ESTIMATED SOVIET DEFENSE EXPENDITURES, 1965-1984

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87T01145R000100050006-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 25
• Document Creation Date: December 22, 2016
• Document Release Date: August 1, 2011
• Sequence Number: 6
• Content Type: REPORT

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Estimated Soviet Defense Expenditures, 1965-1984
Reference Aid
Juiy 1986
This reference aid was prepared by
base support was provided by
the Defense and Economics Issues Group.
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Estimated Soviet Defense Expenditures, 1965-1984
Summary
Information available as of 18 March 1986 was used in this report.
Measured in constant 1982 prices, Soviet spending for defense increased from
about 60 billion rubles in 1965 to nearly 110 billion rubles in 1984. Growth in Soviet
defense spending in this period roughly paralleled that of Soviet Gross National Product
(GNP), averaging almost 5 percent a year from 1965 until the mid-1970s, then slowing to
an annual average of less than 2 percent through 1984.1 The share of Soviet GNP allo-
cated to defense remained roughly constant--at about 15 percent--throughout the
twenty-year period.
Procurement expenditures--which historically have accounted for about half of
total Soviet defense spending--grew at an average of over 5 percent a year during the
late 1960s and early 1970s. We estimate that there has been little growth in procure-
ment since the mid-1970s, and that in the early 1980s procurement expenditures have
declined by nearly 1 percent each year, reflecting decreased military purchases of ships,
missiles, and aircraft. Procurement expenditures in 1984 were nearly the same as in
We calculate growth rates by determining the annual percent changes in the data and
then taking the arithmetic mean of those changes. The resulting average annual
rates of growth are slightly higher than the compound growth would be. We prefer
the annual change method because it takes into account all of the year-to-year
changes rather than just the difference between the first and last years.
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Although procurement expenditures have leveled off, total defense spending has
continued to grow because of increasing expenditures for research, development, test-
ing, and evaluation (RDT&E) and operations and maintenance (O&M). We estimate that
spending for both of these categories has increased at an average annual rate of 4-5
percent since 1965.
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Scope Note
The purpose of this reference aid is to provide CIA analysts and managers with a
summary of SOVA's estimates of Soviet defense expenditures.
This report marks the first de-
ti-year effort to move from 1970 constant rubles to a more current price base.
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Between 1965 and 1984, the Soviets spent about 1.75 trillion rubles on
defense activities and programs. Total Soviet defense spending grew at an av-
erage annual rate of 1-2 percent during the 10th and 11th FYPs--1976-80 and
1981-85--compared to a rate of 4-5 percent annually during the 8th and 9th
FYPs--1966-70 and 1971-75.
Throughout the period, total Soviet defense spending remained roughly
in step with overall growth in the economy. As a result, between 1965 and
1984, Soviet defense spending accounted for a roughly constant 15 percent of
GNP2 (see Appendix I).
2 The estimates of Soviet defense expenditures are in established prices. To calculate
the share of GNP allocated to defense, we estimate both defense spending and GNP
at factor cost. In moving the estimates from established prices to factor cost, we at-
tempt to eliminate distortions in prices which can occur when they are set adminis-
tratively rather than by market forces.
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SOV1 ET DEFENSE E*EZ I TU S
1965-84
8 ! W ONS OF 1962 CONSTANT RISES
60 -
3
m 40
67 69 71 73 75 77 79 81 83 85
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Defense expenditures can be divided into spending for three principal re-
source categories: investment, operating, and research, development, testing,
and evaluation (RDT&E). Investment expenditures are those associated with
procurement and capital (major) repair of weapons and equipment--about 50
percent of total expenditures--and the construction of military facilities, which
accounts for 5 percent of the total. The operating category includes expendi-
tures for personnel--less than 15 percent of the total--as well as for the oper-
ations and maintenance (O&M) of current forces, which comprise approximately
15 percent of the total. RDT&E expenditures--also over 15 percent of the to-
tal--are those devoted to exploring new technologies, developing new weapons,
and improving existing weapons.
