SOVIET REGIONAL DEVELOPMENT IN 1960-69: TRENDS AND IMPLICATIONS

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• Publication Date: April 1, 1972
• Content Type: REPORT

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SOVIET REGIONAL DEVELOPMENT IN 196O69:
TRENDS AND IMPLICATIONS
25X1A by
If"
April 1972
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ILLEGIB
ILLEGIB
CENTRAL INTELLIGENCE AGENCY
TO: Document Iteriplent.i;
/ ? ? ? ? is'
(
rin tinclas.NIcle(1 rcnorl published by the ()Trice of
Economic lir:Alit-eh I:; nol io bi reproduced or
rutted l'In? report, will appear In It compendium of i,cholatly
iirth?les on the Soviet lInlon to be later t hi year,
at which I Imo the author will lie Identified a.-4 all employee of
the central Intellirence ArelleY
STATINTL
MAURICE ERNST
Director
licolimnie Research
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CONTENTS
Ilighlights 1
I)iscussion :1
Intiodnetion
S()vff'i PiflirY To?varfl B(1',io1131 11)I'N'cli'lm1(.111
The Soviet Minorities 5
Policy Aims 5
Regional Trends in Per (:apita National hiconii?, Industrial ()Mimi,
and Agricultural Production
Regional I)ifferences in 1960
Regional 1)evelopment in the 1960s
Regional Trends in Population Cao?vtlf 12
Nat 'Ind Increase 12
19
Regional Investment Polit'y 21
Inconsistency liebvcrii Regional Policy and Investment Alliwations 21
Iligher Clo?vtli of Productivity in the Mote Developed Ite0ons '33
Implications for Soviet Policy 25
Investment Allocations 25
Niigration Policy 2(
Plans for 1971 75 27
APPENDIXES
Appendix A. Primary 1)ata Used in Calculating Regional Trends in Per
Capita National Income, Indostrial and Agricultural
()input, and Facf()I. I'll)(111(?11V11%'
A111)(11(11% If. DISCIINNI(//1 ol StailS1;(;;11 ;111(1 Analytical Procedures
TABLES
Page
31
37
I. USSR: Per Capita Regional Production in 1960 8
2. USSR: Rates of Natural Popidation Increase, by Republic and Region 18
;5. 1.115: I hr (;ontrihution of Natural increase :Ind Migration to Popu-
lation (:rowth, by !legion, 1960-70 19
4. USSR: Index of Growth of Able-Bodied Population, by Republic,
1960-70
21
5. tftiS11: (:ombined Facto! Productivity in industry 24
6. USSR: Planned Growth, by Ileptibfic 28
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ILLUSTRATIONS
Figur(' I. I /SSW l/nion Ilepublics and 11S1.'S11 Economic liegions, 1971
(Map)
Figoire 2. USSR: !legion:11 Variations Average Animal GroNvIli of Pei
Capita r1 ''L Invoint., 1901 09 (Map) 10
1urc 3. USS11: licgioual Gaps in It Capita National Incooic ((hart ) 11
Figure 1, USS11: Vatiations in Averagc Annual (ivJ ui Pcr
Capita Industrial Pouluction, 1901-69 (1\1:1p) 1:1
Vignic 5. ()Still: licgional Gaps in Pc!. Capita industrial Production
((liar!) II
Figure O. USSR: Ilegional Variations in Average Annual Growth of INT
Gipita Agricultural Production, 1961-(i) (Map) 15
Figure 7. USSR: licgional Caps in Per Capita Agricultural Production
((har!)
iitiir8. !legion:11 Variations in Population GroNvtli, 19131-69
(NI:if))
17
Irigure 9. 1.1SS11: Ilanking of Union licpublics, hy Per Capita National
Income and Per Capita NeNv Fixed investinen1 ((hart ) 22
Figlite 10. PIT Capita NVN,11 Investnicnt, 11cpublic ((hart) 99
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SOVIET REGIONAL DEVELOPMENT IN 1960-69:
TRENDS AND IMPLICATIONS
HIGHLIGHTS
Des;?ite the official car for economic equality among the several regions
and republics of the USSR, regional disparities il) per capita income, industrial
011.,1111, (11Id ral prodnoion increased s?bstantially during the 1960s.
Py the end of the decade, those regions viIii OW frVelS (If deVelOIMWIlf
iii 1960?the Central Asian ' and Transcaucasian republics----had fallen even
further behind the rest of the country in terms of p.?r capita income and output.
The principal reasons for this situation are extremely rapid population growth
il) the poorer regions, investment allocations that were not designed for re-
ducing regional diffeiences, and the low productivity of labor and capital in
many of the less developed regions.
Population growth in the Central Asian and Transcaucasian republics has
been much greater than in any other area of the country Over the past decade,
primarily because of their high rates of natural increas... Interregional migration
patterns, however, also contributed to regional disparities in population growth?
reducing growth in areas with relatively low rates of natural increase aad aug-
menting growth in areas already having relatively high rates of natural increase.
Migration into the southern regions has been influenced by Soviet wage policy.
it:xisting regional wage differentials are insufficient to compensate for the rigors
of living in remote or climatically severe regions and make th,? southern cities
far inure attractive places of residence dun) the cold uncongenial areas of
-iiberin and the Urals.
The slowest growing areas in the cmmtry in terms of per capita national
income are Azerbaydzhae, Uzbekistan, and Turkmenia, while the fastest g Nwing
are Lithuania, Belorussia, and Moldavia. In the three lagging regions, growth
rates of population were among the highest in the country, ?vhereas national
income growth was slower than in any other region because of the very low
growth rates of industrial ontput. Conversely, the rapid growth if Lithuania,
Bekinissia, and Middavia is reflected in 1(1 )OV( increases in national
income, industrial output, and agricultural production together with much
lower growth rates for population.
Investment allocations during the 1960s have not been oriented consistently
toward reducing regional differences in production and income. Iwo n the
poorer republics?the Kazakh and Turkmen Republics?received more invest-
ment funds per capita than wealthier republics, but much of this oapital was
directed toward the exploitation of particularly rich mineral a;,(1 fuel deposits.
' Throughout this paper, the term Central Asia includes the Kvzakh Republic.
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Oil the other hand, the Georgian, Kirgiz, and Tadzhik Republics were given ;11-
VCS(111Plit allocations barely half as largo as those funneled into the Kazakh
Republic. Whether actual investment policy has been to maximize national
economic growth rather than to effect regional parity is uncertain. Policy state-
ments are confused and the results are mixed. Although industrial investments
have not favored consistently those repnblics in which the productivity of
combined labor and capital inputs was highest, investment allocations have
not ,ellected it planners' goal of reducing regional disparities.
A serions impedimellt to narrowing the differences in regional levels of
developmeiit is the relatively It growth of productivity of hal mi and capital
in many of the poorer regions. Over the past decade, industrial output per
unit of combined inputs has grown very little in the 1,.,ss developed republics.
In some cases?Uzbekistan, Turkmenia, and Azcalraydzlian?indimITial output
grew at rates 1; low the national average as a decline in productivity offset
the above-average growth of combined inputs of labor and capital.
The present status of regional development confronts Soviet planners and
political leaders with a policy dilemma. A significant reduction of regional
income differentials and maximum national economic growth cannot be adneved
simultaneously through investment strategy alone. 'rhos regions that appear
to have the best investment opoortunities are not the regions with the ',owes -
income per capita. Moreover, the 1971-75 plan data for the republics suggest
that the geographic pattern of development will not change radically o-fer
the next five years. The new five-year plan gives no prospect of reducing
regional income differentials by a coordinated redistribution of both capital
and labor. Thus the regional disparities in development levds are likely to
persit with little change during the new plan period. In fact, if planned
industrial growth must depend primarily on increases in factor produet.vity, as
stated by the leadership, the development gaps may continue to incr2ase, with
the less developed republics falling still farther behind the rest of the country.
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DISCUSSION
INTRODUCTION
Although Soviet economic development has proceeded rapidly, its geographic
incidence has been very uneven. The persistent large differences in per capita
income and production among regions are surprising in view of the longstanding
Soviet goal of providing an even distribution of productive forces (meaning
industry primarily) over the entire couatry. However, the lack of progress in
this regard could, until around 1960, be explained by the imperatives of the
early industrialization drive, World War II, and the recovery from war.
The emphasis on speedy development, ir conjunction with the shortage of
capital during the 1920s and 1930s, encouraged growth at existing industrial
centers, which were to a large extent tire traditional manufacturing centers
in the European part of Tsarist Russia. Moreover, the massive transfer of in-
dustries eastward in 1940-43 was still not sufficient to overcome the imbalance
in the distribution of production. After the war, the concern with reconstruction
coupled with a 1.ighly centralized branch principle of planning brought about
a territorial distribution of economic activity very little different from that
existing in 1945. Only after the mid 1950s, particularly with the creation of
the councils of national cc momy in 1957, did attention to regional aspects of
economic development increase appreciably.2
The purpose of this paper is to assess the results of Soviet regional development
policy during the 190s. After the framework of this policy is set out briefly,
statistics on per capita naticnal income, gross industrial output, an agricultural
output ar3 examined for the 15 union republics and, where possible, the ten
economic regions of the Russian Soviet Federated Socialist Republic?RSFSR 3
(sec Figure 1). National income cannot be calculated for thc regions of the
RSFSR, so their relative levels of development are shown in terms of the two
major contributing sectors to national income?industrial a..id agricultural out-
put. Industrial output per capita is a particularly useful indicator because in-
dustrial development is the leading edge of Soviet growth strategy. Therefore,
the implications of that strategy foi regional development should be most
visiblv in statiNtils on regional industrial output.
Next, regional trends in population grot th are presented. Because the ex-
amination of output, income, and popul: ,ion shows that regional differentials
were greater at the end of the 1960s than at the beginning, the paper goe,' on to
investigate the reasons for the failure to na:row the income gaps among regions.
Finally, since some of the reasons have clear implications for current and future
Soviet economic policy ar,d growth, these implications are discussed in the
concluding section of the paper.
?Councils of national economy were established as a system of regional units in an abortive
attempt to facilitate economic decisionmaking by docenimlizing economic management. The
system was abolished in 1965.
? For primary data used in calcolating regional trends in per capita natioral income, industrial
and agricultural output, and h,tor productivity, see Appendix A. 1?Hional income and indus-
trial production data were derived from official Soviet statistics and reflect Soviet concep .
and biases. The aft ts of such biascs ire discusvx1 in Appendix B, i,Tluding Tables B-1, B-2,
and B-3. The regional values of agricultural output were estimated from price and quantity
data for 17 agricultural products.
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USSR: Union Republics cud RSFSR Economic Regions, 1971 Figure 1
I I
14
Russian Republic
Minority National
Republics
22
23
Republics
1. Estonia
2. Latvia
3. Lithuania
4. Belorussia
5. Ukraire
6. Moldavic
7. Georgia
8. Armenia
9. Azerbaydzhan
10. Turkmen
11. Uzbek
12. Takhik
13. Kirgiz
14. Kazakh
FISFSR Economic Regions
15. Northwest
16. Center
17. Central Chernozem
10. North Caucasus
19. Volga-Vyatka
20. Volga Valley
21. Urals
22. West Siberia
23. East Siberia
24. Far East
? Kaliningrad Oblast': Included
in the statistical data of
the Northwest region.
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SOVIET POLICY TOWARD REGIONAL DEVELOPMENT
The Soviet Minorities
Diversity is the most striking characteristic l the Soviet population. Nearly
170 nationalities and about as mai:), languages form the ethnic and linguistic
composition of the USSR. IImvover, most of these ethnic groups are quite small
relative to the total populi?tion. Only 11 constitute more than 1% of the total
population and only six, more than 27(. Nevertheless, these six nationalities
comprise the bulk of two ethnic groupings with vastly dillerent cultures and
attitudes. The Russian, Ukrainian, and 13elorussian nationalities make up the
bulk of the Slavic peoples and together account for 74%, of the total population;
the Uzboks, Tatars, and Kazakhs belong to the Turkic group and accennt for
8.5% ot the population. The largest single nationality is the Russian, with 53.4%
of the total population in 1970. Nearly 84% of these people live within the
MESH, wher'in they comprise almost 83% of that republic's population.
Russians also tiake up the largest nationality (43% ) in Kazakhstan, and in
all other republics they rank either second or thud. Only in Armenia, Georgia,
and Lithuania do Russians comprise less than 10% of the population.
