TRANSFER OF TECHNOLOGY FROM THE UNITED STATES IN THE USSR: PROBLEMS AND PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00176R000900010004-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 17
• Document Creation Date: December 20, 2016
• Document Release Date: March 26, 2007
• Sequence Number: 4
• Publication Date: December 1, 1973
• Content Type: REPORT

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Intelligence Report
Transfer of Technology from the United States to the US.S A':
Problems and Prospects
ER IR 73.2h
December 1973
Copy No__ 341
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Transfer of Technology
from the United States to the USSR:
Problems and Prospects
December 1973
Soviet leaders recognize that rapid economic growth can be achieved once again only
by accelerating technological progress. Because the Soviet applied R&D sector has been
relatively inefficient in developing and applying new technology, the USSR has turned
increasingly to imported technology as a means of accelerating technological progress and
economic growth.
The major channel for acquiring technology from abroad is the purchase of machinery
and equipment. Other channels have included the acquisition of technical data. contacts
with Western firms and scientists, and formal arrangements for joint research and exchange
of scientific and technical information. None of these channels has lived up to Soviet
expectations. Western equipment frequently is not as productive in a Soviet setting as
it is on native ground. Attempts to exploit foreign technical data or copy foreign machinery
have had mixed success. In some military fields, the results of reverse engineering have
been good; in civilian sectors, the outcome has been less happy.
The onset of detente has dismantled some of the traditional' obstacles to Soviet
acquisition of US technology. Medium-term and long-term credits were extended by the
United States after May 1972, resulting in a large increase in Soviet imports of US
equipment and technology. The relaxation of US export controls since detente contributed
to the rise in imports. although controls continue to limit access to very specialized and
sophisticated foreign technology. Nevertheless, bureaucratic problems unique to the USSR
still present problems to US businessmen.
Despite the improvement in the opportunities for acquiring foreign technology, the
USSR continues to have trouble in assimilating it. The Soviet labor force is unfamiliar
with complex foreign machinery, spare parts for foreign equipment are often in short
supply, and Soviet maintenance programs frequently are inadequate. These problems have
caused the USSR to turn increasingly to the purchase of turnkey factories, relying on
foreign firms to design the plant, supervise construction, and install the equipment.
Note: This report was prepared by the Office of Economic Research with contributions
from the Office of Scientific Intelligence. Comments and queries regarding this report
are welcomed. They may be directed t 25X1
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Because machinery imports - and especially turnkey plants - are expensive, the Soviet
leadership is trying to hold down the cost of acquiring foreign technology through this
channel. The most prominent innovation in Soviet policy is the push for cooperative
economic ventures that provide for the export to the USSR of equipment and technology
on long-term credits. The credits are repaid by deliveries of goods produced by the venture.
As an alternative means of acquiring technology, the USSR is also strongly pressing for
increased cooperative research with the United States in scientific and technological areas.
More than a dozen agreements with US firms have been concluded. Most promise to give.
the USSR tangible technological gains, while the US companies hope to enhance their
sales prospects in the USSR. The USSR also expects to benefit from research in Eastern
Europe as well as from Western technology sold to these countries. In its drive to spur
productivity growth in the civilian economy, however, there is little evidence that the
USSR plans to release high-quality resources from military R&D:
The overall prospects are dim that technology transfer from the United States to
the USSR will have a substantial influence on Soviet economic development. The growing
expense of debt service will limit machinery imports to perhaps $4 billion to $5 billion
per year. Although transfers of technology in the form of imported machinery and the
acquisition of technical data from the West will continue, they will be insufficient and
too slowly assimilated to have a substantial impact on Soviet economic and technical
development. Ultimately, the USSR must depend on its own applied R&D sector to close
the technological gap with the West and to boost economic growth. In certain areas,
however, the acquisition of key Western technology could make some Soviet products -
such as commercial aircraft and pharmaceuticals - competitive in Western markets.
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1. Moscow's interest in Western, and especially US, technology has
flourished in the past five years or so. In pursuing trade deals, cooperation
agreements, and bilateral technological contacts, the USSR has been more
aggressive than at any time since the 1920s. This activity has raised questions
about the extent of the resulting technology transfer and its impact on
Soviet economic capabilities and performance.* This report first sketches the
background of the Soviet preoccupation with Western technology, with
particular focus on US-Soviet ties. It then discusses the channels through
which technology flows from West to East and the degree of success that
the USSR has had in assimilating technology from abroad. Recent Soviet
efforts to increase the volume and improve the effectiveness of technological
transfer are described, and general judgments are made as to the effect
of current Soviet policies with respect to acquiring Western technology on
the development of the economy.
