account only on the basis
of a correct determination of rent payments consisting of a charge for the
water. 'I'here are various opinions with regard to calculating prices for
water. But a unified approach to this question has yet to be formulated.
Until the charge for water is determined on the basis of the incorporation
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- of rent payments therein, it may be based on the specific indicators of
adduced expenditure in di.fferent regions (with regard for the socially
necessary expenditure in the country a;s a whole).~ Perfection of the prin-
ciple of the chargeability of tne use of natural resources will promote the
rational use of wat~r resources. This problem is assuming importanc~ for
the highly developed economic regions of the European part of the country,
which are e~peri.encing a shortage of water of the necessarq quality for in-
dustrial and household-drinking water needs. We believe ~hat it would be
advisable to establish for these regions legislative restirictions with re- _
spect to the creation of new and the development of operating water-inten-
sive works and a.lso production facilities distinguished by harmful effluent
_ which is difficult to purify. It is also necessary to rationalize water
consumption on the basis of the introduction of economi.cally progre:.�sive
norms which take account of the need for the complete transition to return
water supply$ and to perform work on an extensive scale to strengthen the _
sanitarq protection of the reservoirs and channels. Im~ortance is attached
to an increase in the rate of flow of the rivers (regulation of the flow and
. intrabasin and interbasin redistribution), the establishment of legislative
restrictions on the use of sub terranean waters for industrial purposes and '
intensification of the comprehensive approach to problems of water supply,
drainage and pr~tection of the water basin. It appears essential to intro-
_ duce the chargeability of water utilization (with differentiation per region
and with regard for the quality, critical nature and efficiency of consump-
tion of the water and the incorporation of rent paqments in the charge for
the water). It should be Fointed out that the effect from the interbasin
transfers of the flow of northern rivers to the European regions which is _
planned in . the future could b e achieved given a fundamental improvement in
the sanitary condition of these regions' water basin.
The development of long-term forecasts of the development of the production
forces of economic regions (krays, oblasts and ASSR.'s) requires a detailed
analysis of previous geological study of the territory. We believe that the
level at which it is covered b~~ various kinds of geological survey broken
down by degree of detail (large-scale, medium-scale and small-scale) could
serve as an indicator. This indicator is defined as the relation of the
area covered by this type of geological survey or the other to the entire
magnitude of the territory. An analysis shows that in a number of oblasts
of the European part of tY:e country the extent of coverage by a large-scale
survey fluctuates within the limits of 25-30 percent, by a medium-scale sur-
vey within the limi.ts of 60-65 percent and by a small-scale survey within
the limits of 40-45 percent. This is negatively reflected in the extent to
~ which the territory has been geologically tested. Importance is attached
to a study of the tendency of geological prospecting on the basis of an
analysis of the scale, dynamics and structure of planned and actual expendi-
ture (of the krays, oblasts and ASSR's) over a period of 2-3 five-year plans.
We believe that it is essential to utilize the following indicators for
this: rate of growth of expenditure and shifts in its structure; and
proportional expenditure on geological prospecting for individual types of
raw material per 1,000 square kilometers of territory of the kray, oblast,
ASSR and economic region. These indicators may be compared with analogous
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indicators for the country as a whole and the union republics. :'he exten-
sive application of the halance method is essential i.n the process of region-
al long-term forecasting provision with mineral raw material (fuel) re-
sources [as publishedJ. The technical-economic evaluation of mineral raw
material is a task for the specialized scientific research and planning
organizations. However, regional digests of the location of~mineral raw ma-
terial resources are not of a regular nature, and the possibilities of their
use are limited.
The long-term regiotial forecasts pay great attention to problems of the com- ,
_ prehenszve use of mineral raw matexials and the maximum reduction in losses
in mining, concentration and metallurgical treatment. The solution of this _
problem is a most important factor of a reduction in materials-intensive-
ness, an increase in social production efficiency, saving resources, obtain-
ing valuable elements and so forth.
It is essential in the forecasting of the development of the regions to study
the desree of comprehensiveness of the use of the raw material in nonferrous
and ferrous metallurgy and the chemi.cal industry. This is particularly urgent
when it cones to the use of copper-pyrite, compound copper and copper-zinc,
tin-polymetallic, tungsten, molybdenum and tantalum-niobium ores, concentra-
tion tailings, slag, sludge, pqrite cinders, mining and chemical raw mater-
ial and oil. It is important to uncover the shortcomings in the comprehen-
sive use of raw material. These include: a departmental approach, whereby ,
it is planned to obtain only individual components; a low level of production
combination, which fails to insure the extraction of valuable elements; short-
comings in the organization of the investment process, wherein capital in-
vestments are channeled predominantly into the mining and treatment of in-
dividual components; and the unfinished nature of production processes and
the imperfection of essential equipment, reagents and materials. It is
advisable in the course of the long-term forecasting of the regions~to make
a quantitative and qualitative analysis of the resources; reveal the extent
of the provision with reserves in the actual or planned mining yield; eval-
uate the mining and hydrogeological conditions of the working, the techno-
logical possibilities of concentration and the paramenters of extraction
into concentrate and the final product; compare the economic indicators for
deposits and basins; and determine the need for the development of deposits,
proceeding from the requirement established on the basis of the balance
sheet of this type of mineral or the other. The economic evaluation of
mineral raw material should be of a comprehensive nature and based on a
consideration of mining and geological conditions and technol~gical singular-
ities of the mining, concentration and final conversion and also cost fac-
tors and be oriented toward final national economic results. An evaluation
of the use of mineral raw material according to the criterion of a differ-
ential rent is successful. But this idea has not been i.mplemented in prac-
tice. We believe other effective methods of an evaluation of mineral raw
material for regional investigation are also possible: determination of the
- difference between the cost of the extracted components (in current whole-
sale prices) and�the amount of expenditure on the mining and treatment of -
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the raw material; a calculation of the time needed to recoup capital invest-
ments from profits, which is compared with the normative, sectorial average
or the best indicators of national and foreign practice; and comparison of
specific irdicators of capital outlays, prime costs of the mining and treat- ~
ment of individual types of minerals and also adduced expenditure. A
systemic apProach to an economic evaiuation of mineral raw material demands
computation of t~tal expenditure on exploration, geological pros*~ecting and
preparatory operations, on concentration and metallurgical treatment and so -
forth.