Although the Soviets officially proclaim equality among the nationalities,
Russian dominance general'y pervades the political and economic life of the
minority groups. Minority languages, literature, and arts are still supported and
even encouraged, but the use of the Russian language increases throughout the
USSR, and Russians continue to migrate to the cities of traditionally non-Russian
areac, where they hold many of the key positions as managers, professionals, and
technicians. The other nationality groups, particularly the nationalities of the
Central Asian republics, are generally less widely distributed than the Russians.
These groups are heavily concentrated in their respective republics and usually
form significant minorities only in immediately adjacent non-Russian republics.
The number of non-Russian people woo claim Russian as their native language
has been inching upward (11.5% of the population in 1970 compared with 10.8%
in 1959). Most of this increase has occurred among the Ukrainians, Jews, arid
Bclontssians, and the percent of the non-Russian population speaking Russian
fluently as a second knguage is generally greatest among the Slavic and other
Indo-European groups. Linguistic assimilation has been more difficult to achieve
among the Turkic peoples, owing partly to the more rapid rate of growth
of these peoples and partly to the much stronger cultural differences between
the Turkic and (i.e Russian peoples.
Policy Aims
Because of ideological considerations, one of the goals of Soviet economic
policy has been to equalize levels of development throughout the country.
Originally part of Lenin's "nationalities policy"?which considered economic
equality a prerequisite to political, social, md cultural equality and the eventual
creation of a Communist society?this aim was set forth specifically in terms of
industrial development in the resolutions of the 10th Party Congress in 1921.
Economic equality among the nationalitie.; was to be achieved by transferring
industry to the areas of minority nationalities.4
kommunistieheskaya Partiya Sovetskogo Soyuza v rezolyetsiyakh i resheniyakh s''yezdov,
konferentsiy i plenumov 'sentrarnogo 1-ntr'teta, Moscow, vol 1, 1954, p. 560. Although what the
Soviets meant by equality is not c' , for cample, per capita industrial output, per capita
real income, or some other measure), they apparently intended to equalize economic develop-
ment in general and believed that industrialization was the most effective ineah..: to this and.
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Following the 15th Party Congress in 1927, which ushered in the Creat In-
dustrialization Drive, the goal of equality was overshadowed by the concern
for rapid industrialization and maximum productiu:. at minimum cost." Since
the less developed areas wero less favorably endowed with the infrastruc-
ture necessary for the rapid development of heavy industry (the primary
focus of the industrialization drive 7) they received an insignificant share of
the total investment." As a result, little progress was made in the pursuit of re-
gional parity.
Nevertheless, for political and ideological reasons, equalization of levels of
development among regions and republics has remained a tenet of Soviet de-
velopment policy, and the definition of "development" has been broadened to
include production in sectors other than industry." In its present form, Soviet
development policy incorporates the objectives of both regional parity and maxi-
mum production. Current statements on development policy, although somewhat
ambiguous, seem to assign equal priority to both aims, or, at least, to be founded
on the belief that the objectives are consistent.'?
In fact, conflicts arise in attempting to achieve both regional parity and
maximum production simultaneously. Since the best investment opportunities
are not necessarily in the less developed regions, heavy investment allocations
to these regions could be inconsistent with the goal of maximizing overall pro-
The 15th Party Congress ordered pursuit of the equalization goal to proceed within the
constraints of national interests. (Ibid., vol II, p. 483.)
" Pishchayev, V., "K postanovke problemy geograficheskago razmeshcheniya promyshlennosti
SSSR," Problemy ekonomiki, no 6, 1931, p. 102.
As Naum jasny has pointed out,
For years, indeed for the whole period covered in this monograph [1928-521, almost
the whole economy was geared to produce ever inure steel for the construction of ever
more steel and other heavy-industry factories, as well as for the output of ever more
armaments.
(JnsuY, Soviet Industrialization, 1928-52, Chica:;o, 1961, p. 3.)
' Koropeckyj, I.S., "The Development of Soviet Location Theory Ilefore the Second World
War," Soviet Studies, no 2, 1967, p 243. Kotoperkyj argues convincingly that the emphasis
on increased development of the already established industrial centers during this period was
motivated primarily by defense considerations?that is, heavy industry was considered the
backbone of defense, and rapid dcvolopment of heavy industry wos considered the most
expedient means to military prcparedness.
?Several Soviet specialists have indicated that the equalization of development levels includes
equal:4111g the level of "well-being" of the population. However, there is little agreement as to
the methodology for measuring "well-being." For example, sec Telepko, L.N., Urovni
ekonomicheskogo razvitiya rayonov SSSR, Moscow, 1971, and Vedishehev, Al., "Soizmereniye
urovney khozyaystvennogo razvitiya ekonomieheskikh rayonov SSSR, in Ivanehenko, A.A. (ed.)
Ekonomicheskiye prohlemy razmeshcheniya proizvoditanykh sil SSSR, Moscow, 1969.
" For example, in his speech to the 24th Party Congress in 1971, Kosygin stated,
One of the most important conditions for increasing the efficiency of social
production is the correct siting of productive forces, which ensures the further indus-
trial development of all the union republics and the consistent implementation of the
Leninist nationalities policy.
(Fravda, 7 Apr 1971, pp. 2-7, cited in the Current Digest of Soviet Press, vol 23, no 16, p. 4.)
Also, N.N. Nekrasov (Chairman of the Council for the Study of Productive Forces) recently
said,
The general plan for the development and distribution of productive forces for the
period up to 1980 [includes] further equalization of the levels of economic develop-
ment of the union republics and economic regions of the USSR, improvement in the
interrepublie division of labor and prodoction relations, etc.
(Planovoye kliozynystvo, no 6, Jun 1971, p. 90.)
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CPYRGHT
CPYRGHT
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duct ion." Moreover, where relative retardation of economic growth in a region
is the result of initial underdevelopment combioed with rapid population growth,
rather than failure to ildapt to changing conditions film a previous position of
equality, the movonent of capital (inchiding educational capital) into the
underdeveloped region may kive iittle effect if not acconipanied by a move-
ment of labor out of the region.
The successful solution to the regional pit)! )lei involves, in general, the
application of the principle that each resource be moved to the place where it
contributes most to production. If invest ill' 'lit opportunities are greater in the
well developed regions, then the primary ini?ans of ii 10V toward regional
parity must be the movement of labor out of the less developed regions.
This is the familiar "north-south" problem as exemplified by the American South.
In practice, differences in educational levels, cultures, languages, etc., may
hinder population movement; the migration north ie the United States has been
going on for geir2rations. Although adjustment is slow, the migraiion process
can be a powerful factor in reducing regional income differentials. A good
example is Brazil during the 1950s, where, despite the flow of private capqal
from the less developed Northeast to the relatively well developed Center-South,
the migration of population in the same direction resulted in a narrowing of
regional incomt differentials over the decade.12 A somewhat different case
is that of Puerto Rico, where emigration to the United States acted as a
safety valve to population growth, and an influx of US capital provided the
wherewithal for per capita income growth.'"
REGIONAL TRENDS IN PER CAPITA NATIONAL INCOME, INDUSTRIAL
OUTPUT, AND AGRICULTURAL PRODUCTION
Regional Differences in 1960
In 1960, Soviet economic regions could be clas3ified into three basic cate-
gories: (1) the well-populated industrially developed regions of the European
USSR, containing collectively more than two-thirds of the country's population
and three-fourths of the industrial employment; (2) the sparsely populated
pioneer regions of Siberia and the Far East, with only one-tenth of both the
total population and industrial employment; and (3) the well-populated, in-
dustrially underdeveloped regions of Central Asia, Transcaucasia, and the
North Caucasus, encompassing one-fifth of the population but only slightly
more than one-tenth of the industrial employment. The data in Table 1 clearly
show the large differences in the level of economic development among the
individual regions of the USSR.
" However, if investment in the less developc:1 regions, particularly those bordering on
China, is motivaLid primarily by overall defense interests as suggested in a recent article by
I.S. Koropecle then the regional parity aim could he consistent with national interests even
if it conflicted with the goal of maximizing production. For a more complete treatme nt of the
defense motivano.. 'n investment decisions, see Koropeckyj, "Industrial Location Policy in the
USSR During the Postwar Period," US Congress, Joint F.conoinie Committee print, Economic
Performance and the Military Burden in the Soviet Union Washington, 1970, pp. 262-285.
"Graham, D.II., "Divergent. and Convergent tegional Economic Growth and Internal
Migration in Brazil-1946-1960," Economic Development and Cultural Change, vol 18, -Ico 3,
Apr 1970, pp. 362-382. See also Baer, Werner, "Regional Inequality and Economic Growth in
Brazil," Economic Development and Cultural Change, vol 13, no 3, Apr 1964, pp. 268-285.
"Stahl, J.E., "An Application of a Klein Growth " Aodel to Puerto Rico, 1947-61," Economic
Development and Cultural Change, vol 13, no 4, part I, Jul 1965, P. 471.
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Table I
Per Capita Ilegio.nd Production in 1000 "
1,1t I via . .
EHI.,)nia. . ..... . . ..... .
11SVS11 economie regiom.
Per Capita N,.tionat
Income
11uhle:; 11a nIc
11.11) I
8119 2
765 :1
""1" H"u! .t11"I h't
(0110111 (4 \)
It tilde 11:oil, I:111de
1133 I 3 I1
1171 3 :178
820
ill
1
N. A .
Center
I , 185
1
176
111
North we + b
1,167
I 2,1
22
!Irak
930
.ri
'203
Ili
Val. Elva
"37
'7
99
24
VoIga-Vyallut
653
8
217
13
Vidgli ValleY
64.5
9
274
11
West Siberia
621
16
288
.8
North Caneasi
600
I 1
300
7
Haat Siberia,
591
12
210
14
Central Cliernozein .
311
24
3:15
1
Lithuania
678
4
:)I 9
IS
356
2
Ukraine
675
5
775
6
285
10
Azerhayilzhan
560
6
461
16
123
23
Armenia
522
7
584
13
128
21
Moldavia
521
8
:193
119
287
9
Belorussia
517
9
451
17
323
5
Kazakh
511
10
403
18
321
6
Turkmen
509
I I
340
23
205
15
( leorgia.
454
12
522
14
144
20
Uzbek
460
1:1
359
21
241
12
Kiru-iz
449
14
3611
20
195
17
Tadzhik
380
IS
352
22
178
IS
USSR
(49I
724
244
" In all regions, per capita industrial output and per capita iigricultnral (441(4)414 together exceed
the value shown for per capita national income becpuse the three indicators of development are
based on different prices and concepts. The nationa: income data are based on I 9513 prices and
reflect the Marxist conception of net income which includts oily the 'it product of the
"productive" sectors. On the other hand, the industrial output data are based on 1055 prices
and r( fleet the gross output of industry, which includes doubleconnting of SOIlle products. Th,
agric4.1tural data are bascd on three-year moving averages in 1968 prices and reflect production
estimates net of intra-agricultural uses of farin products but not excluding doublecounting of
purchases from other sectors.
The derivation of these data is described in the notes to Appendix Table A-2.
Including Kaliningrad Oblast'.
As indicated in Table 1, the western republics, including the ESFS11, started
the decade with the highest levels of per capita national income, while the
republics of Central Asia and Transcaucasia had levels of national income
per capita considerably below the national average. Not surprisingly, the levels
of industrial output per capita in 1960 fell into the sam, general pattern.
In terms of avicultural output," the picture was somewhat different. While
I he Baltic repuAics and thc Ukraine were again among the led.cling regions,
the Central Chernozem region, Belorussia. Kazakhstan, and Moldavia made up
for part of their industrial backwardness with above-avA-age agricultural pro-
duction. However, in the remaining Central Asian republics and all of Trans-
11t should be noted that while agricultural production per capita provides an indication of
the relative weight of agriculture in a region's economy it may not provide a true measure
of agricultural development?that is, agriculture may account for a relatively small share of
national income in a region and still be highly developed in terms of output per unit of inputs.
8
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1110.1111
Approved For Release 2001/09/28 : CIA-RDP85T00875R002000040001-1
cam .c.rt, pia f apila 1.ii iii 111111,111 11.111,11 1111111111 t111 Ihrlilliisil .1'. 1 1.1"1 I Iii ,, l?,
Zi1,,, 11i1. 1.rd.
