1982 622 2 Bergson

FINAL REPORT T O
EUROPEAN
COUNCIL
RESEARCH
NATIONAL
FOR SOVIET ANDEAS T
TITLE :
The Soviet Economy to th e

Year 2000 :
Paper 7 of 1 2
"SOVIET TECHNOLOGICAL PROGRESS :
TRENDS AND PROSPECT S "
AUTHOR :
CONTRACTOR :
Abram Bergson
The President and Fellows of Harvard Colleg e
PRINCIPAL INVESTIGATOR :
Abram Bergso n
COUNCIL CONTRACT NUMBER :
622- 2
DATE :
February 2, 198 2
this report was supported in whole or i n

The work leading to
part from funds provided by the National Council for Sovie t
and East European Resarch
.
THE SOVIET ECONOMY TO THE YEAR 200 0

LIST OF PAPER S
Paper Number
Author
Titl e
Martin Weitzman
"Soviet Industrial Production "
Gertrude E . Schroeder "Consumption "
D . Gale Johnson
Edward Hewett
Robert Campbell
"Energy in the USSR to 2000 "
Joseph Berliner
"Planning and Management "
Abram Bergson
"Soviet Technological Progress :

Trends and Prospects "
Seweryn Bialer
"Politics and Priorities in th e

Soviet Union : Prospects fo r
the 1980s "
Douglas Diamond,
Lee W . Bettis ,
Robert Ramsso n
"Agricultural Production "
10
Leslie Dienes
"Regional Economic Development "
11
Murray Feshbach
"Population and Labor Force "
12
Daniel L . Bond and

Herbert Levine
"The Soviet Economy to th e

Year 2000 : An Overview"
"Agricultural Organization . an d
Management in Soviet Society :
Change and Constancy "
"The Foreign Sector in th e
Soviet Economy : Development s
Since 1960, and Possibilitie s
to the Year 2000 "
Soviet Technological Progress :

Trends and Prospect s
Summar y
Abram Bergso n
The paper distinguishes between two concepts of technological progress :

technological progress proper (TPP),representing in a restricted way th e
introduction and spread of new technologies enabling the community to in crease output at a given resource cost, and technological progres s
extended (TPE) . The latter embraces not only the foregoing causes of a n
increase in output at given resource cost but also others, such as incentiv e
reforms, amelioration of a historically distorted resource allocation ,
weather fluctuations, and so on .
The essay focuses primarily on TPP, but technologica l
progress of either sort should be manifest in corresponding variation s
in output per unit of factor inputs, or factor productivity, as such
coefficient has come to be called . For purposes of quantitative appraisal ,

therefore, I first compile data of a conventional sort on the growth o f
factor productivity . After allowing for changes in factor inputs no t
initially accounted for, I obtained measures of TPE . By adjustin g
additionally
for the impact of causal aspects other than the introductio n
and spread of new technologies, I also derived measures of TPP .

The initial computation of factor productivity is flawed by limitations in both underlying data and methodology, while further adjustment s
to derive TPE and then TPP are often conjectural at best . In the upshot ,
however, TPP is found to have generated these annual percentage increase s
in output per unit of factor inputs in material sectors of the Sovie t
economy :1950
60,2 .88 ;1960-70 .98 ; 1970-75, .16 .
Granting all th e
limitations of the computations, TPP probably has slowed to a relativel y

low tempo over the period studied .

Summar y
Abram Bergso n
The paper distinguishes between two concepts of technological progress :

technological progress proper (TPP),representing in a restricted way th e
introduction and spread of new technologies enabling the community to in crease output at a given resource cost, and technological progres s
The essay focuses primarily on TPP, but technologica l
in output per unit of factor inputs, or factor productivity, as such

therefore, I first compile data of a conventional sort on the growth o f
additionally
for the impact of causal aspects other than the introductio n