Upon an evaluation of multicomponent raw ma.terial it would appear necessary
to determine the value of all the extracted components according to current
wholesale prices and to distribute capital and operating expenditure among
them proportionate to the value of each of them. The prime cost of the ore
or concentrate of the main type of raw material may be reduced by the value
of a secondarq component. IC is necessary to proceed here not from the
actual content of the secondary componer..ts in the source raw material or
intermediate product but from the actual indicators of their extraction in-
to a final product.
In a 28 November 1979 decree the USSR State Committee for Science and Tech-
nology and the USSR State Committee for Prices approved the "Provisional '
Model Procedure of the Economic Evaluation of rLineral Deposits." It takes ~
as the basic criterion the national economic effect in the farm of the dif-
ference between the value of the final product determined on the basis of
the final expenditure indicator and total production expenditure. Together
with this it recommends indicators of the time needed to recou~ capital
investments in the prospecting and working of the deposits, *_he annual prof-
it total and others. A norm was also established for adducing expenditures
at different times and results, making it possible to take account of the
time factor in evaluatin~ the use oi capital investmen ts.9
An improvement in the comprehensive use of minerals demands: the organiza-
tion of strict quantitative and qualitative accounting of each type; the
creation of technological possibilities of preserving main and secondary
components in the semifinished product at intermediate treatment stages; and
the determination of an effective system of the economic stimulation of the
maximum extraction of raw material.
The 25th CPSU Congress pointed to the need to reduce materials -intensiveness
as an important task of an increase in social production efficiency. One
way to reach this goal is to reduce industrial waste and make fuller use of
it. "This waste--irrespective of the role which it performs as new compon-
ents of production--reduces to the extent that it can be resold raw material
costs...."10 For this reason the application of secondary resources is
important in regional preplanning research. It is advisable to study there-
in the amount of secondary resources and ways to evaluate the degree of
utilization of secondary resources in the regions: the relation of utilized
quantities of secondary raw material (fuel) per type to their availability
in the region and also to the overall volume of consumed prinary raw material
(fuel, heat).
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This problem is of importance for the country's developed ecunoudc regions,
where large reserves of secondary raw material are being built up and where =
there is a l~ck of large-scale mineral resources. The 4pplication of secon-
~ dary resources in these areas wiil contribute to a reduction in expenditure
on imported raw material and will increase social production efficiency. Thus
in the Central economic region tfie available resources of scrap copper ~nake
it possible to cater for the operation of a copper-smelting plant. Use is
made of 70 percent of ferrous meral waste and metal scrap. There is a low
level of utilization of iron (carbonaceous) pyrite--important coal-mining
waste from which it is possible to obtain concentrate with a 47-percent _
sulfur content and fire clay for the production of chamotte. The extraction -
of sulfur from this sacondary raw material requires three times less ad-
duced ex~enditure than from nonferrous metallurgq waste. The use of 1 mil-
lion tons of carbonaceous pyrite instead of Ural sulfur-bearing raw material
could insure a saving of adduced expenditure of more than R100 million a ~
year. However, dumps thereof increase annually by several million tons.
A large proportion of blast furnace, dump and power engineeri.ng slao and
ashes is not utilized, and inadequate use is made of the granulated slag
and fluxing limestone of ferrous metallurgy, although high-grade cement -
and construction materials (panels, blocks and light cinder fillers for the
~ production of concrete and panels) may be obtained from them. For example,
grade 300 slaggy Portland cement from slag of the Kosogorsk Foundry is
approximately R3.5 per ton cheaper than that of the Podol'sk Cement Plant,
where prima r~ raw material is used. In addition, it is known that 1 ton
of cement containing cinders costs R1.2 less and that the use of panels from
cinders and slag makes it possible to reduce prime costs per cubic meter of
structure by R10-18 and to reduce wall weight by a factor of 4-5 compared
with the use of brick. Yet consumption of power station cinders and slag
does not exceed 2 percent. The cinders of Moscow area coals axe val.uable
raw material for the alumina industry. They contain 1.4 times more alumina
than other types of aluminiferous raw material, and expenditure is lower.
According to data of the Mineral Fuels Institute the Council for the
Study of Production Forces and the Institute of Applied Chemistry, adduced
expenditure on obtaizing 1 ton of alumina constitutes (in rubles): 1.5
from Moscow area coal ~;nders, 20-36 from bauxites, 26 from nepheline con-
centrate and 18 from Chin:~ clay. Therefore the use of coal cinders is ex-
pedient for alumina production.
Importance is attached for regional preplanning research to secondary power -
resources (the waste of coal concentration and wood processing, blast furn-
ace and cracking processes, coal-tar chemical operations, the heat of exhaust
gases, discharged hot water and steam and others). For example, it is pos-
sible to provide tor 30 percent and more of the fuel requirement (data of
I. P. Krapchin) as a result of their application in ferrous and nonferrous
metallurgy and petroleum refining and chemical and petrochemical industry.
However, secondary energy resources are onlq utilized to the extent of 10-15
percent in the industry of the Central economic region.
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It is essential in the process of regional preplanning research to pay due
attention to questions of protecting the atmosphere (the implementation of
radical measures to purify emissions into the atmosphere by industry, mo tor ~
transport and municipal services). Tt is also advisable to study ways of `
restricting individual transportation means in the biggest cities and of
establishing a strict system of control and economic penalties for air pol- -
lution, including sanitary control of motor-transpc:rt emissions.
In addition, it is necessary to broaden the f ront of work on studying val-
uable natural facilities, including recreation zones and health resorts,
conserv.ation of flora and fauna and the most characteristic landscapes, -
- on substantiation of the recommended protective practices and on the creation
of improved registers for all types of natural resources, including the at-
mosphere.