III '1"ilii. 1,1 111,' iii111r?1ii.111\ 111 NI 1'111111 i1 ?'.I(111., ,?11111ii 111, 11',P111
Tri illi ,I11% Ili(' 1 ii,11... ( 'Int( I. .iIi(1 Nfiillik% 1 ',I 11 l'.inii, III 1...i..I ,,i'- i?) .w..I
it Vai 1.1,I.,1. kvlicir 1,111nnw, r. 10)100.41 liv , Immlf? .1 iii Ildir?pill1.01(m Pluid,10,.
tilt. If?vcr, fil imi capil.1 ;11,.1? iiiiii,?1 /mid", 11,111 \,,?ii? ,11,, hf ,IIi\ II, fmtimml
Spurial 111(11111111 ',111)111(1 Iii Ithific iii lite duce ti (mown iii'i,ii,if ifthc
Ilak ?Vi".1 Sihr11.1. !''Ihrl la. .11
wady \'iIt lira, ()I ;ihioVi?liii m1111)11;11 ;IVr1;tr.0 in !tam', id pia f .1116.1 1111111'111.1i
111111'11 if WI'. Ic11111)1V, iiutitiIiilv iiiIhriii
:11111ii SiIitiit, ttiiif il vill11;111V 111a1111;11111cd 161114.11ii?., a', It11;11%11
11111".1Cal ;111(1 iiiuiitit tiiIitlitiitit illilitI lilt haVc ',C1111111? IIiIilfitIiiI tirVid4)11
111010 (1111MIllalll 11'1111 flitir 1(-.11111ur ha.W. 1,,icalci linancial mu
reipiired i?,talikli ;old the ncre.o,aiv hicilitii"; tor ',Ode
iiitutl, iii thew iireAs than it ;MN' (0111T pall id III(' (.1111101y. /\1011)111',11 111('itvjrf
IlaN (11111)! III(' V:1`.1 11111114": (II Illf",r
?")11Iii 1)14)V1(11' ifill".1".` 1(".tiI "";11/1"1 (1'.".1"1)
1111111 I/1 a rurajut Illarkrt :11*Ca, this lii iii tt 1)(11111-111.
Regional Development in the 1960s
Irss (1"(1()P('(1 Su?'(('I "Tim" lii1".(1) l'arr Ili(' t(-4
the country is the most striking feature of regional development hi the 1960s.
Contrary to ?vliat might be the expe,?led pattern for ;, nation whose poliev
ostensibly is to achieve regional equality, those reg,ions with 6le !invest levels of
development in 1960 did not generally grow more rapidly during, the 1960s than
the areas already highly developed by 196(). In fact, percentage in(l eases ill
1)e1 capita national income (see rig,itre 2) ?vere Imvest ill Olt' I(I)11;dif'S (d
tral Asia and Transcaucasia. Moreover, with the exception of Kazakhstan, re
imblics that grew at rates below the national avviage during 1961-65 fell
even further behind during 190(i-69.
Thus the gaps bekvecii these less developed reg,ions and ill(' rest of the
("111111T havr 1".11 aS ShOW11 ill Figure 3, The range of variation in
the levels of per capita national income among the union republics, which
was !Wady 1?111)1(':; ill 19(3), extending limn ,15';; lwlEm lo "i6`; alnive the
national average, approached 1,1(8) rubles by 1969, ranging Born Slim :n.low to
41'/e above the national average.''' Since Soviet national income data exclude
any valuation for services, the differences between the two extremes probably
would be even greater if national iiimine \v( Ii measured by \Vestern concepts,
?vhich include values of services. ()f titus reptiblic?s in ?vhich per capita na-
tional \Vati ill'10\?' all-union avv?age hi 1960, (miy lit liniunijimill the
Ukraine ?vere able to close the gaps ( svhali \yew minimal in 19(8)) between
themselves and (he national average While Moldavia and Belorussia still n?-
main at levels 11e105v the national average, their positions improved consider-
ably relative to ti e C-ntral Asian and Transcaucasian reptiblic?s. For the remain-
ing republics, the 1960 deviations from average per capita national incagne (both
positive and negative) increased considerably over 0 (litadc.
'The coefficient of variation, which measnres the relative dispersion of the republican data
around the melt' for the USSR, increased from 0.283 in 1960 to 0.355 in 1969. In other words.
the relative stando-d deviation from the average for the USSR was greater in 1969 than if) 1960,
indicating greater n4,ional disparity in development levels a: the end of the decade.
9
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USSR: Regional Variation. in Average Annual Growth
of Per Capita National Income, 1961-69'
All thli011 Average !4.5",. per Year
J
Significantly above average
(more than 6.0",, per year)
[.?velisori urowth
(5.0",, to 6.0"., per Ir. fir)
Significantly below average
(lec than 5.0"? per year)
10
IS
Average Annual Rate of Growl (%)
I igure 2
1. Estonia
6.3
9. Az?rbaydrhan
1.7
2. Latvia
5.9
10. Turkmen
1.7
3. Lithuania
7.9
11. Uzoek
2.5
4 941oriissia
(3.9
12. Tadzhik
3.6
5. Ukraine
5.9
13. Kirgiz
4.5
G. Moldavia
6.7
14. Kazakh
4.0
7. Georgia
4.6
15. IISFSII
5.6
O. Armenia
5.3
o Ap1'c11,111 1.1blo A I
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-49
Fiume 3
USSR: Regional Gaps in Per Capita National Income
I Per cy Abov? or Below SOVESt Aver?ue)
I olvia
!sterile
MSI SI
I ilkuani? 2""
Ukraine ?
11111111111111111111111111 4'
l4 NIONIMMISMEMMINIMINPMMPIM
I le
- 26", 1111111=11111.11.11.1.
- 1 r., 1111111111111111=1111
to "..1111111111111.=
111111.1111111111111
11.111.....11111111 2O
- 54 .. 411111
Neel
Ambled/hen
Armenia
Moldavia
larussis
Kazakh
Turkmen
Georgie
Uzbek
Kirgiz
radzhi
11
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In hint'. 111 lir) .iiltf,l illf111.11 LI I IiHiiI,ii 1 11111. till Ill (lid I. till! lii..10 I%ii l'ii'ui
) AI 1111.1111.1. II 1111.iVki, MI( I ill( i.if ilii'. liii 111)/1111.
?,11),1 1.111 I cl11 II P., .III ill H Iii 11 1 5111 11c1(111' ,si 1,11!(' 115 ( 1', (11 1/(.1 1.11111
1111'10 111 NW, i (1
ii iii 1t I I
1,11i \ 111111
I I 1.1 I ii\ii 41
111 1.111,
1!111\lIll.
11.11.11 1(1 l'.11( ifiiifl III,' I 1..11.11
ILI I I 11 I I 1 iii I 11,1 I I\ IV 11'1
1.1 1 1 OH' I I I
I
\i 11 11 If 1
.1 I 11
ll',1.1 1 l'. .1 I(1 I II I
I I I it (I III 1111', 1/.1111.1 11, 1
1(/\\ (-1/4( 1 ol hI
1?,, Li.1111.11
A.?1.111 And 11.111..(.111
c.c.1,111 (11115.
1(111.Ill ' iii
111,,I.'1.1 1.,11.?x
111.111 th
11,111no.11 oN (.1 1110,
le.ailt III 1111,1 liii Illilti I. '11
111. 1 1?111111111'. :111(1 WIVS11 Cri 111(111114'
ill 111(11 'uifttti;119)Irri;thIV (
1{.111 11'1/1111111'. ;11111 11111%1 14.1!11111., 111
11/111! 11111111111111 (:ential and Muth \?1..
dint l'?',11;1 dippC(1 \\Aid(
11(1/1111. lilt! IlillillIell Ih'1l11!IIli', iiOW llTliiIt, Ill if(i (if.
1.111". 14 Ille 1.4'.111VC '4111(11111! (11
Ill trine, (if pet capita indte.hial
'ill!)), 11(1;11. till ii rh 'III and
the It the e?pele,e of the
cerinis. 'I he '4i ti inenia,
' (:'.(11g1;1. Amhavdilian, and Ow 11/11(1,,
111111 551,11? lo?IC,,t1 19(10, liii 'till
11". 1"1"" "Tinil;11 Val 11111(//1% 111 1/1'1' l'ill/11A ;W1.11'111111111 1!111 \\Al 1.1'!,(1111/11
1.1'1;11111:11 (111 11`1.111(.1": 111 1!;1111% 111 1111 111/11;1 industrial 111111111' 11111, lthinii
the absolute range of variation ?va.; consideralily smaller. ?v.is
ill the Center and the Celina, Cliciliozeiti Il'i'ituIl Ill Illy liSFSit, Nfoldavi
11'1oIll','il? and Lithuania. ;111'1 111 Ow VnIt&?')%ilka least (i
Ill Central Asia and Transcaucasia (see ti). Of those riTioi
sltil hclow-a?Traie 1(?vels of per capita larm output ill 11u.4) 1 ti t
...?? why ?le ...111,1'
Urals, Volga.A'yall,a, and Ow Far Vast trp;ions of the aml the Ce()rgia
and "l'orkinen Itepublies 11111511! to\vaid 111111 average in relative terms hi
55'''191 19(4) 1(1111 1)(i!) 7).
illus die tremls ill i)er {?;ipita national income and imlustrial ail(1
i)r((ltiction all confirm, the in.esence of ;1 Loge and gro\viiii,, disparity in economic
(1''vc1()I'1111'111 11rtw''''11 till' (11'vri()1"1 ;11.cas ((:011tral Asia, thy .1.ranN('1111511s?
111(1 the North ;Ilicasus ainl the rest of the coontry. the economies
(11 lJI HTinns ha"' 1)ro'n'ssod III thr 11`,1 ducado. file rat(' Ill Pr( 1.1:1-css ill t:H' 1,?%s
(levelope/1 it' tills has been too slo?v for these re,,,ions eatc.hiln; up to
the rest of the conotry,
REGIONAL TRENDS IN POPULATION GROWTH
Natural Increase
Thc \vide regional differences Ill population growth in ti0 I rSSIi (111r1111r, 1111'
19(O', (S(4' Figlin. 8) reflect patterns of erliwth that ;ire characteristic of the
development process thro.eghinit much of the world. The lowest rates of !lateral
increase occurred priniariiy in the European an?as of the couriry (see Table 2),
?vhere iirbanization is fairly \yell establied and ?vliere per capita 'noun is
high. Conversely the highest rates are in Central Asia and the Caucasus ?vnere
P'' capita income is low.
The coefficient of variation iticrew.ed slightly frnin 0.383 in 1960 to 0.385 ill 1969.
" The 1.01.1licivot of variation shou.rd an increase 1:om 0.34:3 in WOO to 0.300 in 1969,
" natural rate of population incrt?ase is the difference bet?yeen the birth rate and the
death rate and equals the numerical increase per 1,000 of the existing population.
12
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USSR: Regional Variations in Average Annual Growth
of Per Capita Industrial Production, 1961-69'
All-Ur ion Average 8.9"0 per Veer
-
F-1
11
Significantly above average
(more than 7.4% per year)
A 'rage growth
(6.4% to 7.4" per yonr)
ri Significantly below overage
(fess than 6.4% Per year)
'Source Appendor Table Al.
14
Average Annual Rate of Growth(%)
Hume 4
Republics
RSFSR Economic Regions
1. EAtenli
8.1
15. Northweit
5.8
2. Latvle
8.3
IL Center
5.8
3. Lithuania
10.4
17. Central Chernozem
9.4
4. Belerustie
10.2
II. North Caucaous
8.7
5. Ukraine
7.8
19. Volga-Vyatka
8.8
8. Moldavia
9.1
20. Volga Veil,/
8.6
7. Georgia
8.3
21. Urals
7.6
e. Armenia
6.9
22. 'Nest Siberia
7.9
a. Azerliagdzhin
3.5
23. East Siberia
8.5
10. Turkmen
3.2
24. Fr East
7.3
Uzbek
3.4
17 Tadzhik
4.9
411
7.9
14. Kazakh
6.8
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40
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Figure 5
04%
USSR: Regional Gaps in Per Capita Industvial Production
(Porcent Ahoy? or Bolow Souks' Avorogo)
- .v)
Center Imiteestaavairmatosaairamsermanniai 40",
Northwest
Istonia
WO,
Urals
Ukraine
Tar Fest
-10%
Volge-Vsatke
-11",,
Volpe Valley
-20"?
-32",,
-20",,
NANNMAMAAAININNNMNMMIMMNOIIMOIINIMNMI 47",
341,
SUMMNIIIME 40%
29'
20%
BIMMIIIMI 13%
2",.
-14"?
Jest Siberia
-17%
-19% 111111.1111.1114.
-10%
-0?,
-44"?
