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Estimating the Size
of the
Soviet Economy
Summary of a Meeting
Michael Alexcev and Lee Walker, editors
Commission on Behavioral and Social Sciences and Education
Office of International Affairs
National Research Council
National Academy Press
Washington, D.C. 1991
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NOTICE: The project that is the subject of this report was approved by the Governing Board
of the National Research Council, whose members are drawn from the councils of the
National Academy of Sciences, the National Academy of Engineering, and the Institute of
Medicine. The members of the committee responsible for the report were chosen for their
special competencies and with regard for appropriate balance.
This report has been reviewed by a group other than the authors according to procedures
approved by a Report Review Committee consisting of members of the National Academy of
Sciences, the National Academy of Engineering, and the Institute of Medicine.
The National Academy of Sciences is a private, nonprofit, self-perpetuating society of
distinguished scholars engaged in scientific and engineering research, dedicated to the
furtherance of science and technology and to their use for the general welfare. Upon the
authority of the charter granted to it by the Congress in 1863, the Academy has a mandate
that requires it to advise the federal government on scientific and technical matters. Dr.
Frank Press is president of the National Academy of Sciences.
The National Academy of Engineering was established in 1964, under the charter of the
National Academy of Sciences, as a parallel organization of outstanding engineers. It is
autonomous in its administration and in the selection of its members, sharing with the
National Academy of Sciences the responsibility for advising the federal government. The
National Academy of Engineering also sponsors engineering programs aimed at meeting
national needs, encourages education and research, and recognizes the superior achievements
of engineers. Dr. Robert M. White is president of the National Academy of Engineering.
The Institute of Medicine was established in 1970 by the National Academy of Sciences
to secure the services of eminent members of appropriate professions in the examination of
policy matters pertaining to the health of the public. The Institute acts under the
responsibility given to the National Academy of Sciences by its congressional charter to be an
adviser to the federal government and, upon its own initiative, to identify issues of medical
care, research, and education. Dr. Samuel O. Thier is president of the Institute of Medicine.
The National Research Council was organized by the National Academy of Sciences in
1916 to associate the broad community of science and technology with the Academy's
purposes of furthering knowledge and advising the federal government. Functioning in
accordance with general policies determined by the Academy, the Council has become the
principal operating agency of both the National Academy of Sciences and the National
Academy of Engineering in providing services to the government, the public, and the scientific
and engineering communities. The Council is administered jointly by both Academies and the
Institute of Medicine. Dr. Frank Press and Dr. Robert M. White are chairman and vice
chairman, respectively, of the National Research Council.
Library of Congress Catalog Card No. 91-061282
Additional copies of this report are available from:
Commission on Behavioral and Social Sciences and Education
National Research Council
2101 Constitution Avenue N.W.
Washington, D.C. 20418
Printed in the United States of America
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Participants
LAWRENCE KLEIN, Chair, Department of Economics, University of
Pennsylvania
VLADIMIR TREML, Consultant, Department of Economics, Duke
University
MICHAEL ALEXEEV, Rapporteur, Department of Economics, George
Mason University
ABRAHAM BECKER, Rand Corporation, Santa Monica, California
ABRAM BERGSON, Department of Economics, Harvard University
IGOR BIRMAN, Soviet economic analyst, Silver Spring, Maryland
ROBERT CAMPBELL, Department of Economics, Indiana University
RICHARD ERICSON, Department of Economics, Columbia University
GREGORY GROSSMAN, Department of Economics, University of
California, Berkeley
FRANKLYN HOLZMAN, Department of Economics, Tufts University
RICHARD JUDY, Hudson Institute, Indianapolis, Indiana
RICHARD KAUFMAN, Joint Economic Committee, U.S. Congress
VLADIMIR KONTOROVICH, Department of Economics, Haverford
College
BARRY KOSTINSKY, Bureau of the Census, U.S. Department of
Commerce
WILLIAM LEE, Industrial Resources and Production Division, Defense
Intelligence Agency
NORBERT MICHAUD, Economic Affairs Section, Defense Intelligence
Agency
JAMES NOREN, Office of Soviet Analysis, Central Intelligence Agency
GUR OFER, Department of Economics, Hebrew University
GERTRUDE SCHROEDER, Department of Economics, University of
Virginia
DMITRI STEINBERG, Intelligent Decision Systems, Berkeley,
California
. . .