2. Inasmuch as the technology offensive is still gathering steam, the
conclusions of this report should be considered preliminary. In many areas -
and particularly in the analysis of the technology transfer implied by the
increasing number of direct contacts between Soviet organizations and US
firms - a good deal of spade work remains to be done. Much more work
also is needed on the transfer of particular types of technology and its
impact on individual industries. In addition, the world energy bind and
changing US attitudes toward the granting of long-term credits to the USSR
are likely to have a substantial impact on Soviet programs to attract Western
technology.
Background of the Soviet- Interest in US Technology -
3. : Since 1960, Soviet economic growth has slowed appreciably
despite large continuing increases in -the labor force and investment. For
a number of reasons, the average annual rate of increase in the productivity
of labor and capital inputs fell off abruptly in the 1960s, and productivity
- actually declined in 1971-72, as shown in the following tabulation:
GIMP
6'16
Output per unit of
labor and capital
3
1'h
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Looking into the future, Soviet leaders recognize the rate of economic
growth would not trend upward again unless productivity could be
accelerated. Because of lower birth rates, the labor force would eventually
increase at a slower rate while the growth of plant and equipment is
becoming harder to sustain in the face of competing demands for consumer
goods.
4. In part, the disappointing performance of productivity since 1960
has been caused by a failure to introduce improvements in technology at
the rate that was possible during the period of reconstruction after World
War II. The lower rate of Soviet technological advance, moreover, has
preserved the substantial technological gap that separates Western from
Soviet practice in almost every economic sector.
5. This disparity in technology is of great concern to the leadership,
particularly since the resources devoted to promoting technological progress
are enormous. The USSR has more engineers employed in RDT&E* than
the United States and almost as many scientists. Expenditures on R&D
are now almost four times the 1960 level, whereas the number of scientific
workers with advanced degrees increased from 109,000 in 1960 to 298,000
in 1972. A major problem is that the R&D sector has been characterized
by great unevenness. Basic research, particularly theoretical work, is
considered strong, while applied R&D has been weak except in priority
military sectors (including military applications of the space program), which
attract the best scientific and material assets. In large part, the weakness
of applied R&D in the civilian economy stems from its incompatibility with
rigidly centralized direction and management. In addition, the indifferent
quality of many Soviet engineers and applied scientists has hampered the
civilian R&D effort. The training of Soviet engineers and applied scientists
is rather narrow, and many of the engineers are best described as technicians
by Western standards.
6. In the 1960s the Soviet leaders first concentrated on domestic
reform as the solution for sagging economic performance. The 1965 reform
of economic administration and numerous decrees designed to reform
applied R&D were intended to spur productivity growth. Reform has not
produced the desired results, however, and the USSR has turned increasingly
to imported technology as a means of accelerating technical progress and
economic grovith. The recent US-Soviet detente has encouraged this trend.
A relaxation of US export controls and the offer of US credits have
redirected Soviet acquisitions of equipment and technology toward the
United States, although West Germany and Japan are still the largest
non-Communist suppliers of machinery and equipment to the USSR.
* Research, development, testing, and evaluation - the span of the innovation process from basic
research to introduction into series production. This entire process is referred to as R&D in this
report.
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7. The revival of Soviet interest in US products and technology is
partly political, but is also in line with the traditional policy of acquiring
the most advanced technology available. US companies are the preferred
sources of automotive equipment, -oilfield equipment, both computer
hardware and software, and civilian aircraft technology. The Soviets are
also seeking equipment and know-how from the United States in numerous
other specialized areas such as cryogenics, air traffic control, and advanced
metallurgical processing. If contracts cannot be reached with US companies,
the Soviets recognize that other countries often can provide technology
that is as good or almost as good. The USSR has had success, for example,
in buying computer hardware and some kinds of automotive equipment
and machine tools from Western Europe and Japan. In other areas, such
as oilfield equipment for Arctic exploration, the United States is the only
technology source in the eyes of the Soviets.