-45%
-40%
-40%
44"r,
-18?? 11111,11Mlin
11111111?111
-50?,
-63", WillatilminP"MENIMEMOMMEINI
-52",
-53%
cc"" raras
-57%
-48% 1111011?1111111111111111?11?11110111111111111MMI
North Outdone
East Siberia
Armenia
Georgia
Lith aisle
ezerboydzhan
Belorussia
Kazakh
Moldevla
Kirgiz
Uzbek
Tadzhik
Is
Central Chernozem
36%
45%
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6 I%
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USSR: Regional Variations in Average Annual Growth
of Per Capita Agriculturril Production, 1.961-69'
All-Union Average 1.6% per Year
Significantly above average
(rncre than 2.1? per ylnr)
ri Ave ?go growth
(1.1 to 2.1% per year)
Signi; cantly below average
(less ts,sn 1.1, per year)
.SOUTCP ,)ppenrItx Table A- I .
I I
23
Average Annual Rate of Growth(%)
Republics
I. Estonia
2. Latvia
3. Lithuania
4. Belorussia
5. Ukraine
6. Moldavia
7. Geomia
0. Arm,,ia
O. Azerbaydzhan
10. Turkmen
11. Uzbek
12. Tadzhik
Figure 6
IISFSR Economic Regions
1.2
15. Northwest
1.3
1.1
16. Center
2.5
2.9
17. Central Chernozem
3.0
3.1
10. North Caucasus
0.5
1.6
19. Volga-Vyatka
2.9
3.7
20. Volga Valley
2.1
2.1
21. Urals
1.0
- 1.0
22. West Siberia
0.4
-1.0
23. East Ziheria
0.7
1.8
24. Far East
1.0
--0.7
-Nag!.
13. Kirgiz 1.1
14. Kazakh 0.3
15
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USSR: Regional Gaps in Per Capita Agricultural Production
(Percent Above or Below Soviet Average)
-37".
-38%
-48".
-58% 11513MUM
-49%
-500. anneffaMMIIMMiNariniMiligiNEEM
-50%
-6O %
-59%
-58%
Estonia
I
Lithuania
Latvia
Central Chernozem
Ilelorussia
Kazakh
North Caucasus
West Siberia
Moldavia
Ukroine
-14%
-28%
-22",,
?
Volga Valley
-1".
-
Figure 7
itairemmoissmargeamaniammaraman 5 1.,,?
IITTRINIZIONSKIEMEMLIIINI "?
ostammenatorznistawrowa 30%
4
NM 6",
--10",,
23%
12"?
18",,
18%
17%
1.11.111111M. 180
12".
1111=111111111111110?len,,
Uzbek
Volge-Vyatke
East Siberia
Turkmen
Urals
Kirgiz
Tadzhik
Center
Georgia
Armenia
No
Azerbaydzhan
Far East
32",,
37%
43%
52",,
16
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66",
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USSR: Regional Variations in Population Growth, 1961-69* Figure 8
All-Union Average - 1.3% per Year
f---1 Significantly above avenge
I I (more than 1.8% per year)
r 1 Average growth
"" (0.8% to 1.8% per year)
Significantly below average
(less than 0.8% per year)
'Source: Appendix Table Al.
23
21
Avrrage Annual Rate of Growth ('/.)
Repuhlics
RSFSR Economic Regions
1. Estonia
1.1
15. Northwest
1.0
2. Latvia
1.1
16. Center
0.5
3. 1,thuania
1.3
17. Central Chornozom
0.2
9. Belorussia
1.0
10. North Caucasus
1.0
5. Ukraine
1.0
19. Volga-Vyatka
Nog,.
3. Moldavia
1.J
20. Volga Valley
1.2
7. Georgia
1.4
21. Urals
0.6
0. Armada
3.0
22, West Siberia
0.6
9. Azorbaydzhan
3.0
23. East Siberia
1.2
10. Turkmen
3.2
29. Far East
i.g
11. Uzbek
3.6
12. Tadzhik
3.6
13. Kirgiz
3.3
14. Kazakh
2.7
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Table
USSR: Ratcs of Nab ml Population Increase, by Republic and Region "
Per 1,000
1900
1970
Turkmen
35.9
28.6
Tadzhik
28.4
28.3
Uzbek
33.9
28.0
Kirgiz
30.8
23.1
Azerbayclzhan
36.0
22.5
Kazakh
30.7
17.3
Armenia
33.3
17.0
Moldavia
22.8
12.0
Georgia
18.2
11.0
Far East
18.7
10.3 b
East Siberia
20.9
10.1'
North Caucasus
16.8
9.1 b
Lithunnii
14.7
8.7
Belorussia
17.8
8.6
Volga Valley
18.0
8.0 b
West Siberia
19.8
7.6"
Urals
17.8
7.313
Ukraine
13.6
6.3
Volga-Vyatka
16.6
5.8 b
Northwest
13.1
4.9 b
Estonia
6.1
4.7
Central Chernozem
14.1
4.1'
Latvia
6.7
3.3
Center
10.7
3.1"
USSR
17.8
9.2
RSFSR
8.9
5.9
' Narodnoyc khozynystvo SSSR v 1967 godu, pp. 40-41; v 1970, pp. 50-51.
"1907.
These wide variations in rates of natural increase resulted primarily from large
regional differences in birth rates, as death rates varied relatively Jittle among
the reg:ons. In Central Asia, for example, where the urbanization process is a
relatively recent phenomenon, birth ratc: were the highest in the country-more
than doublp the rate in the RSFSR-while death rates were slightly lower than
in the RSFSR.
In addition to the usual "urban/rural" and "developed/less developed" reasons,
inherent differences in the cultural outlook of different nationalities, particularly
between the Slays at one extreme and the Turkic peoples at the other, have
undoubtedly been a source of disparate birth rates among the regions. For ex-
ample, according to a recent survey on family size conducted by the Central
Statistical Administration," the number of children considered "ideal" among
married women varied from two to three in the European republics and throug;,
out the RSFSR, to from three to five in the republics of Central Asia and Trans-
caucasia. Even more striking is the fact that the pprecntage of women who
consider six cr more children "ideal" is significantly wca ter in the Central Asian
and TranscLucasian republics than in any other region of the country. In all
regions, the number of children actually anticipated by the families in Ih?
survey was slightly 'less than the numb N considered "ideal," ranging from t.
in the European areas and the RSFSR to three to four in Central Asia and
Transcaucasia. These differences in attitudes regarding family size reflect, among
" The survey was conducted in 1969 and the re. published in an article by Belova, V.,
"Obsledovaniye mnerni o nailyuchshein i ozhidayemom chisle detey v sem'ye," Vcstnik
stntistiki, no 0, 1971, pp. 23-34.
18
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other things, regional variations in the average age at marriage. The average
age of newly married couples in the PSI7S14 is currently 29+ for men and 27+
for women and increasing, but in Central Asia the average age is in the low
20s and stable. It is not surprising, therefore, that the natural rate of population
increase is now as much ds four times great 3. in the Central Asian republics as in
the RSFSR as a whole.
Every region except the Tadzhik Republic shared in the remarkable decline
in rates of population growth that occurred in the 1960s. The general fall in rates
of natural increase, however, did not disturb appreciably the substantial regional
differences that existed in 1960.
Migration
Usually, migration of population acts to reduce regional disparities in popula-
tion growth and income levels?that s, people move out of regions of high
rates of population g?-owth and low incomes into regions of lower population
growth and high incomes. This pattern was most notable in the Baltic republics
of Latvia and Estonia, where in-migration was the dominant source of population
growth, and in Azerbaydzhan, the only area of high population growth that
experienced a net out-migration during this period (see Table 3).
Table 3
USSR: The Contribution of Natural Increase and Migration to
Population Growth, by Region
1960-70
Net Percentage
Change in
Population
Percentage Change
Due to Natural
Inc! 'ase ?
Percentage Change
Due to Migration b
Out-migration
Central Chernozem ?
....... .. . 3
11
?8
Volga-Vyatka .. .........
. . 1
7
?6
West Siberia
. 8
14
?6
Urals
7
13
?6
Belorussia
12
15
?3
Georgia
16
18
?2
East Siberia
15
17
?2
Azerbayclzhan
38
39
?1
Center
8
9
?1
Northwest
12
12
Negi.
In-migration
Turkmen . ..
. 42
42
Negl.
Volga Valley
15
15
Negl.
Ukraine
13
12
1
Lithuania
15
14
1
Moldavia
24
22
2
Far East
20
17
3
Uzbek
45
41
4
Kirgiz
42
36
6
North Caucasus
23
16
7
Latvia
13
6
1
Estonia
13
6
7
Armenia
41
33
8
Kazakh
40
32
8
Tadzhik
46
37
9
USSR
16
16
N.A.
RSFSR
11
12
?1
" Change in population that would have resulted from natural rates of increase alone.
? Derived by comparing the 1972 census results with the population that would have resulted
from natural rates of increase alone.
19
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On the other hand, migration atra,ravated regional disparities in natural
population growth in most republies?rct,irding the growth of population in areas
with relatively low rates of natural increase mid augmenting growth in areas
already having relatively high rates of natural increase. On froin tlw
regions of the 11SFS11, with the exception of the North Cancams and the Far
East, tended to reinforce the effects of the already relatively low rates of natural
increase. This effect was most prominent in the Volga-Vyatka, Central Chernozem,
West Siberian, and Urals regions where out-migration reduced the effects of
natural population increase by 86%, 73%, 43%, awl 46%, re.pectively. On the
other hand, the net migration into the republics of Central Asia and Annenia,
where the rate.; of natural increase were among the highest in the country, had just
the opposite effect.
Much of the migration over the last decade has been closely linked to the
massive flow of rural residents to urban areas. Nearly one-half the growth
of the country's urban population between 1959 and 1970 was due to the
migration from rural to urba:i areas, although the intensity of the rural-zuban
flow has not been uniform in all regions. In the IISFSR, out-migration from rural
areas was approximately double the natural increase ip these areas, resulting
in an absolute decline in the rural population. The decline was most prevalent
in the Central, Volga-Vyatka, Central Chernozem, West Siberian, Northwest,
and Urals regions. Within the RSFSR, only the North Caucasus and Far East
regions incurred an increase in rural population during this period. On the other
hand, in the Central Asian republics the rapidly growing rural population has
tended to he considerthly less mobile. In fact, Soviet demographers have pointed
out that ? :wit of the urban population growth in these repub!ies has been the
result of i influx of people In. n other regions, notably from West Siberiv and
the Urals, rather than from their own rural areas. In many cases this has
created urban enclaves of Slavic peoples surrounded by rural areas populated
by the rapidly growing indigenous ethnic groups.
Thus the economic growth that has taken place in the Central Asian republics in
recent years has not been accompanied by a general assimilation of the Turkic
peoples into the urban-industrial economy. In the absence of an influx of workers
from other regions, economic growth in these republics :.light well have been
less, but a continuation of this pattern would enhance the colonial image that
the central government has been trying to shed ui these regions and limit the
opportunities for drawing the indigenous population into more advanced indus-
trial processes.
Practices followed in :ing labor, particularly highly skilled labor, do
little to alleviate this Ation. Students holding post-graduate de, rees are
generAy assigned to remote areas for a period of three years followirg com-
pletion of their studies. Many of these specialists avoid such duty through
one or another loophole in the regulati:-,ns. However, most of those who are
unable to avoid a remote work assignment settle afterwards in other regions,
notably in the larger urban areas such as Moscow and Leningrad, or in the
southern cities where the warmer climate provides considerable incentive after
three years in the harsh northern or eastern regions. This attraction of skilled
labor to the southern regions is reinforced by Soviet wage policy. Regional wage
differentials, designed to attract and retain labor in the more remote or clirra :c.ally
severe regions ( especially Vberia and the Far East), are insufficient to counter
the attraction of the southern cities. Consequently, skilled laborers are pulled into
the urban areas of Central Asia, where they are warmly received by employers
who would rather hire Slays than the generally less well trained Turkic people
at Lie same rates of pay.
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The rapid population growth in the less developed reg,imis was accompanied
by a somewhat slower growth of population of working age (see Table 4);
able-bodied population in the Central /Wall republics grew about 20%-30%
between 1960 and 1970 (compared with a population growth of about 40%)
because of low population growth in the early 19505. However, in 1970-80 the
able-bodied population will surge because of the high birlh rates of 1960-70.
!knee, the problem of finding work for rural minority group labor will become
CV( 'II more acute in the .1970s.