The initial computation of factor productivity
is
flawed by limi-
tations in both underlying data and methodology, while further adjustment s

economy :1950
60,2 .88 ;1960-70 .98 ; 1970-75, .16 .
Granting all th e

In respect of TPP, the Soviet performance appears to have bee n

within the range of Western experience, but inferior to that expecte d
of a Western country at a comparable stage of development .
As for the future, the past trends in TPP are seen to reflect ver y
diverse forces, including institutional reforms affecting R and D an d
innovation,
" catch up " opportunities, technological transfers, and so on .
We can only speculate as to the sum of these forces in future . A distinc t

acceleration is not precluded, but more likely advance will continue a t
a slow pace more or less comparable to that which has prevailed lately .
A negative rate of TPP, although imaginable, is presumably not among th e
contingencies to be seriously reckoned with .
Although TPE was derived primarily as an element in the computatio n

of TPP, it has an interest of its own . Given prospective TPP, th e
corresponding TPE now follows from a reversal of adjustments such a s
I made previously to derive TPP for the past years . In calculating TP P
for 1970-75, however, one of the adjustments made to TPE was an additio n
to allow for abnormal weather (Table 4) . In reversing the previou s
computation, no corresponding deduction from prospective TPP is now i n
order, so far as reference is to TPE in the long run .
By projection of past . . experience on that understanding, TPE migh t
be expected to exceed TPP by from 0 .4 to 0.5 of a percentage point . A large r
differential than that is possible in future, but that does not seem very likely
J.
Note that TPE was obtained in turn by deducting from facto r

productivity as initially computed ,
an allowance for labor qualit y
improvement due to educational advance .
I also added to factor pro-
ductivity as initially calculated an allowance for natural resourc e

exhaustion . Since the former adjustment exceeded the latter . facto r
productivity as initially computed exceeded TPE : by (0.2 to 0 .4 of a
percentage point .
In future, the educational quality of the labo r
force can change only slowly, but if the CIA is at all reliable on oil ,
natural resource exhaustion should be decidedly more costly to th e
USSR in the years ahead than it has been hitherto . The margin betwee n
these two aspects, .28
therefore, should dwindle if it does no tvanishloger
In considering the sources of past productivity growth I made n o

allowance for labor quality variation that may have occurred on accoun t
of the rapid increase experienced in consumption standards . Standard s
tended to increase practically throughout the period studied, but th e
gains over the low levels that prevailed under Stalin could have bee n
particularly favorable to worker morale and productivity in the earlie r
post-Stalian years . If they were, that would have been a furthe r
source of divergence of factor productivity as initially computed from TPE .
In any event, in appraising prospects we must consider that any marke d
deceleration in consumption standards might have an adverse impact o n
Hence, calculated productivity woul d
in consumption standard s
.
Such
a
deceleration/seems
a distinc t
be further depressed relatively to TPE
productivity growth in future .
possibility ,
In sum if my projection of TPP is not too far from the mark, the Russian s
should find it difficult in future to raise the rate of growth o f
calculated factor productivity much above the very modest tempo that ha s
30
_ore likely a decline from thi s
prevailed lately :, 91 percent yearly .
tempo is in prospect . I have now ventured well beyond TPP, the primar y
concern of this essay, and often into areas that are being explored i n
other contributions to this volume .
Even a very provisional appraisal ,
however, may facilitate juxtaposition of my results with related finding s

of others .
Content s
I.
II .
III .
IV .
V.
VT .
VII .
Productivity Growth
p.
Some Methodological Issues
p. 6
Productivity Growth and Technological Progress
p . 11
Technological Progress Proper
p . 15
Conditioning Factors : R and D versu s

Technological Borrowing
p . 23
Conditioning Factors : The Innovation Process
p.
Conclusions
p . 40
Notes
p . 47
Appendix :
Sources and Methods for Table 1
p. 58
Bibliography
p . 61
30

Abram Bergson
The aim of this volume is to appraise the future course of th e

Soviet economy . The aspect on which I focus, technological progress, i s
both central and, by its very nature, particularly conjectural, Perhap s
I can narrow the range of uncertainty by inquiring summarily into pas t
trends and the forces that have shaped them . Inquiry into these matter s
hopefully will provide
a basis for concluding speculation about futur e
prospects as to Soviet technological advance .