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D I STRIBJ11 ON OF SOVIET DEFENSE E EPD I TUBS BY RESOURCE CATEGORY
1965-84
1982 CONSTANT RUBES
to---
go-
80-
70
3D-
20-I
10-~
0
65 67 69 71 73 75 77 79 81
63 85
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Measured in constant 1982 prices, procurement expenditures totaled al-
most 900 billion rubles during the past two decades, increasing from about 30
billion rubles in 1965 to almost 50 billion rubles in 1984. Spending on procure-
ment grew at an average annual rate of 5 percent during the late 1960s and
early 1970s. Our estimate shows no growth of procurement since the
mid-1970s. The plateau in procurement reflects slow or negative growth in
spending for three major categories of weapons--ships, missiles, and aircraft.
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SOVI ET M I I I TARY PROC VENT END I TL FES
1965-84
B I W ONS OF 1982 CONSTANT RUBLES
67 69 71 73 75 77 79 81 83 85
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Soviet spending for procurement of military aircraft--which averaged
over a quarter of total procurement expenditures--rose during the late 1960s
and early 1970s. In the mid-1970s, aircraft procurement spending leveled off.
In the early 1980s, the Soviets began to deploy a new generation of tactical air-
craft. Although these aircraft are more expensive than their predecessors on a
per unit basis, the number procured each year has not been enough to increase
aircraft procurement spending.
Procurement of missiles also comprises over one-fourth of total pro-
curement spending. Missile procurement increased at an average of 6-7 per-
cent per year prior to 1975, but decreased at an average of almost 3 percent a
year after that.
Procurement of ships and boats--which accounts for over 10 percent of
total procurement spending--grew at an average of 5-6 percent per year during
1966-74, primarily as a result of Soviet naval modernization. After 1974, spend-
ing for procurement of ships and boats fell almost 1 percent annually.
Land arms procurement rose every year during 1966-84, averaging al-
most 10 percent of procurement expenditures. Especially high growth in
spending occurred prior to 1974.
Space expenditures, while a small percentage of the total, grew sharply
during the entire period. This growth boosted the space share of procurement
expenditures from under 10 percent in 1965 to over 15 percent in 1984.
We estimate that expenditures on the other procurement categories--
nuclear weapons, electronics, ammunition, and miscellaneous support equip-
ment--grew at approximately 3 percent annually during 1966-84. This catego-
ry's share of total defense spending remained fairly constant at approximately
15 percent.
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DISTRIBUTION OF SOVIET M I IJ TARY PROCL EN NT BY WEAPONS CATEGORY
1965-84
1982 CONSTANT RIB-ES
100-1
701 SIPS
60 SPAa
50
30
0
65 67 69 71 73 75 77 79 81 83 85
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Soviet expenditures on military construction fluctuated during the late
1960s and early 1970s, with average increases of 7 percent a year during
1966-70 and average decreases of 5 to 6 percent a year during 1971-73. After
1974, spending for military construction increased at an average annual rate of
approximately 2 percent.
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65 67 69 71 73 75 77 79 61 83 85
SOV1 ET M I U TARY CCNSTRJCTI ON DP DO I TI,t S
1965--84
B I LLI CNS OF 1982 CONSTANT RUBLES
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The growth in military personnel expenditures paralleled the growth in
military manpower during 1966-84, both averaging slightly over 2 percent each
year (see Appendix II). There was faster growth during 1966-71--about 4 per-
cent per year on average. Average annual growth since the early 1970s is esti-
mated to have been considerably slower--about 1-2 percent.