Tolle 4
USSR: Index of Growth of Able-Bodied Popuhnion, by Republic '1
1960-70
1959=
100
Kazakh
131
Armenia
131
Kirgiz
129
Uzbek
124
Tadzhik
123
Turkmen
123
Moldavia
119
Azerbaydzhan
118
Estonia
111.
f.atvia
109
Lithuania
109
Georgia
109
Belorussia
107
MESH
108
Ukraine
105
' Males between 16 and 60 years of age and females between 16 and
54 years of age. Based on 1970 census data reported in the regional
press.
REGIOAAL INVESTMENT POLICY
Ac2ording to all the measures discussed above, the differences among regions
with respect to per capita income and output widened rather than narrowed
during the 1960s. The other major factors determining growth of income and
output, apart from population growth, are investment allocations, by region,
and the return on investment, by region.
Inconsistency Between Regional Policy and Investment Allocations
The professed official policy of favoring the less developed regions is not
borne out by the pattern of investment allocations. Per capita new fixed invest-
ment in 1960-69 has not favored consistently those republics that had the
lowest national income per capita in 196020 (sec Figure 9).
Although some of the poorer republics?notably the Kazakh and Thrlonen
Republics?received more investment funds per capita than the richer republics,
" The Kendall rank order correlation coefficient relating per capita aew fixed investment in
1900-69 to per capita regional income in 1960 was 0.410. In other words, there was some
positive correlation in the SCI1V3 that areas with relatively high per capita national incomes in
the base year tended to be favored with relatively high per capita investments expressed in
rubles. While the relationship did not indicate a strong planners bias in favor of the "rich"
republics, the results certainly did not suggest that a policy of giving preference exclusive to
the lagging areas was followed. The coefficient would have been ?1.00 if investment alloca-
tions had been inversely related to income levels with perfect consistency.
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USSR: Ranking ol Union Renublics, by Per Capita National Income
and Per Capita New Fixed Investment
Figu. 9
National Income Per Capita, 1960 Per Capita New Fixed Investment, 1C30-69"
(1958 rubles) (1955 rubles)
940 Latvia
099 Estonia
765 IISFS11
678 Lithuania
675 Ukrelne
5R0 Azerbay6zhan
522 Armenia
521 Moldavia
517 Belorussia
511 Kazakh
509 Turkmen
484 Georgia
460 Uzbek
449 Kirgiz
380 Tadzhik
691
2i to
25i4
2265
I 1939
; 1819
1578
1525
1568
1980
2782
?
2336
1458
1652
1543
1532
?Cumulative investment, 1960-69,
divided by 1965 population.
2100
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ihv ccorom, and T1,1,11il, \vele given
lions barely hull iis 'hose funneled inn) Ntoirovei,
the relaiively high invesiineni the K.1/01,11 and inikiiien
\yen' used largely exploitation of iiiiiniiI iiul hiel h'eposits.
Soviet polievinal,ers ill making, decisions hom the /vide! may 11;ivr emr,ideo,(11
the regional parity goal, clearly ollop factwr.. hav temper-I 11M,
SI(IVIA11011 N1'11111 111111S 1111(1(..
Willtiti II"' lut?v"'cr, "Illita Ow(-1111'10 alliwatt?11s 11)1)1.a. to
have favored the less developed Isastern r;.giore,, partieularlv Fast Silot ii iipii
the Far Fast. Throngliont most Of the HMOs,'" per capita investment allocations
iii these reg,ions appear to have liven consistently higher than in any (Wier
region of the liSFSIt or in any other union republic. This may reflect, it) pit I.
it planners' preference for developing the eastern regions, though perImps
motivated less by equality considerations and more by a desire to exploit the
vast natural resource base in these regions. The high investment alloratiiris
to the eastern regions of the IISFS11 may :dm) reflect the greater cosIs moat
ill tht? general development of these regions.
CPYRGHT
Higher Growth of Productivity in the Mor Developed Regions
To narrow the dif ferences ill reg,ional !evils of development sig,nificantiy, the
USSR must fly in the face of the best investment opportunities. Increases in
industrial prodiiction are becoming relolively more expensive to achieve in
most of the less developed areas of the USSR tlimi in the already developed
western regions. One measure of this is the relinively low growtli of produclivity
of inputs of labor and capital in many of the poorer regiia1s.2".
? ?
" Comparable investment data for the regions of the IISVSIt were available only for 1900,
1965, 196(3, md 1967 in Narodnoye kozyaystvo StiSll v 1967 godu,p. 625.
"Although it is usual to consider the incremental canital-output ratios \Olen discussing in-
vestment priorities, the growth of combined factor prodlictivity is considered to be a better
indicator for the allocation of investment among regions, since it is misleading to suggest that
increases in output are due solely to capital accumulation. As C.M. Meier points out,
Even if we accept the assumption that thew is a fixed relatioi,ship bet?vven capital
and output as determined by technical factors, it does not fc.11oyv that we can infer
from this relationship that only capital is needed to incre.ra, outdid. We must also
consider explicitly the effect of other variables on output--for example, the supply
of trained manpinver, entrepreneurship, institutional arrant...ements, attitudes, etc.
(MI,' , Leading Issues in 1)evelop. tent F,co lllll nics (2nd Ed.), ()xford University Press, New
York, i 970, p. 177.)
Lab( r and capital inputs were combilmd in i ( obb-l)ouglas prodnetion function under the
assumption that the inputs xvere paid the 011?11' marginal products in Om base year.
Fcr the derivation of production finiction toeff,cients, see Appendix B.
Tin, measure of combined factor productivity was derived as the residual ` ment yvhich
accounts for that p?..rt of the annual pereentai,,,e increase in output in excess of increases in
4,,gregate itiptits?...iiat is,
where:
---= ? +(1?a)''
-
AA AV [ Al.
A Q ' K
]
A =Residual (combined factor productivity),
Q=Industrial output,
1, = Man hours of lab" input,
K=Industrial fixed capital stock,
a and (1?a) -1,abor and capital coefficients.
Since it is a residual, c,,inhined factor productivity covers the contribution of many factors to
the growth of output such as the contribution of management improvements in resource alloca-
tion, economies of scale, increases in the skill level of labor, and any other phenomena that may
affect the efficiency with which industrial production is carried out.
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II 11,1?,1 ill/ IC1111'111, Ill 1111111'AI I;11 11111 1 IWO III
101011,, r.nikk'n ir in lin. lii.V1'111111l I Ill '.1/1111'
11;1\1'IIf 11.111V ii 1111111 (..cc lahlc !)). (m11611111 Lit too
ll;11 1 II 11111ft '.uiitult ii IfIhIliiI in I Lii1%1.111, .1 III 1,1111'16;1,
/\ /CI il;1? I 0011)111 Iii4s 31 ith, 101,0\ Illo 1,31
Avil,09? (Ii".101cliii thi1v!' .1v11019' gli!?vIll of(.m111'1111(1 1011111'. "I 1"'I"" "'",
(.1pit.11 filIi itjitiiihti litconlia'.1. Itallic ((Tubb, loec?thci ???ith Itclo
And ti hi pv6/.1111'11 CA. laiv,(",1 1111 I 1
IIIliit'li ft
(1111 fill lailni
IipliliutiIIVI!V In 4.i.111 if gic?t.
Ilii".30,o ,r, fill. 11;11 :ivoiagy, p vc15",10?v t!,,,\v1 wind., ciirin.,1
'Fable 5
1 'ottibined Factor l'roductivity in Indust' y
Alcolute Clcolge
i'..ndoned Pio
Ill uvit , I
1,1.
Av etair.e Awn c I
AnIn1:d lIt
111111,111
of
if I:Imo!! ol
I it Id-
11,11113,vilv, 1961 1,9
1111:11;,,, 1961
',10i1,00,I
I IIIill
Percent
Latvia
! 3
1
3.1
.5.!0 12
l':'11(o11111..
I .'.111
:1.:i I
nod( all,:in
2.S :1
.?I 7
I II? riitii.
III i
1
2.3
I; . 2 I I
1,01,,iiiiint
0.
Ti
2.4 .1
!I.3 2
I leorgin
0.,41
1;
2.2 41
15
liigiz ..
0.79
7
2. 1 s
9.3 3
1111,'411
0.0?
!i
2." 7
5.6 1,1
Nlohlavia
!I
I .2 910.0
,
Al'Illl'Ilill
11.31
10
09 . III
9.1 4
titzalcli ...
0.15
11
6.0 1 1
9.1 5
Azerbityllzhan ..
0 02
12
O. 1 12
0.6 10
Tadzhik
ILI)
1:1
11.1 1:1
Y.',.1 6
Uzbek ..
0.1:11
14
OA 1.1
7.6 9
Turk!, 1....
it 21
Tr,
I .0 I 5
7.44 N
O. GI;
2.2
li. II
(, Q?
? I Ivri v1.11 ii,,.
Ik..
This patter!, of productivity groxvtlt is not particidarly surprising,. ravorible
factors for growth are usually available in areas of considerable urbaniriclustrial
development. Therefore, given an existing spatial distribMion of urban-indus-
trial development, this distribution could be expected t( exert a significant
influence on the regjonal pattern of productivity groxYlb." The rcason is that
l)ifferences in the industrial structures of the republic's niay aho ;lemma for some of the
regional differences in productivity growth-that is, if output per unit of combined inputs grows
faster in song. branches of in,1,,,;tr:.? than in othcrs, then icgions in ?vhicii the faster growiag
branches predominate might show it higher rate of growth of overall factor productivity.
Koropeckyj attempts to deal with this problem by analyzing the productivity of various indus-
trial branches in most of the republics over 11w period 1958-65 (Koropeckyj, "Industrial Loca-
tion Policy," op. cit., pp. 290-295). Although his results show r relatively higher growth of total
factor productivity for some of the less developed republic's, Koropeckyls evidence is based
on average annual ra? ,s of change covering a different time period than that covered in this
paper. Moreover, tin.' tilne period examined by Koropcckyj was not consistent for all republics,
and the data appear to require very b'oad assumptions with respect to comparability and the
problem of matching the coverage of ii puts and output.
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1,.iitt.,111 plug iii 111011' III ()I Ho',11 ,1111 Ad\ villi:111 1111111'.111;11
(.11114'1'.ii;11',1',11111111111111 , 1)111111111. 111.11i 111111111Ie", 111)111 (hi
cow culialiou (.1 ? ..iwown. III ,1 ;lI 11 ;11c,1 ?hal iii IiAle
iiiI liivial can hest'ell III OW 1?11111111111.11 1'1 11.11111111 1111 111111111 1" 111 11W 1,11 l',1".1
111111111111111,111 1111",11111' i11111?111 f1111111,1',1', (Ill 111?1 111)1111W HI, '111,1111 1 11111,111
11(-1''? "fiii 1 l',411(1111V 1"111111 II I 11111 11""1"' Ii II"1"""' 11111
"1);11H1 rX1.(111,'?luililit,'11111 I l\ 11"V 111.1111'' I" "1"11 II"Il 111
11011",
11'1'11111', 111,11 111' ,11111111' 11'111 (111'111111 1 1 111.111 11 (1111", t11 11111111 114 1,1111'
( MC111111111!
liii t,oiiifiij ',11(1,11 111'11111..111 )ii (Iii ii 11'1111)11111 Ic11,11111),.
it i?. t?asita Iii i,uii,jLi(i n?t?Iiiittlitg,ical and nib o the
iitainstosini til iiitaluction10 liii tlliiiiv highly dc\ clopcd uIilIIl
lins if i.. 1011 ii 111,1111 that rot.)in.ao ire,n)ir, of the coonliv, m \dud'
tuned (lcvekintictif 1.; c(oireof 1.111.41. .,ho\v flo.
11111?; of cititiltitu'il factor 1)1(1(111(1101v. .1 heir is net tituih
II) stip:gest fli..1 111110 ovciii()\v(hio', awl iii Il curd.; id
t)flf?vf.i);1) uiiiiiniup'r of in ho
IMPIICATIONS FOR SOVIET POLICY
Investment Allocationn
The regional trends examined this paper conliont Soviet planners and
political leaders with a policy dilemma. A signific;m1 reduution of regional in-
come differentials and maximum national economic groxvtli cannot he achieved
simultaneously through investment strategy alone. II maximum national economic
growth is to (be chief criterion for allocating investment, then capital should
he directed primarily toxvard those re0ons III svhich if is most productive. But,
as die dala on factor productivity in industry sugg,est, these are not the sante
regions in ?vhic?I) lie;:vy investment allocations vvotild be consistent ?vith a policy
0rien1:.(1 to\vard achieving regional parity In income. ()lily with the help of
migration policy could all regions move toxvard income parity, since the most
rapid popidatiou growth is occurring it) those regions with the lowest income
gro?vt1). SOlificantly increa..ing the development of labor-intensive branches of
industry in the less (1('VelO1)r(1 regions, to utilize their rapidly groxving supply
of "warm bodies- of xvorl:ing i!; not lihrly to he a viable subAitute for
out-migration of labor. Much of the growth of able-bodied population in these
regions consists of unskilled rural residents whose social and cultural habits
inhibit vocational transitions.