W~ believe that the consistent implementatlon of the nature-conservation
laws requires the creation of a special constitutional body for planning,
procedural guidance and monitoring the fulfillment of nature-conservation
measures in the country and the union republics, primarily in such a major _
union republic as the RSFSR.11 The limited nature of the natural resources
engenders the need for the speedies~~ transition to the chargeability of the ~
use of natural resources based on the mineral, land and water resources and
surrounding air registers. -
The economic evaluation of natural resources is possible by means of a com-
putation of expenditure on their assimilation and reproduction or by pro-
ceeding from the maximum permissible (final) expenditure on the output of
the sectors exploiting the natural resources. Determination af differential
rent rates is also probable on the grounds of optimized calculations oriented -
toward maximum rent proceeds. But with any method of the determi.nation of
differential rent it is advisable that its absolute amount for ~:ac:h type of
natural resource correspond to the expenditure of socially necessary labor
on conservation and expanded reproduction and the country's budgetary pos-
sibilities at this or the other stage of the econo~y's development. The
transition to the chargeability of the use of natural resources acquires '
particular relevance in the light of the decree "An Improvement in Planning
and an Intensification of the Impact of the Economic Mechanism on an Increase
in Production Efficiency and Work Quality." -
The expansion of the planning horizon outlined in the decree dictates the
need for the transition to the systematic development for periods of 20 and
10 years (broken down by 5-year plan) of comprehansive forecasts with re-
spect to the conservation and rationa.l use of natural resources and the
preservation and improvement of the environment in the country as a whole,
the union republics, economic regions (krays, oblasts and ASSR's) and the
most important territorial-production co~plexes by the efforts of the sec-
torial and territorial scientific research"-. and planning institutes. The
coordination of this research could be undertaken by natural-resource fore-
casting departments which it would be expedient to create in the system of
the scientific research institutes of th~ USSR Gosplan and the union republic
gosplans.
2~
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FOOTTIOTES
- 1. These indicators are typical, for esample, of the "S:,F~~novskiy" Sovkhoz
of Moscow Gblast's Ramenskip Rayon.
2. For example, light machine-building plants require 5-15 hectares for
~ their accommodation. Even with a total compensation of R10,000 per
hectare, its magnitude would amount to R50,000-150,OOG, with an esti-
mated cost of the enterprises of R10-20 mi~.lion and more. In the cities -
the compensation is the equivalent of 0.5-5 percent of the cost of de-
velopment of the territories.
3. The limited nature of land resources urgently demands the implementation
of ineasures for the recultivation of territories and the use of unsuit- -
able and barely suitable land, despite the expenditure connected with
these. Accor~iing to data of the CentraY Scientific Research and Plan- -
ning Institute for City Desig*_iing and Building, capital expenditure on
removing the consequences of mining operations constitutes (thousands of
rubles per hectare): 10-40 on the restoration of troughs, 100 and more
on removing and landscaping dumps and 10-40 on f illing in quarries; up
_ to �13 on leveling out dumps of stripped rocks; and from 1.3 to 200 on _
the recultivation of urban territories.
4. There are proposals on the need to increase this indicator to 0.15. It
is interesting in this connection to quote the following from r`,cademi-
cian T. S. Khachaturov: "Some people believe that, having raised the
efficiency nor~ from 12 to 15 percent, we will thereby increase the
level of efficiency in the economy. But if matters are so simple, why
- not raise the norm to 20-25-30 percent, perhaps this would be better "
(see METODY I PRAKTIKA OPRIDELENIYA EFFEKTIVNOSTI KAPITAL'NYKH VLOZHENIY
Izdatel'stvo Nauka, No 28, 1977, p 29). According to T. S. Khachaturov's
calculations, the time needed to recoup capital investments thanks to
the savings from a reduction in production costs in 1977 was approximate-
ly 25 years in industry, while recoupment is not achieved in agriculture
and transportation (see VOPROSY EKONOMIKI No 7, 1979, p 124).
5. It is interesting to point out that in instances of the detachmen~ of
forest areas under the conditions of the M~scow region the amount of
compensation is R6,000 per hectare of forest. But even this fails to
- prevent the occupation of this land.
6. K. Marx pointed out that even the worst areas with respect to fertility
and location yield a differential rent (See K. Marx and Engels,
"Soch." [Works], vol 25, pt II, p 295).
7. For example, in a number of oblasts of the Central economic region
associated with the Volga basin the amount of adduced expenditure per
cubic meter of water fluctuates within the limits of 0.101-0.333 kopecks
(data of the All-Union Scientific Research Institute of the Economics
of the Management of Water Resources for 1975).
25
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8. Despite the a~preciable expenditure, this measure is axtremely neces-
- sary: 1 cubic meter of "conditiona.lly" clean and incompletely purified
effluent pollutes SQ-6Q cubic IDp:2rs of clear water and requires a
I~ 7-15-fold dilution with natural water for natural purification. Return
water nake~s it possible to reduce the loss of valuable materials enter-
ing the water. The time required to recoup capital investments in the _
construction of purification installations does.not exceed 5 years.
9. See EKONOMICF~ESKAYA GAZETA No 5, 1980, p 15.
10. K. Marx and F. Engels, "Works," vo~. 25, pt I, p 91.
]1. State committees for nature consernation have alreadq been set up in a `
number of union republics, and the Ministrq of Forestry and Nature
Conservation has been created in the Estonian SSR.
~ COPYRIGHT: Izdatel'stvo "Pr~.vda", "Voprosy ekonomiki", 1980
8850
CSO: 1820
~
~i
;i
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r.nr. nr.~rn~-~� rc~ rl`iLV
a v.. . i i...--�i..
INTRODUCTION OF NEW TECHI~IOLOGY
.
_ EFFECTIVENE~S OF NEW TECHNOLOGY SCRUTINIZED
Moscow VOPROSY EKONOMIKI in Russian No 6, Jun 80 pp 44-55
_ [Article by D. Palterovich: "Actual Effectiveness of New Technology"]
[TextJ Costs for implementing measures on new technology in industry make
_ up a significant share of all state and enterprise expenses on scientific
and technical progress and are growing somewhat more rapidly than outlays
for science. To a certain extent, this trend reflects the focus of efforts
on practical realization of scientific and technical achievements. In 1978,
these outlays were 8.7 billion rubles, or 19 percent of total capital in-
vestment in industry, but in relation to capital investment just in machines
and equipment for operating enterprises--about 60 percent. This figure in-
cludes outlays for new equipment installed during reconstruction, expan-
sion, technical improvement and reequipment of operating enterprises,
financed through centralized sources, funds for develop~nent and assimila-
tion of new technology, as well as bank credit. Thus, the main share of
these outlays is associated with setting up and installing equipment.