Technological progress has been understood variously . Traditionall y
reference has been to the introduction and spread of new production method s
that enable the community to increase output at a given resource cost .
The new production methods often involve use of new sorts of capita l
goods or physical processes, but other changes in production modes, suc h
as extension of the intra-factory specialization, are also envisaged .
Whatever their nature, the new methods enlarge the technologica l
" opportunity set " of a production unit, thus generating a larger output a t
the same resource cost .
Output may expand at given resource cost, however, not only through suc h
variations in production methods but in other ways ; for example, throug h
a reform in labor incentives . Lately technological progress has often bee n
understood to embrace such an institutional change as well . Indeed ,
reference has come to be made to output expansion at given resource cos t
on any and all accounts .
As between these two concepts of technological progress, the secon d

perhaps has an advantage, for, as not always considered, it is sometime s
difficult, even in principle, to delineate between the introduction an d
spread of new technologies and other causes of output expansion at give n
resource cost . Depending on the development stage, for example, amelioratio n
of a historically distorted resource allocation in the process of industrialization may be a significant source of increase in output at the sam e
resource cost . Such a gain is very often treated as a source of technologica l
progress apart from introduction and spread of new technologies . But a
resource transfer between, say, agriculture and industry such as in questio n
serves in effect to extend the scope of advanced production methods .
From that standpoint, ' it might be viewed as a form of technological diffusion ,
albeit of a rather indirect sort . True ; the advanced technologies applied ma y
not be especially novel in any period considered, but that may also b e
true of technologies where application is being extended more directl y
elsewhere in the economy .
I propose nevertheless to focus primarily on technological progres s
in its traditional and more limited sense . In fact, where a choice i s
open, I interpret the traditional concept less rather than more inclusively .
quantativel y
A principal concern, however, is to assess/the pace of technologica l
advance . In attempting that, it is difficult to do other than view suc h
progress, at least in the first instance, in a more inclusive way . Tha t
should be to the good, though, for technological progress in the inclusiv e
sense that has come lately into use is also of interest . Where th e
concept in question needs underlining, I refer to technological progres s
in the less inclusive sense relating to new production methods a s
technological progress proper (TPP) . and in the more inclusive sense, that
3.
embraces also other causes of output expansion at given resource cost, a s

technological progress extended (TPE) .
In either usage, the touchstone of advance is the increase i n
output at given resource cost . That, strictly speaking, still leaves open
the treatment to be accorded introduction of novel products for househol d
and other final consumption, and resulting gains in final user values at give n
resource cost . Although such gains are obviously to be included in an y
complete accounting for technological progress, the advance realize d
exclusive of such gains has an interest of its own . Western quantitativ e
research on technological progress has properly often focused on the mor e
limited concept . As rarely noted, how completely the statistica l
measures compiled do in fact exclude consumer ' s gains from new fina
. That is also an intricate matter that is
no t
lproductsiaheproblmtic
to be disposed of in this essay, but I compile measures for the USS R
of a sort usually compiled for Western countries . As will appear there ar e
reasons to at least be alert to the issue posed .
I
Productivity Growth
Technological progress from its very nature is manifest in productivit y

growth . An attempt to appraise the tempo of such progress, therefore ,
properly turns to that aspect . Measurement of productivity growth in a
way that is indicative of technological progress has generally proven t o
be a difficult task, and the USSR is no exception to that rule . But th e
increase of productivity can still serve as an illuminating benchmark . O f
particular interest are trends in factor productivity as indicated by the
4.
comparative growth of output and factor inputs . Such calculations hav e