Soviet Acquisition of Foreign Technology
8. The USSR has acquired foreign technology mainly by purchasing
machinery and equipment. Imports of machinery and equipment from the
developed West have climbed especially rapidly since Brezhnev came to
power. In 1972 they reached a record S1.4 billion, about $800 million
higher than the level in the mid-1960s. Other channels of transfer have
included the acquisition of technical data (by purchase or theft), attendance
at international meetings, visits to Western firms, and formal agreements
for collaborative research and the exchange of scientific and technical
information.
9. In part, the USSR has been forced to buy machinery abroad
simply because investment priorities were changing too rapidly for the
capabilities of domestic industry. In the early 1960s, for example,
Khrushchev's chemical campaign required a sudden surge in imports of
chemical plant and equipment from the, West. These gave way in the middle
.and late 1960s to imports of automotive manufacturing equipment for the
giant FIAT plant and for the modernization of existing motor vehicle plants.
In the past few years there have been massive imports of r.,achinery and
equipment (including large-diameter pipe) for transmitting natural, gas. Last
year's purchases were concentrated in the automotive, chemical, and wood
processing industries. Currently, a large part of the imported machinery
will be used to satisfy the requirements of the Kama truck complex.
10. Soviet engineers have had mixed success in exploiting foreign
-technical data or in practicing reverse engineering on examples of Western
machinery. In the military area, their performance has been sometimes
_.startling - as in the quick duplication and production of Western air defense
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missiles. In other areas, Soviet applied R&D has been so slow in working
with Western blueprints or models that the products are obsolete by the
time they enter series production. The Soviet effort to copy US space suit
technology, for example, resulted in a product 7-8 years behind the current
US level of sophistication. Copies of US biological materials (vaccines and
antibiotics) are not up. to US standards of efficacy and purity. In what
has been a classic example of reverse engineering, the Soviet attempt to
make the RYAD family of computers compatible with IBM machines is
far behind schedule.
11. To bypass some of these problems of exploiting foreign
technology, the USSR has recently placed greater emphasis on buying
turnkey plants and arranging cooperative ventures with Western firms.
Although expensive, turnkey plants avoid many of the problems that plague
Soviet applied R&D. Soviet-style cooperative ventures permit the USSR to
acquire technology on credit and to repay the Western partner with the
products (raw materials or manufactured goods) of the venture. These
arrangements ensure Western participation in the development and provide
for repayment in full by the end of a stated term. Hence, the projects
are designed to be self-liquidating.
Obstacles to Acquisition of Foreign Technology
12. Some of the barriers that have impeded the flow of US equipment
and technology to the USSR in the past have diminished with the onset
of detente. Other obstacles remain. The current status of the various barriers
to technology transfer is discussed below.
o Prior to the extension of medium-term and long-term credits
to the USSR by the developed West, hard currency shortages
were the major constraint on acquisition of Western
machinery and equipment. With the increased availability of
medium-term and long-term credit, this constraint has been
eased somewhat.. Between 1968 and 1971, the USSR drew
$2.5 billion in medium-term and long-term credit from
Western Europe and Japan. Credit from the United States
was extended only after the May 1972 summit, and in
1972-73 US credits are expected to account for about half
of the $2.5 billion total for the two year.
US attitudes toward trading with the USSR have long
obstructed transfers of US technology to the USSR. Many
US firms have opposed trading with the USSR, and US public
opinion has influenced other firms to refuse to deal with
the USSR. Since the mid-1960s these attitudes have shifted-
a great deal in favor of increased contacts with the Soviet
Union.
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? Bureaucratic problems unique to the conduct of trade with
the Soviet Union present special. problems for US
businessmen. Long, expensive pilgrimages to Moscow without
assurance of seeing the right people are often followed by
long, difficult, and expensive negotiations with the Soviets
that do not bear fruit. The US businessman is frustrated by
the great difficulty in contacting the ultimate user of his
product; he must work with foreign trade organizations
instead, adding to the usual delays encountered in conducting
business in the USSR.