At the same time, there is insuuficient utilization of the growth potential
- in effectiveness of these outlays. In 1978, 675,000 measures, differing
sharply in nature ~nd scope, were implemented in industry for new technolo-
gy--from a major industrial process, a control system or automatic line
costing hundreds of thousands of rubles to modernization of an individual
machine tool or devising an attachment costing several hundreds or tens of
rubles. In quantity, minor measures make up the main, but in cost--a small
share of the total aggregate of ineasures. One should also consider that a
considerable portion of the items introduced is characterized by only
relative ~for the given enterprise) innovation, while some of them in
general are not new.
" The amount invested, stated above, for measures on new technology in indus-
try includes the amount spent in pa~t years for new equipment installed in
_ 1978, but does not include that year's investment, about the same amount,
for measures which entail installazion after 1978. The total outlays for
measures introduced, including those of past years, exceed the given year's
in~restment for the same group of ineasures an average of 1.6-1.7-fold.
27
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.n E~,-1 ~ u r1 'C a.~ cU ~ C~,-1 ~ aJ ~ S~+ N t~ N S~ ~ C a
H . z ~ z � � ~ � ~ � ~
28
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APPROVED FOR RELEASE: 2007/02148: CIA-RDP82-44850R000300024418-7
- ^CR nFrIC~':1L [;S~ :~NL`?
Based on a uniform distribution of expenses over time during the period of
realization of the measures, 1.6-1.7 year is the average time of implemen-
tation of a measure. In the process, it is a question of outlays for in-
troduction into production of ineasures which to a considerable extent by
their results determine the effectiveness of all outlays for development -
of science and technology.
Analysis of the dynamics of the basic indicators of the measures on new
technology implemented in industry (table 1) shows that the rapid growth
in outlays was accompanied by a significant growth in the number of inea-
sures introciuced. The small increase in the average cost of one measure
(8.2 percent in 8 years) can be explained by the change in prices for the
means of production. Actually, the averages for the measures are not
increasing. -
As outlays for measures on new technology have increased, the annual eco-
nomic impact has grown almost to the same ext~ent, the added profit from in-
tr~duction has grown somewhat less, and the number of relatively released
workers--still lesser.l As a result, average pay-off periods for expendi-
tures on the introduction of ineasures on new tec:hnology have increased in-
significantly. The average cost per worker released has grown 23.6 percent
during the eight-year period; in our view, this is mostly due to two rea-
sons: insufficient intensive introduction of effective technology in an-
cillary production (where expenses per worker released are considerably
less than in basic production) and the relative (compared to growth in pro-
ductivity) rise in price of many means of inechanization.
It is clear from table 1 that appreciable growth in outlays for measures on
new technology was achieved mainly in the Ninth Five-Year Plan. The average
annual growth rates for these outlays have declined considerably in the
early years of the Tenth Five-Year Plan. This is evidently asscciated with
the general slowdown. in growth of production and profit in industry. A1-
though about 12 percent of all profit is now allocated for introduction of
new technology, compared to about 9 percent at the start of the seventies,
the slowdown in growth rates for industrial outlays on new technology is
~ not conducive to quick realization of the achievements of scientific and
technical progress. On the average, outlays for introduction of ineasures
on new technology for the national economy are very effective: they are re-
covered through annual savings within about two years, and through added
profit in less than three years.2 In the process, although the share of
added profit from introduction of ineasures on new technology did increase
in the total of all profit in industry (from 3.5 percent in 1970 to 4.2 ~
percent in 1978), it is not very large and should be increased.3
Growth in the effect from measures on new technology cannot always be
achieved by increasing the number of ineasures and money spent on introduc-
ing them. Moreover, analysis shows that a direct relationship does not al-
ways exist between expenditures for introduction and the effectiveness of
the measures. Let us track this process in the basic sectors of industry
(see graphs). To reduce the influence of price changes on amounts of
29
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^OR i)F~ TC?_aL ~SE O~LY _
Chemis try Ferrous Metallurgy
>ta ~SO
>40 ~ ~ !40
�a ~ ~ >30
~ZO / ~ f10
�o ~ �o
+oo >oo % ~
~ `----'1
90 ~ 90
80 ~ 80
~a \ ~o
_ 60 6p
s0 s0
!97! l9~Z /97J /979 >97S /976 /977 /97! f971 ~97! f974 /97S /976 /y~T-
~Iachine Building Building Materials
fS0 'fS0
f40 ~40 .
!30 1j0
f10 !ZO
!~0 ' ~ !!0 ~
!00 >00 ~ /
90 - 90 ~ / ~
8a ao
7~ 7~
~0 60
so so
19t1 1972 >973 >97y 191J 1916 197> >97! /971 l97~ >974 1975 J976 I9�
~JO Power Engineering ~Ja � Food
14o f~'0
f~0 !30
!IO /i^~ >20 ~
!~0 / !!0 1 `
~00 ~ ~DO ~ ~ ~
9a ~ 90 ~
g0 ~ 80 ~
70 ~1 70 ~
60 ~0
SO ~ ~ SO
fS7f i9~t ~9� /97y ~9~3 >9~s >97> >9� f9~2 J9� i979 /9~f i9~c i9n
outlays and results, let us take the change in the share of the sector in ~
the overall total of outlays for measures on new technology in industry as
an indicator of the dynamics of outlays by sectors; as an indicator of ef- _
fectiveness, let us use the pay-off period through annual savings. In the
process, the curve of the pay-off period in basic sectors of industry re-
peats the curve describing the dynamics of rhe outlays. In other words,
a substantial growth in outlays for introduction of new technology in the
sector is accompanied, as a rule, by an extension of the pay-off periods,
i.e., by a reduction in the effectiveness of the measures.