by now often been made for the USSR, but it is best to approach th e
matter afresh here .
I have compiled data on Soviet factor productivity growth for th e
whole economy and for a somewhat less comprehensive sphere . To refe r
first to the measures for the whole economy, as indicated (Table 1) thes e
relate the growth of GNP to the growth of three major factor inputs, labor ,
capital and agricultural land . The calculations are made for most part i n
a usual way . Among other things, they entail imposition, on underlyin g
data on factor inputs and output, of a Cobb-Douglas production functio n
with assigned factor input coefficients and neutral technological progress . l
The calculations also yield more or less usual results for the perio d
studied : factor productivity growth, not especially rapid to begin with ,
slows in successive intervals--and indeed is negligible in the final perio d
considered .
This is not the place to reopen the perennial issue concerning th e
reliability of Western measures of real national output in the USSR, but i t
should be observed that Greenslade measures that I use are compiled i n
terms of ruble weights (depending on the level of aggregation, prices o r
factor cost) which generally relate to 1970 or a nearby year . For presen t
purposes, that is an appropriate weight year to consider in calculatin g
output growth for the latter part of the interval studied, but ther e
might be much to say for referring instead to a more nearly contemporar y
weight year when output growth
in earlier intervals is in question . Fo r
well-known reasons, such computations should yield higher growth rates than
Greenslade ' s for those intervals .
Table 1 .
Average Annual Rates of Increase, Output, Factor Inputs and Factor Productivity ,
USSR, 1950-75 a
(percent )
Material sector s
All sectors
1950-60
1960-70
1970-75
Gross product
5 .89
5 .26
3 .83
7 .55
Factor inputs, total
3 .95(3 .92)
3 .69(3 .75)
3 .72(3 .66)
3 .78(3 .72)
Labor
1 .16(1 .11)
1 .74(1 .84)
1 .79(1 .70)
Employment
1 .55(1 .30)
2 .08(2 .01)
Hours
- .38(- .19)
- .33(- .17)
Capital
9 .49
8 .00
Farm land
3 .33
.18
Factor productivity
1 .87(1 .90)
1 .51(1 .46)
1960-70
1950-60
1970-7 5
5 .53
3 .9 2
3 .63(3 .71)
3 .65(3 .56 )
.98( .90)
1 .28(1 .41)
1 .37(1 .25 )
1 .63(1 .60)
1 .43(1 .12)
1 .67(1 .60)
1 .17(1 .15 )
.16( .10)
- .44(- .22)
- .38(- .19)
.20( .10 )
7 .86
9 .47
9 .06
8 .7 3
1 .04
3 .33
.18
1 .0 4
.11( .16)
3 .63(3 .69)
'
1 .83(1 .75)
.26( .35)
a 0utput for all sectors is the gross national product, and for material sectors, the gros s
national product less the gross product (i .e ., net product plus depreciation)of housing and divers e
services, chiefly health care, education, science and repairs and personal care . Factor inputs are i n
each case of essentially the same scope as output .
Fixed capital is taken to represent capital generally, and the sown area to represent farm
land . On the parenthetic figures on employment and hours, and the corresponding data on factor input s
and productivity, see the text and Appendix . Factor inputs are aggregated by use of a Cobb-Dougla s
formula with these " earnin,-,share " weights : for all sectors, labor, .62, capital, .33, and for farm
land, .05 ; for material sectors, labor, .62, capital, .32, and farm land, .06 .
For
years since 1950, index number relativity in measure o f
aggregative
Soviet output appears to be quite modest, indeed so much so that i tis
hardly perceptible in some relevant data . 2
But the Greenslade serie s
probably does understate the retardation in output growth since the fifties .
There must also be a corresponding understatement of retardation in productivit y
growth as calculated from those data .
Inquires into the sources of Soviet post-war growth very ofte n

proceed without reference to penal labor . In view of the uncertai n
nature of both the numbers and quality of such workers, that is understandable, but, by all accounts, there was a substantial reduction in th e
penal labor force in the early port-Stalin years .
' Even though I mus t
resort to rather arbitrary figures, it seemed in order to explore th e

impact on my computations of an allowance of penal labor varying in thi s
way : 1950, 3 .5 millions ;
million .
1960, 1 .5 millions ; and 1970 and 1975, 1 . 0
In the table the parenthetic figures for employment ar e
obtained after addition of a penal labor force of these magnitudes .

I
also show parenthetically the impact on variations in workin g
hours of an allowance for changes in their quality . Although of

arule-ofthumbsort,healownceprobalydesnotdifervymuchfro m
that indicated by Denison ' s well-known, more careful procedures . Als o
shown
parenthetically is the joint effect of the allowances for
penal labor and changes in quality of hours on the rates of growth o f