? Western firms frequently are reluctant to part with their
technology, preferring the sale of their finished products to
a transfer -that might generate future competition for the
firms in world markets. -
?. . Export controls continue to- limit Soviet access to very
specialized and sophisticated foreign technology. The range
of controls has been reduced substantially in recent years,
however, as East-West tensions have- eased and as Western
exporters have pressed for expanded sales to Communist
countries. The United -States -is now supplying the Kama
River truck complex with manufacturing equipment and
technology that was embargoed two years ago. Computers,
integrated circuits, telecommunications, avionics, and other
sophisticated electronics technology continue to be
controlled, although controls have been relaxed even in these
fields. Third-generation computers of rather sophisticated
design can now be exported where they could not be a year
ago.- -Nevertheless, the controls on other high-technology
items such as advanced disc units and disc pack technology
still hinder Soviet computer- development. - -
-
c- : Problems in Assimilating Foreign Technology ---
- -
- -
-- 13.-- --.Foreign technology has been of less help -to the Soviet Union
than expected in a great many instances, particularly when machinery is
bought piecemeal. Frequently, the purchased machinery fails to mesh well
with existing Soviet equipment, with other foreign equipment, or with
Soviet inputs within a production process. In part, this interface problem
is a natural one. The Soviet applied R&D sector, however, takes an
inordinate length of time to solve problems of compatibility in the civilian
economy. In - the case of the Kama truck factory, where most of the
equipment is being supplied by numerous foreign firms, Western engineers
estimate that several years will be required to interface all of the equipment
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into an integrated operation. By the time trucks roll off the assembly line,
they will be obsolete by Western standards.
14. The USSR's difficulties stein partly from a tendency to import
equipment that is too advanced for rapid assimilation, given existing levels
of domestic technological development. This overreaching is especially
evident in the computer field but extends into other sectors such as
production of color television sets. In 1968 the USSR purchased from a
US firm a complete package of very advanced automated machinery and
technology for the fabrication of shadow masks for color television tubes,
capable of supporting an output of one million color television sets annually.
By the end of 1971, despite a year's training in the United States for four
Soviet technicians, the equipment still was not operational, and, in fact,
had suffered severe damage through improper operating procedures and poor
maintenance. Thus the Soviets were forced to procure, at a cost greater
than the original purchase price, additional technical assistance and parts
to restore the line to its original condition. This line, now operating at
only a fraction. of its rated capacity, is a major bottleneck in Sovi':t
production of color television sets which, in 1972, reached a level of only
200,000 a year.
15. As a result of Soviet reticence to supply foreign companies with
information on how the imported machinery is to be used, purchased
Western machinery is sometimes less productive than it otherwise would
be. The Kama plant is an example; the buildings at the truck plant are
standing, and foreign equipment will have to fit into space allotments that
have already been designated. Yet foreign suppliers have been hindered in
obtaining useful drawings of the factory and in obtaining permission to
visit the site. Where security is considered critical, the USSR would rather
forgo a purchase than release details necessary to make an interface possible.
For this reason, purchases of aircraft navigation equipment, radar
equipment, and the like have been deferred in the past.
16. Assimilation of foreign technology also depends on the quality
of the labor force. Soviet workers must first master the unfamiliar and
complex foreign machinery, so many foreign-built plants do not reach rated
capacity until after lengthy delays. For example, the huge FIAT-equipped
passenger car facility in Tol'yatti became fully operational about 2 years
behind schedule. A major factor retarding assimilation of the technology
was the quality of the Soviet labor force. Soviet workers frequently shut
down an entire line to make minor adjustments to a single piece of
machinery. Despite intensive training in Italy, technicians commonly
reassembled machines improperly after repairs, and workers were casual in
their approach to the maintenance of precision machinery. Supervisory
personnel at the working level, reluctant to make even minor decisions,
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bucked upstairs virtually all problem-solving decisions. In addition. the
installation of the FIAT plant was also hampered by language barriers and
frequent conflicts between Soviet workers and foreign supervisors.
17. To keep foreign plants and equipment operating, the USSR needs
a steady supply of spare parts and solid maintenance programs.
Shortcomings in these areas have often put foreign equipment out of
commission. Foreign-made spare parts seem to be purchased only for
high-priority industries such as the chemical industry. Industries with lower
priority apparently get no foreign exchange to buy spare parts. Because
of the shortage of foreign spare parts, low-priority industries may favor
less modern domestic machinery or East European machinery even if hard
currency is available for the purchase of original equipment from the West.