30
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�nu nF^rrrar r-tir n;,'I_�
A similar trend is observable, though less clearly, in analyzing the dyna-
mics of outlays and their effectiveness in the areas of scientific and tech-
nical progress. Thus, the sharp increase in outlays for automation of pro-
duction during the period 1976 to 1977 was accompanied by an extension of
the pay-off period for measures on automation from four to five years, i.e.,
- to the highest level that occurred in any group of ineasures on new technol-
ogy. A similar trend occurred in the period 1972 to 1974 for the group of
measures on introduction of computer technology, and in 1976--for the group
of ineasures on mechanization of production. At the same time, the decrease
in the share of outlays for assimilation of new types of industrial produc-
tion from 13.2 percent in 1972 to 9.2 percent in 1976 was accompanied by a
reduction in the average periods of pay-off through the annual economic ef-
fect from 1.17 to 0.79 year.
A pronounced growth in outlays for measures on new technology in some sec-
tor or on a specific group of ineasures, as we see, is most often accompa-
nied by a drop-off in effectiveness of these outlays, while a reduction or
slowdown in the growth of outlays in the majority ~of cases is accompanied
by an increase in the effectiveness. How can this situation be explained?
Apparently, by the fact that with a rapid growth in number of ineasures,
potential is not preliminarily expanded, the most effective innovations are
not selected, and adequate steps are not taken to enhance the effectiveness
of individual engineering solutions. Therefore, a sharp increase in the
scales of introduction of new technology leads to a reduction in the re-
quirements for effectiveness. As a result, the share of less effective
measures grows and the average pay-off periods are extended. Thus, the
rise in the percentage of ineasures on new technology in machine building in
recent years (see graphs) ar~d the extension of their pay-off periods can be
explained by the substantial growth in outlays for equipment with lengthy
pay-off periods. Just from 1975 through 1977 in machine building and metal
working, the number of automatic lines increased by 2,349, and that of ful-
ly mechanized and automated sections, shops and plants, by 2,458. During
the period 1975 to 1978, 25,600 machine tools with digital program control
were manufactured, or 1.9-fold more than during the preceding four years.
The pay-off periods for such types of equipment in the majority of cases
are not less than four to six years, and not infrequently exceed the norms.
To eliminate the tendency of the effectiveness of new technology to decline
as outlays for introduction of it are increased, a number of steps have to
be taken. First, the work on forming the potential of effective technical
innovations, prepared for introduction, should be improved. Solving this
problem will require increasing the share of development funds in the total
R&D investment, leading development of pilot plants, improvement in organi-
zation and stimulation of the processes of rationalization and invention,
- as well as adoption and transfer of scientific and technical innovations
from some organizations and enterprises to others. Second, it is advisable
to plan rates of growth of outlays for measures on new technology by sec- ~
tors and directions of scientific and technical progress on the basis of an
analysis of the available potential of the technical innovations, a
31 -
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APPROVED FOR RELEASE: 2007/02108: CIA-RDP82-00850R000300020018-7
~0!2 i`F~ IC? yI, i.'SE O~ZY
comparison of indicators of their relative and absolute effectiveness with
the norms, and a thorough consideration of resources.
A prerequisite of planned distribution of outlays by the most effective
- spheres of investment should be an anaiysis of the structure of the mea-
sures on new technology and their effectiveness by individual sectors azd
groups of ineasures (taking not only the economic effect into account, but
also the social). This structure is complex and has many aspects; it has
sector, technological and functional profiles. Measures, implemented in
each sector or subsector, differ in their scales, target and technological -
directions, number of enterprises, where a particular innovation is intro- 4
duced, etc. Exploiting data from existing statistical reporting (form
10-nt) permits construction of only some consolidated groupings.
The industrial structure of ineasures on new technology is characterized by
the large share for machine building and metal working which in recent
years has accounted for about 40 percent of all outlays, 50 percent of the
annual economic effect and more than 44 percent of the profit from intro-
- duction of new technology in industry. The large share for machine build-
ing stems not only from the high relative significancc of its products and
industrial equipment, but also its significant technical potential, deci-
sive role in the technical reequipment of aIl sectors of the economy, and
short, compared to other industries, pay-off periods. The share for
machine building in total industrial outlays for introduction during the
period 1971;*_0 1977 grew from 32 to 39 percent, while that of the food in-
dustry decl'ined from 10 to 7 percent; the portion for power engineering
declined from 4.2 to 1.7 percent, and the share for chemistry, light indus-
try, and the lumber, wood-working and cellulose-paper industry varied with-
in the range of 6 to 10 percent. A more detailed analysis of the trends in
scientific and technical progress and development of production capacity in
each sector would be required to determine the regularity of these dynamics.
In the majority of the sectors, average pay-off periods through the annual
economic effect tend to extend; however, this growth is not marked by con-
stancy and uniformity. Thus, in the chemical industry, the average pay-off
period extended fr�om 1.56 year in 1971 to 1.99 year in 1973, but in 1977,
it was shortened to 1.44 year, which was shorter than in the other indus-
trial sectors. In machine building and metal working, the pay-off period
varied insignificantly (within the range of 1.21 to 1.26 year) during the
Ninth Five-Year Plan, but in 1977, it was 1.52 year. In light industry,
this period extended systematically (from 1.53 year in 1971 to 2.32 years
in 1977).
The longest average pay-off periods for measures on new technology are in
power engineering, the extractive sectors, ferrous metallurgy, the lumber
industry and the construction materials industry. However, in these sec-
_ tors, analysis has shown, prolonged pay-off periods are not invariable and
inevitable. For example, in 1977, these periods were sharply reduced in
power engineering, petroleum processing and the food industry and were even
32
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Y FOR OFFICI:~L USE OiVLY
L
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33
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APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020018-7
- ~0~. ~FF?CYaL C'S~ :~NI_�
shorter than the averages for all industry; at the same time, outlays for
introduction in triese industries were reduced substantially. Thus, al-
though the pay-off periods for measures on new technology depend on the na-
ture of the technology and the level of capital intensiveness of the indus-
try, they can be shortened considerably when measures are selected more
meticulously.