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SOVI ET M I U TARP Puts 1 D MC I TUBS
1965-84
BI W OAS OF 1982 CONSTANT R1...5
0
65 67 69 71 73 75 77 79 81 83 85
SOVIET MILITARY MANPOWER
1965-84
THOUSANDS OF MEN
1000
65 67 69 71 73 75 77 79 81 63 85
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In 1984, the Soviets spent over 15 billion rubles to operate and maintain
the armed forces. Since 1965, these costs have been increasing at 4-5 percent
annually, a substantially higher rate of growth than estimated for personnel
costs. This trend is a result of the cautious Soviet approach to maintenance--
repairing weapons on a regular schedule, rather than waiting until they break--
and the increasing complexity of the advanced weapons the Soviets have de-
ployed.
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SOVIET M I U T A R Y O&M E X P D OIT U E S
1965-84
B I LU CNS CF 9982 CONSTANT RUBLES
16
14
12-I
10 -i
0
65 67 69 71 73 75 77 79 81 83 85
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we estimate that Soviet expenditures
for military RDT&E, measured in 1982 prices, rose from 9 billion rubles in 1965
to 22 billion rubles in 1984, an average annual growth rate of 4-5 percent.F-
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SOVIET N I U TARY RDT&E DO:IEfC i TLS
1965-84
B I W ONS OF 1982 CONSTANT RIJBi..ES
R
3
0
? 65 67 69 71 73 75 77 79 81 63 85
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The Soviet armed forces are organized into five services--Ground Forces,
Air Forces, Naval Forces, National Air Defense Forces (PVO), and Strategic Rocket
Forces (SRF). Our direct-costing approach enables us to estimate the allocation of
much of defense spending among these services.
RDT&E has been excluded from this discussion and
the command and support functions and the space program have been assigned to
a residual category. The Soviet reorganization of Air Force and PVO units compli-
cates the presentation of these data. Still, we believe that we have a reasonable
appreciation of the allocation of investment and operating resources between
these two services.
? Expenditures for the Air Force consistently accounted for nearly one-fifth of
total investment and operating expenditures. Spending on this service lev--
eled off after the mid-1970s, after growing at an average of about 5 percent
per year during the previous ten years.
? The Ground Forces are the quickest and steadiest growing of all the services,
averaging expenditure growth of 3-4 percent per year during 1966-84 and
growing both before and after the mid-1970s. As a result, the share of total
military operating and investment expenditures increased slightly during this
period, exceeding one-fifth of total operating and investment expenditures in
1984.
? Investment and operating expenditures for the Soviet Navy comprised a fairly
constant one-fifth of such spending for the military services from 1965-74.
Expenditures for procurement accounted for almost three-fourths of this
amount. As procurement declined in the late 1970s and early 1980s, the
Navy's share of total spending dropped, falling to 12 percent in 1984.
? The PVO's share of total investment and operating expenditures averaged
over 10 percent, but declined slightly during 1965-84. PVO spending exhibit-
ed the slowest growth of all the services--for 1966-84, growth averaged less
than 1 percent per year.
? Spending for the SRF averaged less than ten percent of investment and op-
erating spending during 1966-84. Spending for this service was the most
volatile--the share fluctuated between 6 and 12 percent--because of the
cyclical nature of missile procurement. From 1979 to 1984, SRF procurement
spending plummeted over 50 percent, causing total SRF spending to decline
almost as much.