18. Because of its problems in digesting imported technology
piecemeal, the USSR, as indicated earlier, has turned increasingly to the
purchase of turnkey factories. Foreign firms design the factory, supervise
construction, and are responsible for the selection and installation of
equipment; Soviet workers assume control once the plant is operating. The
USSR has purchased numerous chemical plants on a turnkey basis, but the
most famous turnkey plant in the USSR is the FIAT plant discussed above.
19. Turnkey plants have not proved to be the final answer to the
USSR's difficulties with foreign technology, because they are too expensive
to buy on a massive scale and because they do not resolve all of the interface
problems. As in the case of the FIAT plant, the Western plants often require
labor skills in construction and operation that exceed the skills available
on site in the Soviet Union. In addition, as the Soviets found in taking
over Western-built chemical plants, the processes sometimes demand raw
and semi-finished materials of a quality that the domestic economy is not
prepared to supply.
20. It should be noted, too, that the Soviets' relative lack of
experience in managing large complexes of very modern technology may
cause problems. Soviet managers have been trained to concentrate on
meeting narrowly defined production goals in an organizational environment
that does not promote the coordination of many complex parts. Western
corporate management has invested heavily in specifically training
middle-level managers in problems of complex organization before advancing
them to higher levels. The Soviets have displayed much interest in importing
these Western management techniques.
New Directions in Soviet Policy Toward Technology Transfer
21. Moscow, in promoting the acquisition of foreign technology, has
had to contend with the USSR's hard currency problem. The increased
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availability of long-term credits on favorable terms and a resumption of
gold sales in 1972 enabled the USSR to postpone the consequences of its
inability to sell enough to the West. Nevertheless, Soviet indebtedness to
the West has increased sharply; by the end of 1973 it will amount to $3.5
billion, and 27/o of the USSR's hard currency exports will be needed just
for debt service. The leadership is trying to hold down the cost of acquiring
technology from abroad by exercising a number of the options available
to it. The cooperative ventures discussed earlier and bilateral agreements
to cooperate in research are the most prominent innovations in Soviet
policy. The USSR is also attempting to involve Eastern Europe more directly
in Soviet technology interests. Thus far, however, there is no indication
that the USSR will transfer high-quality resources presently allocated to
military R&D to work on assimilation of technology in civilian industry.
Search for Economic Cooperation
22. Economic cooperation agreements promise a partial solution to
the rUSSR's growing balance-of-payments problem. Cooperative ventures
provide for the export to the USSR of equipment and technology on
long-term credits. The credits are to be repaid by deliveries of goods
produced by the venture, easing the Soviet hard currency problem. Indeed,
these projects often involve Soviet deliveries in excess of repayments and
thus create new markets for Soviet exports. The gas-for-pipe deals with
West Germany, France, Italy, and Austria are prime examples of this kind
of arrangement. More recently, Occidental Petroleum and El Paso Natural
Gas signed a letter of intent with the USSR to help develop the Yakutsk
natural gas fields in Eastern Siberia and to supply transmission equipment'
and facilities in exchange for a share of the gas over a given period of
years.
Bilateral Scientific and Technological Cooperation
23. The trade and joint venture aspects of the transfer of technology
between the United States and the USSR basically favor the USSR and
are of a conventional commercial nature. Since the US-USSR summit
meeting of May 1972, the Soviet Union has also strongly supported
increased cooperative research with the United States in scientific and
technological areas. The Soviets portray such cooperation as a means of
achieving a genuine exchange of technology and enhancing the returns to
the vast resources devoted to R&D in the two countries.
24. Under the US-USSR Agreement on Cooperation in the Fields of
Science and Technology signed on 24 May 1972, the Soviets have
participated actively in planning joint research programs with US scientists
in a variety of fields, including medicine and biology, space, pollution,
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chemical catalysis, energy research, microbiological synthesis, and scientific
and technical information processing. They have also markedly increased
the number of direct contacts with US industrial firms, which are permitted
under Article 4 of the Agreement, and in more than a dozen instances
have signed agreements or protocols with specific organizations.