The average pay-off periods for measures on new technology are affected by
many factors; of no little importance among them is the functional struc- -
ture of the measures on new technology, constructed according to the basic
_ directions of technical progress. The division, used in statistical repor-
- ting (Form 10-nt), of ineasures on new technology in industry into eight
areas is very coarse: there is no identification, for example, of individ-
ual forms of automation and types of new technology. It is obvious that _
supplementing this form with more detailed classification of ineasures, as
well as extending such a reporting form to other sectors of the national
economy would expand the possibilities for analysis of the trends in
scientific and technical progress. ~
In the existing structure of outlays (table 2), a high percentage is ac-
counted for by measures on advanced technology (about 40 percent of all
outlays and the annual economic effect, and about half of all profit from
measures introduced in industry). In addition to measures on advanced
technology, equality in percentages of outlays and economic effect is ob-
served only in the relatively small group of ineasures on modernization of
operating equipment. As for the economic effect from mechanization of pro-
duction, its percentage is about two-thirds that of the outlays, from auto-
mation--one half to two-fifths, from introduction of computer technology--
a little over half. Cons~quently, the pay-off periods for these groups of
measures are considerably longer than average. Naturally, longer pay-off _
periods cannot be used as a basis for declining to introduce the means of
automation or computer t~chnology inasmuch as these measures are necessary,
for example, to meet the needs for products or solve important social prob-
lems. However, this low effectiveness should indicate the necessity to
choose meticulously and search for the most economic ways to realize a
given group of ineasures.
The correlation of effectiveness of the different technological groups of
measures varies greatly depending on whether cost accounting or national
economic effect is used as the indicator in the accounts. The significance
of selecting the effect indicator increases especially in connection with
realization of the decree by the CPSU Central Committee and the USSR
Council of Ministers, "On Improvement of Planning and Strengthening the
Effect of the Economic Mechanism for Raising Production Efficiency and
Quality of Work." The effect from carrying out scientific and technical
measures, according to this decree, becomes a plan indicator, and a bonus
for developing and introducing new equipment is awarded as a function of
the total economic effect obtained in the national economy.
34
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APPROVED FOR RELEASE: 2007102/08: CIA-RDP82-00850R000300020018-7
~ ~ ~~~_-at. CSE t~~'L�
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35
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APPROVED FOR RELEASE: 2047102108: CIA-RDP82-00850R000300020018-7
?0?? Jc:=I~-~..r~ i ;~VLY
1
The question of selecting the cost accounting or the national economic ef-
fect indicator is very complex and controversial. Having no claim on an
unequivocal solution, we will try to approach it with regard to the actual -
correlation of the different types of economic effect by areas of scientif-
i.c and technical progress. As seen from the data in table 3, in 1977,
added profit exceeded savings from reduction in production cost in all
groups of ineasures, except assimilation of new types of products, within a
range from 8 to 16 percent. In other words, reduction in production cost
produced the overwhelming share (84 to 92 percent) of profit in almost all
groups, and only in assimilation of new types of products did this sharp
decline to 62.6 percent, while the remaining 37.4 percent of added profit
was obtaineci through an increase in the scale of productian, a change in
its structure, prices, etc.
More significant are the gaps bet~een the amount of profit and the annual _
economic effect inasmuch as the latter is calculated as the algebraic sum
of the annual economic effects derived by both the producer and the consum-
er of the new technology. This addition is performed in those cases when -
introduction of the new technology results in improvement of design, or an
increase in productivity, durability of machines and equipment being pro-
duced, quality of raw materials or goods.
It is quite evident that the main portion of the annual economic effect,
computed by the consumers, is derived from measures on assimilation of new
types of industrial products. The sum of the annual economic effect of
measures in this group exceeds the sum of profit from their introduction
4.6-fold. Almost one-fourth of the sum of the annual economic effect of
all measures on new technology, introduced in industry, was accounted for
by assimilation of new types of products. For this group of ineasures, the
percentage of the annual economic effect is about double that of the out-
lays, while the percentage of added profit is half that of outlays. Conse-
~ quently, the calculated pay-off periods for assimilation of new tyges of
products through the annual economic effect are shorter than those for the -
other groups of ineasures, but the periods of pay-off through added profit
are the longest, except for those for measures on automation. The annual
economic effect appreciably er_ceeds the sum of profit also in the group of
measures on modernization of operating equipment and in the group of inea-
sures on introduction of advanced technology. The consumer often derives
aa effect from the latter through improvement in the quality of products.
The manufacturer's accounting of the new technology consumer's annual eco-
nomic effect undoubtedly leads to duplicate counting of it. New types of
~ machines, equipment and materials, assimilated by manufacturers, are then
used to introduce measures on advanced technology, mechanization and auto-
mation of production by the consumer. The effect, already accounted for by
the manufacturer in planning measures on assimilation of new types of indus-
trial products, is counted again by the consuner,.but in more concrete
amounts. Due to the lack of statistical data on the amount of the annual
economic effect, calculated by the manuf acturer and the consumer, it is not
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possible to determine precisely the sum of the duplicate cour.ting of the
annual economic effect of ineasures on new technology. In the order of the -
first approximation, it can be calculated as the difference between the
annual effect and the profit of the measures on assimilation of new types
of industrial products. In 1977, this difference in industry was 800 mil- '
lion rubles approxi;aately, or almost 19 percent of the total annual effect.
If the total value of the annual economic effect from all measures intro-
duced in industr; is reduced by this sum, it turns out to be only 15 per-
cent more than the sum of the profit from introduction.
It should be no~ed that the indicators of the annual economic effect, espe-
cially in the par*_ computed by the consumer, are less reliable than indica-
" tors of savings in production cost or profit. However, profit reflects on-
ly the cost accounting effect of a given enterprise, while the whole nation-
al economic effect is reflected more fully in the total value of the annual
economic eff ect. In this connection, the periods of pay-off through profit
to a large extent describe the gain from the measures for those enterprises
that implement them, while the periods of pay-off through annual economic .
effect to a large extent reflect the effectiveness of the measures for the
national economy. Take for example the measures on assimilation of new
types of industrial products. Tneir high effectiveness for the national econ-
omy shows up in the shortest (less than a year), and also declining, average -
period of pay-off through the annual effect. But their inadequate gain for
- the assimilating enterprises is reflected in the lengthy average periods of ~
pay-off through profit. As for the group of ineasures on introduction of ad-
vanced technology, their relatively short (compared to other groups) periods
- of pay-off through both the annual effect and profit are evidence of their
advantageousness for both the enterprises introducing them and the national
economy.