Therefore, given the distribution of opportunities, it is not surprising that
Soviet investmont patterns have not favored consistently those republic's with
lo?v per capita ii,tional income in 1960. ()? the other hand, the evidence is not
"For instance, the Lithuanian Council of Minister; reeentiv imported tho industri!!! dcvdep
went continues to expand much inure rapidly in the cities of \ ;loins and Kaunas, which already
accounted for over one-half of Lithuania's industry in 1960, than in the small and medium-size
cities of the republic!, despite official pleadings to the contrary. (lzvestiva. 13 liii 1971. p. 3.)
m As one author puts it,
The continued growth of even the largest metropolitan regions in the world contra-
dicts the expectation of diminishing marginal returns to scale ... there is no evidence
that metropolitan areas have ceased to grow anywhere as the result of presumed
social diseconotWes. (Friedman, J., Regional Development Policy: A Case Study of
Venezuela, MIT, Cambridge, 196(3, pp. 19-15.)
CPYRGHT
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..11111111. 111;11 1111111111 1 \l'41', 11Ic l'.11111111r, 1111116111r 111V1".1111,111 ;111(),';111(III..?
1 111 1111'; 111;11' 11'111'd 1111 111 I 111 iiiv 1.11.111 1111 1111.1111111111(1M' ;111(1 ;WI ri'd
1111(111 11'111111)1111' 1'1 1111 11111 1111 1111111c1111111111V, 11111111111111 Illl'1";11111.111 1111111V ( 11111 III
11011111111 11'.1111c 111 II 11;itd), palII oho I VIII' 11",111,1 111 1111111%1 1 1;11 li)(?111 ji
ii
/ ;11 'fir' 111;111 11". 1;1'1' "I '1 1" "1 11 r?("11 1"1 r?;1111111r. "1"11111/1111', 1 11111 111r1 i"fl'"1
uii IIii lvii 'I diuf 1}1, 10,, vi, rviwatriliv Ili dud oil,
;11 11111;11 V ;11111 111(1,W.1.4(111 ililtIllIli, "1 a 1 1 iV1)1', II 1"?!1"11 (1".151("" in If
1 1Y, 11 ;11111 1111' 1 '1 11111;11111'1111 V 1'1 111'1 11 11111'1, 1141 1 111 p lii V!Mull 111.1.1!;11111,;.'"I
(1Virk 1101' lo'i'n 00.11)1c 11) i1111)1"11(111 171 inv(""""
14) achievr 1)44114 lia,,4444441 4,v4441v and lowdown) prinhiclioo sitiodlaneoludy,
if appcal., Itom 114c cvichatur al 1117111 1111111
W1.11k, 11111 ;11.111111 111V111111111 111111(N'
liivi hiOluif 111(17.1,Iiisiiif Ili,. IA fru :is 111071):,,ts ?mid dt
\VItile this ?votild be (4.1e.istent \vitt) the ptinciple of moving capital 1'1 N(1111.11S
illi
tIll
111.111111111 11'101/11;11 111111)1111 iticiritits
In ow thry (1)10611111r imi:,11.,,11:,:ia11)::(HAhil:?1(1:1:11ti,millifl:1111)::11(i:11, Nit I( !IX:(1'
region;41 parity !oust iiiiihttii 441114 capital investment (particularly
iii 11w 11",s \Nadi 0111-7itigral1011 01 111101.
Irmo 4.1H?se regions. llo?vever, no significant efforts have been made over the
Pa`,1 10 sfiall 111(' 110\v 01 1010 Cilitral Asia 111('
Transcaneasus or to shift labor from these areas to other parts of the t1SSII.
Migration Policy
While more stringent control over migration into the less developed regions
IS a clear possibility for the future, the problem of \vital to (II) about the
rapidly increasing indigenous population remains. F'orced out-migration, though
possible, cloes not seem to be a likely course of action. Aside from the fact that
Turl:ic population may be un?villing to MOW` and til(' "host" Slavic popula-
tion unreceptive to such movement, the educational aml language ('01. 1111)11
that prevents most of the Turkic population from entering the skilled labor
force, logetker with the orientation of these people toward irrigation agriculture,
warm climates, and large families, Inalws it indilaly that they c?ould readily
adapt to the living conditions aml vocational demands in either tile 1,-,tfrol)ean
01' Siberian regions of the country. Moreover, the facilities to accumitmdate SPell
in-migrants are sthely lacking throughout these regions. 'lousing wooiti provide
a particularly Inuiblestnne prolilein as well as a r'itential source of fricti()n
1,0,.vern the Slavic popti!ation and the ne?vconteis, MIKA' it is already in Ott)rt
stipply antl not generally suited to the traditionally large families of the
TurIcic p(ople.s.
1)ifficult thoti,;11 it may in, out-nni.,,ration from the less clev(sloi)ed regions
may have to be encouraged, aml i)roperly accommodated, if the St)victs want to
" Industrial investment in 1961-69 has not favored coes4stently those republics w?14 high
levels of industrial factor productivity in 1960. The Kendall rank order correlation coefficie-it
relating the average annual growth of industrial new fixed investment ii) 1961-69 to the level
of industrial factor productivity in 1960 was 0.048. The coefficient relating the average annual
growth of innbined inputs of labor and capital in 1901-69 to the level of industrial factor
productivio in 1960 was 0.162.
n Defense considerations may also weigh heavily in investment decisions, although in a
nuclear age it seems likely that these considerations would lu? more consistent with maximizing
production than with creating region.I parity. The relatively large investment allocations to
some of the less developed republics in Central Asia no doubt reflect the exploitation of
natural resources at least as much as the implementation of any specific defense measures.
"Vsevolod flolabnychy has prepared an excellent summary and bibliography on this point
in Spatial Efficiency in the Soviet Economy, a paper delivered at the AEA-ASSTE meeting
in New Orleans on 28 December 1971.
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avoiI. i Ilicse iegjoils. inimaity nationalitiesif i vi Iv I income.
At the veiv least Ric cawii Italy ), the movement 01 infligt11011% lah()I Ii iii
1111a1to ',1141?111 l'.1111011 1114,1'
iII )EIV( to lie inereased. I \\'11111(1 1{11111.(' SLIVir
iii iiii'i.iiiI Iii 11"".4' vIiii lifihhhi.,.1111 lily lInted, may pima. iIifiiiilt vith
iiiil ,,imiilicant chailiran,ii (amen( y?ige
Pions for 1971-75
Thi? 1971 75 plan indicatins, ilY imion suggest that past development
Pattiaos iII not iliality.e lathe:111v "ver the neNt \l'arS? 11". P11111"1 gr"Wth
of iiiIiiiiiaI income in each republic, shown in Till& (I heinw, is (kne piece of
evidence. The most rapid growth is planned for Moldavia, Beim iissia, Armenia,
and 1.iilmania, followed by the Turkic republics of llzbekistan, Kazakhstan, and
Azerb.iydzhan. This gi owth, if ititained, \void(' represent a relative
ill Ito' position of Uzbekistan and Azerbaydzhau---republies which grew ;it helOW-
IIVCrage 11960S, ()II a per capita basis, however, ninch of this
planned improvement may be offset by conlitmed high population growth.
In the agricultural sector, the h! .gest percentage increase in production (hiring
1971-75 (comPared with 1900-70) is slated I ,? Moldavia. where Per ciPita
production during the 1900s was already above the national average. Altliongb
above-average increases are also plama?el for Azerbaydzhan, Armenia, Tadzhiki-
stan, and Ceorgia, it is not likely that these increments will go far toward bringing,
these republics up :o the national average, parti_ alarly if no major changes occur
in the regional pattern of population grow,h.
The regional pattern of growth in industry planned for 1971-75 is quiie similar
to that planned kw 19136-70?that is, the most rapid growth is slated generally for
the less devehiped II 'I Based on past pert ()nuance, some of these republics,
particularly the Tnrkinen and Uzbek Republics. probably will fall short of the
planned growth. The likelihood of snch shortfalls becomes even greater when
One considers that Ow pianned growth of industrial output must be achiev.11
through significv.ot increases in prialuctivity rather thaii by large incugnents
to inputs. This ind;cation of a growing pinch on available resources has been
emphasized by the Soviet leadership and is mirrored in the plan data for increases
in total capital investment by republics.
The regional plans also suggest that investment per capita iii most of the
minority national republics will probably grow somewhat slower than during
1906-70 or, at best, maintain the same rate of growth. Only in Azerbaydzhan
is the 1971-75 planned increase in per capita investment significantly greater
than that achieved during 1966-70. The scheduled reductions in per capita
investment growth rates are especially steep in the Lithuanian, Belorussian, Ar-
menian, and Uzbek Republics. Despite these changes in growth rates, the largest
investment allocations per capita will continue to go to the same five republics
during 1971-75 as during 1961-65 and 1966-70?Estonia, Turkmenia, Latvia,
the IISFS11, and Kazakhstan (see Figure 10). Thus it appears that no major shift
in the regional distribution of per capita investment is contemplated.
" Although plan data for the economic regions of the RSFSII are almost nonexistent, the
planned growth of industrial production in Siberia and the Far East is reported to he above
the national avcrage.
27
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,
:
?-?
I'D it ?i?
.? 1 c. ?I/ 1 ? ?1. 0` 71 't,
. 'et
11 I -P 1. I, . ? ,
fv1
: 1
I. 4r6 476 64-c, ,4 c:LI 47, ?-? 9-1
4,/ /C/ On/ ./., I //I 1 . -0 70 ro 07, 70
/-1 ?-1 .-1
"0 .7) 01 '0 ??1' '7 I .0 01 C, 7 1 0, r t-
C't '71 01 70 ?-? 7.IC 01 CI 71 01 ?',1
CCC. f` CO ? a) ?7?1 !NI aa?
?-?
01 or ?-? r- r
'4) ?() .0 ".0 "*. .0 .7' .t. t0 70 .1.
n//1 nA nA .A
r- (0 ,71 ? ? CD CD./-? I- ,rn ,71
.7t. "e -1' we C0 70 70 :0
co GI al -'1? 0
..... ? ....
0 0 0 03 .S0 -la ,.1 i )0 ,T, .E E :E ?gi ?-a,
..'. 71; -2 c",'3 :%) '-'0 .'-? x --s` ;" Ts '-',,, ch
.t, ol -,1 ..: :4 -e. ?.4 :34 g4 E4 (...0 CI) 44
?1. i6,, A
. al
,-.4, C11
6-;
. a)
" 4,_.
,,1 cl. ?-?
11, 0)
? 6 r... .,-.,
;.11 ?vi ,,,
7.:
&I
T.)
o
to
0
4
,n
'C 0
? - - .
:
: h ' T '(1)1 'i'i
.
, - . ? ? . . . . . ,T .
a N
4 0
i.t
I.? 1- 0 ...,
0 i I. 4, 01
1.. I ?? TO. -111 'I;
H ,--.
E .F: ,;' :C.1). ? t-, -,i`:,
C .11 u., -
H ?:-.1 cu .?--, -0
O 0 04) f,i1
....--.) 70 0 ?
0 1:1 ?-? al
0
EC/
9 :I? ?
.. 9 ... :g
1-i-1 '-.
,
...i ,, a., ca,
.r.?' . Ei) .'.1 :L_:
u., al C. ,. -0
0
.. ,, - 0 01
.-4., c-: 17u E
C)
a
,
.._, :,? - .f ?2.
Cl - 0 0
,-.,i- ? c..? `' a ? E:r
? ?-? 41 1-.
70 Cl
0
43 a) ,,, 0 0
--, he0 i -
.