25. In contrast with earlier cooperative agreements in science and
technology, which emphasized basic scientific research, the more recent
Soviet interests are directed more 'toward areas of technology where
additional work could lead fairly quickly to improved products and stepped
up productivity for the USSR. For example, joint US-USSR research on
catalytic reactor modeling and joint work on the design and operation of
thermal and hydroelectric power stations are likely to benefit the USSR
within a shorter period than the more scholarly work in pure mathematics
or theoretical physics carried out under prior agreements. With some
exceptions, the Soviets have had a longstanding interest in these newer areas,
but their progress has been slow. Interestingly, in most of the areas -
including magnetohydrodynamics (MMHD), scientific and technological
information processing, and metrology and standardization - at least one
proposed project involves the use of computers, which is in consonance
with other indications of intense Soviet interest in Western computer
technology and applications.
26. Judging by the vigor of these efforts, it is clear that they have
been strongly endorsed by the top leadership of the USSR. The Soviet
scientists identified to pursue the collaborative research are among the
USSR's best, and they seem to have received somewhat more freedom than
in the past to plan and carry out viable cooperative programs.
27. Despite the Soviet desire for successful scientific and technological
cooperation with the United States, the agreements have encountered delays.
In some cases, the Soviets are not yet ready to receive, fund, and otherwise
take care of the US researchers who would be working in the USSR. Hard
currency problems continually reappear with respect to Soviets traveling
abroad, and communications between US scientists and their Soviet
counterparts, particularly by letter, are very slow. Vestiges of the USSR's
long history of secrecy and bureaucracy in science and technology are still
visible, but some loosening appears to be taking place.
28. To date, the. USSR's recent overtures to US industry under
Article 4 of the Agreement have been decidedly one-sided, in that US
companies in the end have given information to Soviet agencies not in return
for other information but rather in the hope of getting a foothold in Soviet
markets. With very few exceptions, the Soviets have refrained from revealing
any technology of their own for possible licensing or trade with the US
firms. However, there is some feeling on the part of the US firms that
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there probably is not much Soviet technology that would interest them.
So far in these contacts, the Soviets have exhibited a preference for high
technology and for dealing with large firms - conglomerates and
multi-nationals. It appears that the USSR's principal objective is to explore
and exploit at minimum. cost modern US technology under the guise of
cooperation, just as they have done with the French under the Soviet-French
cooperation agreement.
Sharing the Burden with Eastern Europe
29. Eastern Europe's laboratories and industry have been an important
source of technology for the USSR in the past. Through CEMA, the Soviets
are trying to arrange a more systematic allocation of research responsibilities.
The RYAD computer program is a notable example. In the late 1960s,
Bulgaria, Czechoslovakia, East Germany, Hungary, and Poland reluctantly
agreed to cooperate with the USSR in the joint development and production
of RYAD computers. These countries already had their own computer
projects as well as licenses to produce W?stern-style computers that were
not compatible with RYAD. Eastern Europe was first given responsibility
for developing software and peripheral equipment. Later, its role was
expanded to include central processing units as well. In the nuclear field,
the USSR and Eastern Europe have cooperated for a number of years in
the production and distribution of radioisotopes for medical research and
industry. The program was expanded in 1970 to include reactor engineering.
30. Meanwhile, the USSR expects to benefit from growing East
European acquisition of Western technology, especially in the field of
electronics. There are enough reported cases of such transfers to suggest
that the Soviet Union normally gets the benefit of East European purchases
of Western equipment, sometimes including the equipment itself. A good
deal of state-of-the-art as well as obsolescent technology has been transferred
within the CEMA area in connection with the large and rapidly growing
trade in machinery, the sale of licenses, and the recent spurt in joint
Soviet-East European investment projects.
Release of Military R&D Resources
31. Although the resources presently preempted by Soviet military
and space R&D programs would be of great use in the development of
civilian technology or in assimilating Western technology, there is very little
evidence that the USSR is moving in this direction. In fact, the current
pace of development of Soviet military weapons systems is such that, barring
abrupt cancellations of major programs, all major military R&D resources -
including those concerned with ballistic missiles, major surface ships,
manned bomber aircraft, space systems, and nuclear and conventional
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warfare weapons - should be employed almost exclusively in military work
at least through 1975. After that time, the effects of international SALT
negotiations may lead to some realignment in the allocation of R&D
resources between military and civilian uses.
32. The Soviet campaign to acquire foreign technology has been and
will be successful in a limited sense. The growing imports of machinery
and equipment together with more cooperative ventures and bilateral
agreements will transfer a substantial amount of Western technology to the
USSR - whether in the form of informal (and sometimes inadvertent)
disclosure of know-how, exchanges of technical data, or finished products.