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D I STR I BUT1ON OF SOVIET M I U TARY I NVESTNENT AND
OPErRAT1 NG EXPE D I T U S BY SERVICE
1965-84
1982 CONSTANT RUES
100
90
eo
70
STRArEGIC ITT FOXES
60 AIR CEFB6E F>QiCES
50
t4AA1_ R S
4
3D -
GqD" FoFiK.ES
20 -
ID -
NR FEES
0
65 67 69 71 73 75 77 79 81 83
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Soviet Defense Expenditures
Ruble Rules, Broad Definition
Established and Factor Cost Adjusted Prices*
Billions of 1982 Constant Rubles
Procurement 30.8
31.7
35.0
38.1
41.3
41.2
40.9
40.5
44.9
48.2
49.1
49.6
49.9
50.0
50.2
51.1
49.8
49.0
49.4
48.9
RDT&E 9.3
10.0
10.2
9.9
10.3
11.5
12.4
12.7
13.7
14.1
14.7
15.2
15.5
16.6
17.0
18.3
18.7
19.6
20.7
22.1
O&M 7.9
8.1
8.6
9.4
10.1
10.6
11.3
11.8
12.6
13.0
13.5
14.2
14.6
15.0
15.4
15.7
16.2
17.0
17.4
17.7
Personnel 8.5
8.8
9.3
9.7
10.0
10.4
10.8
11.1
11.2
11.4
11.6
11.7
11.8
12.0
12.3
12.5
12.7
13.1
13.2
13.3
Construction 3.4
3.1
3.8
4.3
4.3
4.6
4.6
4.3
3.9
4.0
4.0
4.1
4.1
4.3
4.4
4.5
4.4
4.6
4.6
4.8
Total, Estab- 59.9
lished Prices
61.8
66.9
71.5
76.1
78.3
79.9
80.3
86.2
90.7
92.8
94.8
95.9
97.9
99.4
102.2
101.8
103.3
105.2
106.7
Total, Factor 61.3
63.2
68.4
73.0
77.7
80.1
81.8
82.1
88.2
92.7
94.9
97.0
98.2
100.3
101.8
104.9
104.5
106.1
108.2
109.9
Cost Adjusted
Prices
CD
GNP 416.1
436.7
455.2
481.9
489.4
529.1
545.5
549.7
594.0
611.6
615.5
646.2
663.3
684.3
683.0
689.6
700.9
719.7
745.0
756.5
Defense 0.147
Share of GNP
0.145
0.150
0.152
0.159
0.151
0.150
0.149
0.148
0.152
0.154
0.150
0.148
0.147
0.149
0.152
0.149
0.147
0.145
0.145
* Ruble Rules. The SCAM database provides output in SCAM rules, which do not reflect what we believe are Soviet accounting
practices. The Soviets record capital repair costs as investment rather than operating expenses. Therefore, we adjust the SCAM
estimates to "ruble rules" by including one-half of weapons maintenance--capital repair--in procurement and one-half of facilities
maintenance in construction.
Broad Definition. We estimate Soviet defense spending using both a broad and a narrow definition. The narrow definition--used in
our dollar estimates--corresponds to the definition of defense used in the United States. For our ruble estimates we use the broad
definition, which includes additional costs the Soviets are likely to classify as spending for defense. These additional costs
include expenditures for internal security troops, certain civil defense activities, and space programs that are operated by the
military in the USSR but by the National Aeronautics and Space Administration in the United States.
Established Prices. Our estimates are calculated in established prices which we believe are representative of the Ministry of
Defense outlays for goods and services, adjusted to reflect ruble prices of 1982. The prices are established administratively, not
by market forces, and are often inaccurate reflections of the relative scarcity and value of goods and services within the country.
Factor Cost. To calculate the share of GNP allocated to defense, we estimate both defense spending and GNP at factor cost. In
moving the estimates from established prices to factor cost, we are attempting to eliminate distortions in these prices which can
occur when they are set administratively rather than by market forces. Turnover taxes, subsidies, widely different
profit-to-capital ratios and new product price inflation all push Soviet prices away from the theoretical standard--prices which
reflect the cost of the factors involved in making the product; hence the term "factor costing."
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Estimated Soviet Military Manpower Totals
Broad Definition*
Thousands of Men
Total 4094 4271 4488 4770 4936 5097 5243 5376 5464 5555 5643 5719 5744 5789 5852 5932 5980 6034 6045 6073
Manpower
* Broad Definition. Manpower levels estimated using a broad definition exceed those in a narrow--dollar cost--definition by the
number of personnel in construction, railroad and internal security (MVD) troops.
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