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COMMISSION ON BEHAVIORAL AND SOCIAL SCIENCES
AND EDUCATION
ROBERT McC. ADAMS (Chair), Smithsonian Institution, Washington,
D.C.
ANN L. BROWN, University of California, Berkeley
DAVID K COHEN, Michigan State University
PHILIP E. CONVERSE, Center for Advanced Study in the Behavioral
Sciences, Stanford, Calif.
ARTHUR S. GOLDBERGER, University of Wisconsin
ROBERT M. HAWSER, University of Wisconsin
JOSEPH B. KADANE, Carnegie Mellon University
EDWARD O. LAUMANN, University of Chicago
ALVIN M. LIBERMAN, Haskins Laboratories, New Haven, Conn.
STEWART MACAULAY, University of Wisconsin Law School
DANIEL McFADDEN, Massachusetts Institute of Technology
DAVID MECHANIC, Rutgers University
WILLIAM ~ MORRILL, Mathtech, Inc., Princeton, N.J.
FRANKLIN D. RAINES, Lazard Freres, New York
W. RICHARD SCOTT, Stanford University
JEROME E. SINGER, Uniformed Services University of the Health
Sciences
JOHN ~ SWETS, BEN Laboratories Incorporated, Cambridge, Mass.
RICHARD F. THOMPSON, University of Southern California
DAVID A. WISE, Harvard University and National Bureau of
Economic Research, Cambridge, Mass.
OFFICE OF INTERNATIONAL AFFAIRS
EXECUTIVE COMMITTEE
JAMES WYNGAARDEN (Chair), Foreign Secretary, National Academy
of Sciences
GERALD DINNEEN, Foreign Secretary, National Academy of
_ . .
engineering
GLENN SCHWEITZER, Acting Executive Director, Office of
International Affairs
1V
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Foreword
At the request of Representative Lee Hamilton, Chair of the Joint
Economic Committee and Senator Jeff Bingaman, Chair of the Senate
Subcommittee on Technology and National Security, the National Research
Council (NRC) hosted a meeting on estimating the size of the Soviet
economy in the fall of 1990. The participants were asked to identify the
methodological factors that had produced radically divergent estimates, to
place the controversy in the context of what is known and knowable about
the Soviet economy, to advise U.S government agencies concerning the
relative reliability of these methodologies, and to assist them in better
understanding the strengths and weaknesses of the current estimating
methodology.
The NRC, under the aegis of the Commission on Behavioral and
Social Sciences and Education and the Office of International Affairs,
convened a panel of experts chaired by Lawrence Klein that included
specialists from academia, independent research institutions and
government agencies. These experts met in a series of plenary sessions
and small workshops over a 2-day period and presented their findings to
representatives of the larger specialist community on the final afternoon.
Despite the severe time constraint and the broad range of opinion repre-
sented on the panel, the participants made significant strides at this
meeting in terms of defining the controversy, determining the central
factors at issue in the dispute, gauging the impact of these factors on the
estimates, and identifying areas where methodological improvements were
needed.
The NRC considers that a summary of these discussions will be of
value to members of the government, specialists in the field, and those
with broad interests in the fields of Soviet and comparative economics.
We express our appreciation to Vladimir Treml, who served as the
principal consultant on the project, Michael Alexeev, who prepared the
report, and Lee Walker, who organized the meeting and coedited the
proceedings.
Robert McC. Adams, Chair
Commission on Behavioral and Social
Sciences and Education
v
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Contents
MEETING SESSIONS
Introduction, 1
Session I: Theoretical Foundations of Current Methodology, 1
Session II: An Analysis of the Data Used in Estimating the
Size of the Soviet Economy, 4
Session III: Comparison and Critique of Alternative Methods of
Estimating the Size of the Soviet Economy, 7
MEETING WORKSHOPS
Workshop I: The Size of the Military-Industrial Sector, 13
Workshop II: Consumption and Services, 15
Workshop III: The Second Economy, 17
PLENARY SESSION
CONCLUSION
GLOSSARY
. .
V11
1
13
20
21
22
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