Nevertheless, these transfers are unlikely to close the technological gap with
the West or to speed Soviet economic growth appreciably. On balance, the
Soviet leadership probably will be disappointed in what is accomplished
through importing machinery from the West, and the prospects for rapidly
and effectively exploiting the other channels of technology transfer appear
not much better.
? The direct effect of machinery imports will not be large,
because their volume will be small relative to total domestic
investment in the USSR. In 1972, total imports of machinery
and equipment from the developed West were S IA billion.
In view of the cost of debt service and the Soviet Union's
hard currency constraint, it is reasonable to assume that
machinery imports will not exceed S4 billion to S5 billion
per year by 1982. If imports grow evenly to S4 billion to
S5 billion over the next 10 years and are all directed into
industry, the growth of industrial investment will increase
by less than one half percent per year.
? Although the imported technology should be more
productive than the technology available domestically, it
clearly cannot have a large impact unless it can be duplicated
and -adapted on a wide scale. There is no indication that
the Soviet record with respect to assimilating foreign
technology will improve markedly in the short or medium
term.
33. The cooperative ventures now being considered have an
importance beyond the quantity of technology transferred, however.
Without Western (and particularly US) help, the Soviet Union could not
develop its raw material resources as quickly as it hopes to. In part, the
USSR simply lacks critical elements of the technology needed to exploit
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its raw materials. The United States can supply, for example, the drilling
and production technology necessary for rapid exploitation of oil and gas
deposits in the permafrost regions of Siberia or off Soviet shores. Although
the USSR will sell part of this oil and gas to finance its machinery imports,
there is some evidence that the projects designated for joint Soviet-Western
development will be needed to avert a Soviet energy shortage by the 1980s.
34. While technology transferred from the West is not likely to
improve the USSR's overall economic performance much, this technology
could be instrumental in making some Soviet products competitive in
important Western markets.
? With a well-developed technology in U-235 enrichment, and
low electric power costs in Siberia, some of the Soviet
enrichment plants probably have a competitive advantage
over Western plants., If the USSR develops or obtains
additional gaseous diffusion technology, the Soviet advantage
would tend to increase. In general, Soviet nuclear power
reactor technology is on a par with that in the West, although
Soviet designs suffer from a difference in safety philosophy.
The Soviets will either have to adopt Western safety practices
or convince the West of .the validity of their approach before
they will be able to sell any reactor plants in the West.
a Soviet commercial aircraft have been improving steadily in
terms of world standards. At least two remaining technical
hurdles must be overcome, however, before Soviet civilian
aircraft can be considered truly competitive in the world
market: they must have (1) internationally approved
navigation systems and (2) performance in terms of engine
life, maintenance, and economy comparable with Western
aircraft. The USSR is well on its way to acquiring navigation
systems by purchase of Western equipment and technology.
Improving engine performance may take longer because the
Soviet metallurgical industry generally has not been able to
control quality adequately in the production of
high-temperature materials. However, acquisition of this
technology from the West may be prohibited because of its
direct military application.
? The Soviet manufacture of certain common biological
products and pharmaceuticals - aspirin, penicillin,
streptomycin, and the like - could be improved, with
minimal technical help, to the level that would allow
international competition with similar Western
foods and drinks.
same observation applies to many packaged
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35. The bilateral scientific-technical agreements, if carried out on a
sufficiently broad basis, could help the USSR where it needs help most -
by providing a spark to the civilian R&D sector. Some joint projects -
principally those involved in basic research - will result in a fairly equitable
distribution of benefits between the United States and the USSR. Most
other projects will benefit the USSR more than its partners. In all cases,
the quality of Soviet R&D work should be enhanced by the close contacts
required by the agreements. Still, delays in communication and both
government and private reluctance to divulge information will be a
continuing problem and in a few instances may well lead to the termination
of projects. .
36. In sum, the prospects are dim that technology transferred from
the United States to the USSR will have a substantial influence on Soviet
economic development because - for all of the reasons discussed above -
the transfers will probably be too meager and too slow. The domestic R&D
establishment itself must generate most of the productivity gains necessary
to speed up economic growth and to narrow the technological gap separating
the USSR from Western countries.