Based on the content and the qunatitat;ve relationship of the cost account-
ing and national economic effect indicators for measures on_ new technology,
it is advisable, in our view, to utilize both profit and the annual economic
eff ect for planning. But a differentiated approach is needed for the incen-
tive program. Incentives for measures on assimilation of new types of pro-
ducts should be based on the annual ecor.omic effect, inasmuch as profit by
the manufacturers makes up in this case only a small part of the national -
economic P.tf ECt. For the other groiips of ineasures, the amount of actual
prof it m~~kes up, as a rule, the main part of the amount of the national
- economic effect; therefore, it can be used as a basis for incentives. In
_ the process, the amounts of the incentive ahould, in our opinion, depend not
. only on the amount of profit, but also on its relationship to capital out-
lays, i.e., on the absolute effectiveness.
The sharp differences in levels of effectiveness of ineasures for the differ-
ent sectors and areas o~ scientific and technical progres:~ stem from both
objective and subjective causes. Among the objective f actors, one should
include first of aZl the peculiarities of the technology of the different -
sectors and processes, and the substantial gaps in the level of the
capital-output ratio of the industries. In this connection, we would like
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to come back to our suggestion on developing, along with a unified norm En,
used in accounts of the relative effective~iess of capital investment, norms
for overall or absolute effectiveness too. These norms, differentiated by
sectors and areas of scientific and technical progress and developed on the F
basis of the experience of introducing effective measures on new technology
by leading enterprises, would be references for use in choosing technical
innovations for introduction.
~ The necessity of a diff erentiated approach to defining the threshold of
; effectiveness of the different areas of technical progress may b e substan-
tiated the following way. Let us assume that all innovations, the effect-
iveness of which is higher than the norm of 0.15, and that pay f or them-
selves consequently within no more than 6.6 years, can be introduced. Does
that mean that all of them should be introduced? Evidently, only when the
potencial of the available projects and proposals does not exceed the money
and materials on hand. But in practice, this potential, as a rule, does
exceed the resources on hand; therefore, all innovations can not be intro- '
duced. In choosing measures for introduction, it is necessary to consider
not only the results of c~;lculating their effectiveness (or pay-off periods),
but also such factors as the role of the innovation in meeting quotas for _
~ increasing output of products, the 3uration of the effect of the measure,
its role in saving labor resources, in improving working conditions, etc.
With regard to these factors, in our view, recommendations should be worked
out on establishing a minimum amount of effectiveness of the various areas
of scientific and technical progress. -
Such recommendations or even norms already exist iti some methods materials
on estimates of the effectiveness of individual types of new equipment.
- For example, for the outlays to introduce an automated control system, a
_ minimum norm of eff ectiveness of 0.3 is recommended (to which corresponds
the pay-off period of 3.3 years, i.e., half the::period calculated for the
norm of effectiveness of new technology). For manual machines used in as-
sembly operations in machine building, it is suggested that a normative ef-
ficiency factor be maintained within the range of 0.5 to 1.0, corresponding
to a pay-off period of one to two years, which should stimulate better
utilization of machines by time.5 We agree with this, especially since
electric and other manual machines as well as instruments have a standard
service life of two years, and the common normative pay-off per iod of 6.6
years for new equipment can not be extended to them. The same applies to
individual types of equipment for the mining, lumber, petroleum and elec- -
tronic industries, agriculture, construction and some other sectors where
part fo the equipment has a standard service life of less than s ix years. ~
As indicators of overall or absolute effectivenes~, it is advisable, in our
_ opinion, to use the periods of pay-off through added profit, b ut for mea-
sures on assimilation of new types of products--periods of pay-off through
the annual economic effect. However, the norms of overall effe ctiveness
can become an impcrtant tool in choosing technical innovations f or intro-
duction only when there is sufficient potential of innovations in the
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~t~o nF:~IC?''.T. L~~~ ;~VL.Y
enterprises. This potential is composed of in-house and adopted develop-
ments, projects, inventions, proposals by rationalizers, models of new pro-
ducts, etc. Adopted innovations should hold the largest place in the po-
tential of technical innovations of each enterprise. After all, the engi-
neering teams of one enterprise make up, as a rule, only a small part of
the engineering teams in a sector. In maZy associations and enterprises,
_ new industrial processes, means of automation and mechanization, and other
engineering achievements are being developed and introduced at the same
time which would be useful ~o extend to dozens, and sometimes hundreds of
plants in a given industry and other industries with similar technology.
- Meanwhile, innovations ar e not spread quickly enough. According to the
data of a survey made in tlie Ukraine, the results of R&D, which is usually
done by scientific research institutes and design bureaus, in 80 percent
of the cases are introduced in one or two enterprises, and in only 0.6 per-
cent of the cases is introduction made in five or more enterprises.6 The
sphere of spreadi~g technical innovations developed in enterprises is even ,
narrower. Enterprises that are the first to develop and introduce an in-
novation have no right to obtain some sort of compensation for its trans-
fer, and therefore are not interested in widespread propagation of their -
"creation," no matter how effective it would be for the national economy.
Therefore, one of the main causes restraining dissemination of new equip-
ment and technology is the lack of an incentive to an enterprise to trans-
fer technical innovations to others.
Not infrequently, enterprises even resist transferring technical documenta-
tion for their innovations, inasmuch as they do not have an adequate num- ~
ber of duplicating machines, printing materials and specialists to fulfill
such orders. The lack of interest in transferring technical innovations
_ restrains their dissemination and causes great harm to the national economy.
And the thing here is that not only do effective engineering achievements
expand the sphere of their application slowly in the national economy, but
also that enterprises expend resources searching for in-house engineering
solutions that already exist in practice in industry.
' Depriving enterprises of the right to receive compensation, apparently,
stems from the desire to avoid, as it were, unfounded enrichment as a re-
sult of receiving payment from several or even many customers for technical
_ innovation. Moreover, it is not quite clear how the amount of compensation
should be determined: should prices of the technical innovation be based
on outlays for its development and introductien or on the effect of its use?
The complexity of the solution to this problem should not be exaggerated.