Cl - a) 4/
in
76'
ill
a! X 0 of
:..:.: `?-? >
4)
28
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Approved For Release 2001/09/28 : CIA-RDP85T00875R002000040001-1
USSR: Per Capita New Fixed Investment,
by RepubEc
( 1955 rti Wen)
1001-05
Kazakh
['Ionia MIIIIIIIMMOIMMINIIIIIIMmonsilesmissated I 206
u rk m en 11111111111111111111111111111111MWMINIIMmomesall 1140
11 STSR 11111=11111111111111111111MMALIMMilikilm 10/3
Lily's NIMMINNIIIIIMININIMINIINEM11030
Armenia mum Now 080
Ukraine NIMPIMIMIllailMmilimmea 062
Lithuania 111111111111111.1111111111111111.11M1040
Azerha shim ammimarammoimr 035
Walk INIIINIMINIIIIIIM11111111111111001 622
Uzbek 705
hirelz 111111MIMIIIIMIIIMINIMMIN 7115
Moldavia 11,111111.1111M1111111M11111 700
tholorilssia 576
Georgia 1111111111 573
1000-70
Kozekh
Estonia
Turkmen
RSFSR
Lctviu
Armenia
Ukraine
Lithuania
Azerbeydzhan
Tadzhik
Uzbek
Kirgiz
Moldavia
Belorussia
Georoi.
1971-75
Kazakh
Estonia
lurkmen
RUSH
Leiria
Armenia
Ukraine
Lithuania
Azerbaydzhan
Tadzhik
Uzbek
Kirgiz
UMW,
Relerusela
1114
061
078
1157
1027
1033
1005
040
r:!.,:f.7.4.:n1177:7_7r-t7=7::.7.7-7: ?
J4,;?..,:r.,.?::7,-V,s1,71,=.77: 7.;
i',VT-'277.4a,TfOV.7...1:-.7.1,,?!..,'.., ?
1514
1602
1629
1360
1413
1426
1340
1362
1050
2198
2054
1938
1030
1540
1455
1813
1297
1222
- 1417
1348
' 1533
' 1592
1205
Figure 10
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29
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Similarly, Ito IlukV Willi le!.prel 1.0 itlICIn?f!IU11111 .111)(1'
1)14'11 1111111111111111. 1.:1111111:P;k 101114111V; I 1161111 UI l kV.Ige
101 11111111' I() wig) ;de int() 111(. (1,,i( )(IN. I IU'(' I, Ibis policy bas enjoyed
only mini?. 101' OW 11:1!il. Iii fall, sultirien1 tegional
wage differenlials,v); distlissed lias dairwn labor ink) the sondiein legions.
Allbmigh Iltere bas been MIMI' ICI 4.1g1III 11/11 Of OW 111411 (1) W111,4'
intliftely Ilial any immediate \VIII 1)11)111011'
111111,4(T Ill 1111(11' to ibell!I !Ind 11111' (1111.1111.: III1' 1110 live years.
Since Iliv iirtv live year plait give!. no plospecl of redwing regional income
differenlial); by It roiardinaled redisbilmlion of boll) capital and labor, tegional
dispatilies in development levels are likely It) persist ?vik a 11111e change during
Ilit) new/ plan period. In fact, if industrial glowIli mnsl depend primarily on in-
creases in Inch?. p:mlueliyity, the development gal)); may co,..mtie It) increase,
tvith die IS developed republics faIIiii ill Further behind the rest of the
country.
30
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APPC.NDIX A
PRIMARY DATA USED IN CALCULATING REGIONAL
TRENDS IN PER CAPITA NATIONAL INCOME,
INDUSTRIAL AND AGRICULTURAL OUTPUT,
AND FACTOR PRODUCTWITY
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Table A-I
USSR: Indexes of Regional Growth
1960=-100
Northwest ?
Center
Central Chernozem
Volga-Vyatka
Volga Vallt4
North Caucasus
Urals
West Siberia
East Siberia
Far FAO
Estonia.
Latvia
Lithuania
Belorussia
Ukraine
Moldavia
Georgia
Armenia
Azerbaydzhan
Kazakh
Kirgiz
Uzbek
Tad_hi::
Turkmen
USSR
Mid-Year
Population ?
National Income h
Industrial Output
!-gricultural Production d
1965
1969
1965
1969
1965
1969
Total
Per
Capita
Total
Per
Capita
Total
Capita
1965
1969
106.0
102.5
Iri 7.
10..i.0
107.5
110.4
103.6
105.0
108.3
111.7
105.3
195.7
106.7
104.9
105.9
111.2
108.5
116.3
117.6
119.0
119.4
120.9
121.9
118.1
107.6
109.21
105.01
101.51
100.31
111.5
117.3 [
105.1j
105.51
111.21
11S.3j
110.0
110.0
112.e
109.4
109.7
118.4
112.9
130.5
130.0
127.6
134.1
138.0
138.1
132.8
112.1
135
143
141
132
141
140
161
137
148
125
131
150
145
156
131
137
181
191
1S6
223
200
184
212
173
208
152
193
200
172
189
153
183
168
174
16,
199
183
168
179
153
159
117
151
149
125
137
117
163
)161
(161
1.116509
1138
131
163
145
154
148
150
158
174
164
153
177
141
157
141
164
167
150
154
134
149'
182
174
227
213
233
210
203
209
232
222
222
226
273
263
211
261
196
237
178
231
267
186
211
177
205'
167
166
224
219
209
179
193
1988.
209
188
202
205
244
240
192
220
174
182
137
181
199
135
153
133
183
112.7122.4
113.5
123.7
106.6
115.7
124.5
101.1
1912.99
116.1
112.4
108.2
3.
11226.4
6
115.3126.2
135.5
117.7
108.0
108.8
119.1130.4
136.1
119.2
128.5
132.6
115.5

130.6
112491.'5?
133.6
199.4
123.9
11?18 9. .03
139.0
122.9
121.9
144.6
143.9

164.7
136.0
119.6
119.8

147.8
129.4
137.4
156.2
128.9
112
194
139
129
120
104
118
104
106
117
112
111
199
132
115
139
120
92
92
102
110
94
99
118
115
? Indexes of mid-year population were derived front data in Table A-3.
b Indexes of national income were taken from Narodnoye khorya:stvo SSSR v 1969 goda, p. 558.
? In '^..:ef inaustrial output were taken from Nar-dnoye khozysystvo SSSR v 1969 godu, p. 149.
4 of agricultural production and the per capita ruble data (shown in Table A 2) were derived from three-year mo-.-ng averages, representing an
Lstimated net value of per capita agricultural production in thc various regions. The 7..1.1ue of agricultural output was derived for each region
and for the USSR on the Ws:3 of price (1968 prices) and quantity data for the following 17 agricultural products: grain, potatoes, other vegetables,
fruits and berries, cotton, sugar beets, mr.flower seeds, fiber flax, tea, meat, milk, wool, eggs, cattle, hogs, sheep, and goats. An adjustmept was made for
grain and potatoes used for feAing purposes.
? Including Kaliningrad Oblast'.
The index of industrial prodr.ction for the USSR is based on the sum of the regional values of industrial output in 1965 and 1969.
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Table A-2
USSR: Regional Per Capita Values of National Income, Industrial 01 tput, and
Agricultural Production
11 Miles
National Income ^ Industrial
1960 11169
Output,
1960 1969
Agrbniltural
Proo?o1 ion
1910 1960
Northwest. d
1,167
1,915
124
139
Center
1,185
1,961
176
219
(1entral (1liernozeni..
311
695
335
465
Volga-NlyatIca
653
1,387
217
280
Volga Valley .....
765
1,282
645
1,347
274
329
North (aticastis
600
1,074
300
313
1Jrals
930
1,797
203
239
West Siberbt.
621
1,230
288
298
East Siberia
594
1,239
210
223
Far East
737
1,383
99
117
Estimia
899
1,561
971
1,961
378
423
Latvia
940
1,590
933
1,915
34%
386
Lithuania
678
1,350
519
1,264
356
459
Belorussia
517
945
451
1,085
323
425
Ukraine
675
1,131
775
1,492
285
327
Moldavia
521
933
393
867
287
400
Georgia
484
741
522
906
144
174
Armenia
522
831
584
1,060
128
118
Azerbayilzhan
560
655
461
631
123
113
Iazalch
51.1
773
403
730
321
328
Xi rgiz
449
670
369
735
195
215
I.Jzbelc
460
574
354
484
241
226
l'adzhik
380
520
332
537
178
177
Turkmen
509
594
340
453
205
241
USSR
691
1,127
724
1,325
244
280
" Prices in 1958. The per capita data for national income shown here and in Table 1 of
the text were derived as follows. First, national income per capita for the USSR was
derived for 1965 by moving the 1958 value of national income forward by the appropriate
growth indexes and dividing by mid-year 1965 population (Narodnoye khozyitystvo SSSR v
1960 godu, p. 152 and Narodnoye khozyaystvo SSSR v 1969 godu p. 55%). Republican
data on national income per capita as a percent of the USSR in 1965 (at 1958 prices)
contained in Vedisheliev, op. cit., p. 82, were then applied to the USSR figure. From these
results, national income was dlrived for each republic in 1965, and the latter was moved
back to 1960 and forward to 1969 by the appropriate growth indexes (Narodnoye
khozyaystvo SSSR v 1969 godu, p. 55%). Finally, using mid-year population data (Table
A-3), per capita national income was calculated for each republic in 196)) and 1969.
b Prices in 1955. The per capita data for industrial output, shown here and in Table 1 of
the text, were derived from the gr,)ss value of industrial output for the USSR in 1960 at. 1955
prices (PromyshiennosP SSSR, Moscow, 1964, p. 3);), and the regional percentage shares
of this total figure (originally derived in Cook, P. K., "The Administration anti Distribu-
tion of Soviet Iadustry," in US Congress, Joint Economic Connnittee, Dimensions of
Soviet Econom1c ir'ower, Washington, 1962, pp. 704-732, and later adjusted for boundary
changes in Koropeckyj, "In(1ustrial Location Policy," op. cit., pp. 286-287).
n Prices in 1968. Data for agricultural production were derived as explained in footnote d
for Table A-1.
d Including Kaliningrad Oblast'.
34
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Table A-3
USSR: Mid-Year Population"
'Thousand Persons
196() 1965
Northwest ' 11,676 12,371
Center 25,936 26,584
Central Chernozein 7,848 7,968
Volga-Vyatka 8,290 8,290
Volga Valley 16,371 17,592
North Caucasus 12,080 13,340
Urals . . .. ........... 14,498 15,206
West Siberia 11,526 12,108
Elst Siberia 6,966 7,220
Far East 4,907 5,482
Estonia 1,215 1,279
Latvia 2,130 2,252
Lithuania 2,781 2,968
Belorussia 8,184 8,583
Ukraine 42,786 45,308
Moldavia 3.001 3,336
Georgia 4,161 4,515
Armenia 1,860 2,164
Azerbaydzhi .1 3,904
4,591
Kazekh 10,078
11,988
Kirgi,,. 2,185 2,610
Uzbek 8,564 10,350
Tadzhik 2,073 0.,528
Turkmen 1,598 1,888
USSR 214,318 230,521
? Derived from data reported in Narodnoye khozyaystvo
godu, p. 8; v 1964, p. 12; v 1968, P. 12; v 1969, p. 12; a
khozyoystvo RSFS11 v 1960 godu, pp. 34-37.
"Including Kaliningrad Oblast'.
1969
12,752
27,234
7,964
8.118
18,260
14,172
15,232
12,158
7,412
5,806
1,336
2,344
3,119
8,950
46,944
3,F.552
4,699
2,428
5,076
12,864
2,930
11,816
2,862
2,122
240,347
SSSR v 1960
ncl Narodnoye
Table A-4
USSR: Indexes of Growth of Man-Hours Worked per Year in Industry a
1960 = 100
1965
RSFSR 117.5
Estonia 126.5
Latvia 125.9
Lithuania 146.9
Belorussia 137.2
Ukraine 124.3
Moldavia 150.5
Georgia 121.6
Anei -lin 138.4
Azerbaydzhan 127.6
Kazakh 137.5
Kirgiz 138.1
Uzbek 132.3
Tadzhik 140.3
Turkmen 117.7
USSR 121.2
1969
140.0
146.6
153.7
203.1
189.9
155.6
216.0
149.7
195.3
146.4
192.8
192.9
164.2
181.7
140.6
147.9
' Based on employment data, days worked per man-year, and hours worked
per inan-day. These data were extracted from Trud v SSSR, pp. 40-70, 81,
and 173, and Narodnoye khozynystvo SSSR v 1960 godu, p. 645.
35
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36
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Table A-5
USSR: Indexes of Growth f Industrial Fixed Crpital Stock (End of Year)"
1960=100 "
1065
1969
USSR
169
234
IISFS11
167
229
Ukraine
164
225
Beloressia
210
(313) '
hiloldavitt
213
(317)
Lithuania
104
(308)
Latvia
177
(229)
Estonia
185
( 230)
Georgia
(143)
(195)
Azerbaydzhan
(168)
(242)
Armenia
185
(390)
Kazakh
(182)
(260)
Uzbek
186
(287)
Kirgiz
1C..7
(320)
Tadzhik
193
(385)
Turkmen
(178)
(284)
' Sources:
USSR: Narodnoye khozyaystvo SSSI1 v 1969 godu, p. 45.
RSFSR: Narodnoye khozyaystvo RSFSR v 1969 godu, p. 32.
Ukraine: Narodnoye khozynystvo Ukrainskoy SSR v 1969 godu, p. 48.
b.lorussia: NarocInoye khozynystvo BSSR v 1968 godu, p. 27.
Moldavia: Narodnoye khozynystvo Moldr vskoy SSR v 1968 godu, p. 17;
Sovetskaya Moldnviya k 50 letiyu Velikogo Oktynbrya, 1967, P. 23.
Lithuania: Ekonomika i katura Litovskoy SSR, 1967, p. 80; 1068,
p. 35; 1969, p. 117.
Latvia: Ekonomika i kurtura Sovetskoy Latvii, 1966, p. 35; Narodnoye
khozyaystvo Sovetskoy Latvii v 1968 godu, p. 46.
Estonia: Nnrodnoye khozyaystvo Estonsko: 6SR v 1969 godu, p. 44.
Armenia: Isnakyan, C.D., Osnovne fondy promyshlennosti Armyarskoy
SSR, 1970, p. 387.
Uzbekistan: Narodnoye khozynystvo Uzbekskoy SSR v 1967 godu, p. 26.
Kirgizia: Narodnoye khozynystvo Kirgizskoy SSR v 1967 godu, p. 11.
Tadzhik: Nnrodnoye khozynystvo Tatlzhikskoy SSR v 1.905 godu, p. 28.
b All indexes based on 1955 rubles.
All indexes in parentheses are estimated values derived by the perpetuat
inventory method as explained in the text of Appendix B.
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APPENDIX B
DISCUSSION OF STATISTICAL AND ANALYTICAL PROCEDURES
The Effect of Soviet Statisticrd Biascs on Interregional Comparisons
The statistical data on national income and indusHal output employed through-
out this paper h.. vi' been drawn exclusively from official Soviet sources and are
subject to the biases inherent in Soviet concepts and statistical practices. Although
the regional biases do not differ sufficiently to cause a significant change in the
relative po0.:on of the regions, some regional differences in statistical bias sti'l
exist. These differences and their probable effect On thc results of this paper
are discussed below.
National Income Data
In Soviet practice, national income reflects the total net product of the "pro-
ductive!" sectors of the economy. This differs from the Western concept of net
national product primarily in the exclusion of the service and government sectors
from the Soviet data. The exclusion of services very likely has resulted in the
underestimation of regional variations in per capita national income, since the
value of services per capita is considerably greater in the European areas of
the country than in the Central Asian and Transcaucasian republics."
Probably the greatest degree of regional variation in the bias of national irCOMC
data is due to the inclusion of turnover tax in the net product of indotry."' This
introduces different c:egrees of bias among the regions according to the branch
structure of industry ii each region, due to variations in the einount of turnove,
tax [..pplicd to differei.' products. For instance, in 1969 the turnover tax com-
ponent of wholesale prices averaged 4.2% in the branches of heavy industry and
22.1% in t;:,! branches of the light and food industri...-.."2 Thus, national income
could be subject to more ,Ipward bias in regions with a greater share of light
and food industries in their industrial structures. Neverthele.-, a comparison
of the relative positions of the union republics in terms of )er capita national
income in 1965, inclusive and exclusive of turnover tax,"" reveals that regional
variations in the bias resulting from inclusion of the turnover tax lo not sig-
nificantly change the ranking of the republics (see Table B-1), and have virtually
no effect on the findings of this pader, with respect to r!gional variations in the
level of per capita national income.
For example, the data given for personal services in SSSR v tsifrakli v 1970 godu, p. 227,
Indicates that the value of such services per cadita ranges from 11 rubles in Azerbaydzhan
and Uzbekistan to 27 rubles in Estonia.
" The turnover tax incidence is a result of budget practice rather than production relations,
and distribution of net products, by sector, including turnover tax distorts the actual situation.
Narodnoye khozvaystvo SSSR v 1969 godu, p. 191.
"Per capita national income data exclusiv2 of turnover tqx in 1965 were obtained from
Vedislichev, op. cit., p. 82.
37
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Table 11-1
ItSSR: Ranking of Republics, by Per C111)i11 National Income,
Inclusive and Exclusive ol Turnover 'Fax
/.965
1111.111!thrr (11 .1.11111()%'(.1 It \
IiIii,jv,nor, 1
I ,:iIi ia Est og
Hslonia La I v ia
ItsP'Sii
I I ,ithitallia
likraine
ISS II ilveragr t !Stilt Average
Moldm,fit oldav fit
Ilil ,russia
Aril vflin
( .1?09,;(11 Kazakh
Azerbilydzkoi :eorgia
Turkmen Kirgiz
Kirgiz
Kitzaldi Azerhay(lzhan
1171)1.1; Tirlourn
Tadzhik
Regional indexes of national income growth are also affected differently,
depending On the branch structure of industry in each region. Since the light
and food industries generally experience slower growth than heavy industry,
regions with a greater share of the former in their industrial structures will
naturally display slower growth rates of national income. The turnover tax
element in the net product of the light and food industries exaggerates the weight
of these branches and therefore causes an understatement of economic growth.
Nevertheless, the relative rates 01 industrial growth, by region, should not be
affected appreciably by the inclusion of the turnover tax.
In& alai Output Data
The sector defined as industry includes manufacturing (inclu(ling munitions),
mining, e'lectric power generation, lumbering, and fishing. The official production
indexes extracted from the statistical handbooks of the USSII and die
are indexes of gross indostr:al production ( valovaya prothild promyshlennose ).
These indexes represent the sum of the gross production of ill industrial enter-
prises, where the gross production of each enterprise is calculate by multiplying
the output of each product by its price (exchi(ling turnover taxes) as of a base
year. Only those product, produced by an enterprise solely for internal use in
the production of its primary products are excluded from the gross production
of an enterprise.'1
These indexes are subject to several defects when used to estimate growth.
Multiple weights will be assigihd to some industrial activities due to interindustry
transactions, and if those activities are growing faster than others that are les
heavily weighted, the index will be overestimated. To the extent that this occurs,
regions NVith relatively greater concentrations of technically related industries
(that is, the Europetu regions) may incur a relatively greater inflationary bias
in growth. Another defect is that the indexes are sensitive to changes in the
organizational structure of industry. As the degree of specialization increases,
" Narodnoye khozyaystvo SSSR v 1967 godu, p. C21.
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Illy number of independent esiterprEe:; and accounting units, and with them
the gross value of industrial proilliction, x'ill increase. Thus, increases in the gross
value of industrial production alter f9() may II) 5(1110 IxtIrIt III' lin'
111111III011 III I hr (1)11111.11N OF national economy and the relarn to die branch system
of administration.
The greatest inflationary defect of these indexes is probably the million by
which II('W 1)11011(.1S 11111ThIllred Plt() the ill(11ACS. New products and
modified or improved old ones are assigned prices ostensibly equivalent to prices
that would (Aisle(' in the base year. In practice this has usually meant
the initial wait cost of production, which is generally %,ery high and includes
Thiti prar:Ire, C011pird WWI the tendency Of low
products to glOW 11101` rapidly in output than 01(1V1 011eti, may CIIIISC greater
inflation of the growth rates of industrial production in I: European regions
of the country where conditions are ininv condtic.,;! to the introduction of ne?v
products.
There is little doubt that some of the regional variations in both the level
and growth of per capita industrial output are attributable to (lie problems
discussed above. However, the regional variations ill industrial production seen)
far too grelit to be explained predominantly by variations in statistical bias.
Derivation of Industrial Inputs and Combined Factor Productivity
The Input Series
Perhaps the most seri( 015 ch,ficiency in the analysis is the lack of adequate
regional data on factor inputs other than labor awl capital. There does not
ar;war to be any tractable method of imputing inputs from other sectors, par-
ticularly agriculture, to the industrial sector on a regional basis. Although a
fairly detailed input-m(1,91: table exists for the country as a w hole, there is no
reason to expect that the coefficients would realistically represent the techniques
of individual regions, and use of these coerficients would probably comimund
the existing margin of error.
Indexes of labor services
The indexes of labor inputs are based on published Soviet data: the average
annual number of wage earners and ,ilaried personnel in industry, the average
number of days worked per man-year in industry, and the average number of
hours worked pVI' man-day. Data on hours worked per man-day 111(1 days worked
per man-year are available only for the USSR as a whole and had to be assumed
relevant for each region. To the extent that this assumption is violated, the indexes
of labor inputs are not fully comparable with those of output. Another problem
of matching the coverage of inputs and outputs occurs in the labor series because
of the exclusion of industrial workers participating in minor industrial production
activities on collective farms whose output is included in the indexes of industrial
production.
Indexes of industrial gross fixed capital stock
Data on the growth of imlustrial gross fixed capital stock, by union republic,
were obtained both directly from Soviet statistical sources and ind;rectly from
Trud v SSS11, Moscow, 1968, p. 81,
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esliniatcs 1111 nible value of industrial gross fixed eapitpl sto-1; derived by the
perpetual inventory melhod.3" Conceptually, those indexes are less desirable
as stirrogates tor the growth Of capital services Orni indexes of average annual
gross fixed capital stock would be, since the irdexes presented here represent
stock as of the end of the year. However, ill Oil IlbSOICV finll data on the
annual ruble value of industrial gross fixed capital, by republic, Ii iii \Ville))
ill(IPX('S Of aVrragr Minna, I.VOSS fixed ShWk C0111(1 la, derived, the end-of-
year indexes represent a feasible alternative for indicating the relative order
of magnitude in the growth of capital services among the union republics. The
growth indexes of industrial gross fixed capital stock for 1965 and 1069 (with
1960 as the base year) are presented in Table A-5. Those in parenthe,ws
represent values estimated by the perpt tual inventory method.
Four basic steps were followed in obtaining the estimated indexes. First,
estimates of the ruble value of industrial gross fixer' capital stock at the end nf
19t20 were ch,rived as slg)wn in Table 11-2. For cacti republic except Georgia,
An,rbaydzlian, Kazakhstan, and TurklIWIlia this value was moved forward by
the reported growth index to the most recent year for which the index was given.
The perpetual in nwthod was then appli(,d for the remaining years to
obtain a ruble value of industrial gross fixed capital stock at the end of 1969.
No growth indexes were available for Georgia, Azerbaydzhan, Kazakhstan,
and Turkmenia, so the perpetual inveAtory method had to be used for all years.
Because republic data on the changes in unfinished construction were not
available, the perpi tual inventory method tends to overstate somewhat the
growth of industrial fixed capital stock e1l:.1) year. The stock of unfinished con-
struction typically grows faster than total investment. Thus, when the values of
industrial fixed cPpital stock were sumrded for all republics at the end of 1965,
they totaled 152.24 binion rubles, or 2.24 billion rubles more than the reported
total for the USSR. On the assumption that the reported growtl: indexes for the
other 11 republics were accurate, this error was attributed selely to the estimating
procedure, and the four estimated values for 1965 were adju.:ted proportionally to
add to the difference between the sum of the 11 republics for which data were
reported and the total for the USSR. Starting from :hose adjusted values, the
porpetual inventory method was again applied through 1969. The sum of all
republic values at the end of 1069 was 211.33 billion rubles,--_)r 3.33 billion rubles
over the reported total for the USSR. Therefore, the esthr ated values were ad-
justed as before, md indexes of growth were then calculated from ratios of the
adjusted values t ) the 1960 values.
In addition to the lack of data on changes in tinfini.iied construction men-
tioned above, two other factors associated with the perpetual inventory method
may have affected the accuracy of the estimates. Since retirement rates for
industrial fixed capital stock, by republic, were not available, the all-union retire-
ment rates were applied to the values of industrial gross fixed capital stock
of each repnblic. Second, :ndustrial investment data for some republics (and
The perpetual inventory method can be expressed as follows:
S1?[(S1) . (R,)]+I=Sw
where
St=Gross fixed capital stock at the beginning of the year t.
Rt= Bate of retirements in the year t.
Investment during the year t.
St.i_i=Gross fixed capital stock at the beginning of the year t+1.
40
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