Proceeding on the ~basis that the compensation should interest an enterprise,
that has developed and introduc?d an innovation, in transferring and intro-
ducing it at the maximum possible number of other enterprises, it is not
too difiicult to construct an acceptable scale of compensation.
In our view, one solution would be to classify innovations by the scope of
the possible sphere of their application: innovations that could be used
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at 2-3, 4-5, 6-10 enterprises, etc. For aach group of innovations, a
scale of payment for transfer should be established as a percentage of the
added profit from introduction in suc..h a way that with maximum expansion of -
the sphere of application of the innovation, the enterprise that first in-
introduced it would receive, let us say, full compensation for its outlays
or double the profit at the expense of the enterprises that had adopted -
this innovation. In the process, *.he amounts of bonuses for introduction
- of new technology should be increased in accordance with the increase in
profit. Other methods for determining payment for innovations transferred
are possible too. But under all conditions, reimbursed transfer of techni-
cal innovations, developed not only in scientific research institutions and
design bureaus, but also in associations and enterprises, should become an
integral part of the cost accounting system of organizing work on develop-
ment, assimilation and introduction of new technology, provided for by the
decree of the CPSU Central Committee a~1d the USSR Council of Ministers,
"On Improvement of Planning and Strengthening the Effect of the Economic
Mechanism for Raising Production Efficiency and Quality of Work,"
It is advisable as well to take steps to enhance the contribution of inven-
tors and rationalizers in increasing the portfolio of new engineering pro-
jects and solutions. Statistics show that outlays for invention and ratio- .
nalization are the most effective investments in scientific and technical
progress. In 1978, 5.1 million inventions and proposals by rationalizers
were submitted and 4.0 million introduced. Total outlays for invention and
rationalization were 353 million rubles, but the savings from introduction,
calculating for a year, were 5.878 billion rubles, i.e., for each ruble in-
vested in inv~ntion and ratianalization, 16.2 rubles were returned in sav-
ings from introduction. Rationalizers receive as compensation about six
- percent of the annual savings from introduction of their proposals, while
inventors receive two percent of the savings from introduction of their
inventions.
Also relatively small are the resources allocated for bonuses for promoting
introduction (1.6 percent of the savings from introduction) and for mass
organization measures associated with rationalization and invention (0.7
_ percent). Unfortunately, the form used for reporting invention and ratio-
nalization does not contain data on the outlays for introduction. Total
outlays for rationalization az~d invention in industry in 1976 were only
four percent of total outlays on introduction of ineasures on new technology,
while the effect of the inventions and proposals by rationalizers intro-
duced (calculating for a year) made up the main part of t`~e economic effect
of all measures on new technology. In other words, outlays for rationali-
zation and invention are relatively small, but the introduction of ineasures
- based on inventions and proposals by r~*_ionalizers yields a significant
share of the total effect. Hence, the conclusion is drawn that it is ad-
visable to increase outlays for invention and rationalization, especially
for compensatio~n to originators and for promotion of introduction.
In our view, it is espPCially important to raise compensation for inven-
tions, for the development and introduction of fu,-damentally new technology
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_ entails the greatest difficulties. In 1976, inventions introduced made up
only 30 percent of the patents issued and another 35 percent were in the
preparatory stage for introduction. At the same time, proposals by ratio-
nalizers introduced were 86.4 percent of the total accepted, and the re-
maining 13.6 percent were in the preparatory stage for introduction. A
certain increase in outlays for invention and rationalization and
strengthening of the incentive program for inventors would promote expan-
sion oT the potential of effective technical innovations.
To make better use of this potential and to rationalize the distribution
of outlays for introduction, studies in all sectors of social production
should be made of th~ effectiveness of ineasures introduced in profiles of
technologically similar plants and areas of scientific and technical pro-
gress, and based on this, norms or' overall effectiveness, as well as
~ recommendations on criteria and the procedure for selecting measures on
new technology for introduction should be developed.
FOOTNOTES
1. Due to the lack of accounting, indicators of effectiveness of ineasures
` on new technology are, as a rule, estimated. However, as noted earli-
er in the literature (see VOPROSY EKONOMIKI, No 7, 1974, p 139; and
~ No 1975, p 40), for the major groups of ineasures, deviations of the
estimated indicators from the actual are counterbalanced, which makes
it possible to use Form 10-nt data to analyze L-rends in dynamics and
effectiveness of outlays on introduction of new technology.
2. Hidden behind the average pay-off periods are their significant differ-
entiation by areas, enterprises and types of equipment. Thus, at the
Minsk Tractor Plant, a mill for rolling transverse-helical semiaxles
paid for itself within five months.' Forklifts pay for themselves
within six months on the average, semiautomatic mliltispindle rod
lathes--with a year, specialized vertical drilling machines--within
- 2.7 years, specialized vertical lathe (turret) and milling machines--
within 4.2 years, semiautomatic thread-cutting machines--within 6.4
years, and automatic machining lines--within 8.4 years (see G. A.
' Vasil'yev, "Ekonomicheskaya effektivnost' kompleksnoy avtomatizatsii
proizvodstva" [Economic Effectiveness of Full Automation of Production],
~ Iadatel'stvo "Ekonomika", 1978, pp 67, 68, 131, 146).
3. If one considers that each measure yields an effect over a number of
years .~;nd the period of its "life" (based on the average machine model
replacement frequency) is six years, it turns out that the overall
share of profit, derived through measures on new technology, increased
in industry during the period of 1970 to 1978 from about 21 to 25
percent.
q
4. See VOPROSY EKONOMIKI, No 4, 1975, p 48.
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- 5. See, for example, S. A. Yuzepchuk, "Tekhniko-ekonomicheskiye osnovy
- sborochnykh protsessov v mashinostroyenii" [Technical-Economic Bases
of Assembly Processes in Machine Building], Izdatel'stvo
_ "Mashinostroyeniye", 1977, p 222.
6. See V. Pokrovskiy, "Raising the Effectiveness of the Utilization of
Scientific and Technical Potential," (PLANOVOYE KHOZAYSTVO, No 3,
1977, pp 20-21).
COPYRIGHT: Izdatel'stvo "Pravda", "Voprosy ekonomiki", 1980
8545
CSO: 1820 END
;i
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