labor and factor inputs and factor productivity .
of factor productivity growth ,
Turning to the less comprehensive measures/I refer here to the whol e
economy less housing and diverse services . For the " material" sector s
that thus remain, productivity varies broadly as for the whole economy ,
but the initial tempo is much higher than before, so the overall deceleratio n
is more marked than previously .
I use essentially the same procedures for material sectors as fo r
the whole economy, and also the same sorts of data . That means that fo r
output I again rely on Greenslade's calculations in 1970 rubles, so th e
slowdown in factor productivity growth should again be somewhat understated .
The allowance for penal labor that was made previously is assigned entirel y
to material sectors . Hence, it has & more pronounced effect here than
for the whole economy .
II
Some Methodological Issue s
I have been referring to calculations where,to repeat,a Cobb-Dougla s

production function with assigned factor input coefficients is imposed o n
factor inputs and output . Given that production function, the elasticit y
of substitution ( ) between factor inputs is unity . Concerning th e
production function of the USSR in post-World War II years, there hav e
been a number of econometric inquiries . The different inquiries do no t
seem to converge to any clear and reliable consensus on either th e
general form of the production function or the magnitudes of parameter s
that are presupposed (see Bergson, 1979) . The econometric studies do
alert us, however, to diverse possibilities in those respects .

It is of interest, therefore that if,in place of the Cobb-Dougla s
formula, we impose a CES production function with
equal to, say, 0 .5 ,
the trends in factor productivity for the whole economy are somewha t
changed . The tempo remains modest, indeed for years prior to 1960 it i s
distinctly lower than before (see Table 2, columns for which =
.12) .
As a result the sixties now bring some acceleration, but the tempo agai n
slows in the seventies . For material sectors, with the shift to = .5 ,
the earliest tempo is likewise much reduced, but remains relatively high ,
3
so that growth decelerates over the whole period as before .
Judging from the econometric inquiries,
= 0 .5 is within th e
realm of possibilities . An even lower elasticity has sometimes bee n

observed . As it turns out, however, 'even
= 0 .5 implies a notabl y
high factor share and rate of return for capital in early years . If onl y
on that account, results of the econometric inquiries perhaps may properl y
be discounted at this point . 4
Factor input coefficients in the Cobb-Douglas formula are supposedl y
given by income shares that are imputable to the factors when earning s
rates correspond to relative marginal productivities . In the CE S
formula, a similar correspondence is supposed to obtain between facto r
input coefficients that appear there and such imputable income shares i n
the base year . In applying both formulas here, I obtain the neede d
coefficients from income shares indicated when the rate of return o n
capital is 12 percent . That was usually the lower limit allowed,in a
1969 Soviet official methodological release, for "normative coefficient s "
for appraisal of investment projects (Gosplan USSR
et . al ., 1969) .
7a
Table 2 . Alternative Computations of Average Annual Percentage Rate of Growth ,

Factor Productivity, USSR 1950-70, for Alternative Elasticties o f
Substitution () and Rates of Return on Capital ( )
Percentage rate of growth o f

factor productivit y
Period
= 1.0; = .12
5=
0 .5 ; = .12
= 1 .0 ; p = .06
= 0 .5 ;F= 0 . 6
All sector s
1950-60
1 .87
.01
2 .66
.8 7
1960-70
1 .51
1 .12
2 .14
1 .73
1970-75
.11
.32
.70
.81
Material sector s
1950-60
3 .63
1 .40
4 .47
2 .38
1960-70
1 .83
1 .14
2 .59
2 .00
1970-75
.26
.50
.94
1 .11
How closely actual returns might have approximated that limit, however ,
is an interesting question .
Here too, therefore, experimentation with alternative assumptions i s
in order . For this purpose, I consider a possible reduction in th e
postulated rate of return on capital to 6 percent . With that, as was t o
be expected,, factor productivity grows somewhat more rapidly, but th e
variation in tempo over time is essentially as before (in Table 2, compar e
columns for/ = .12 and .06) . These results hold for both the whol e
economy and material sectors .
Farm land in the USSR is publicly-owned but made available withou t
charge to those who till it.5 Here too the needed earnings share i s
imputed rather arbitrarily, but I take as a benchmark Western, especiall y
U .S .,experience . Unless the resulting share (5 percent of the GNP an d
6 percent of gross material product) is implausibly wide of the mark ,
any error at this point could only affect our results very marginally . 6
Factor productivity growth during 1970-75 is found to be especiall y
slow . That is true regardless of the computation, although with
as
low as .5 the all-sector tempo during 1950-60 is even lower than that fo r
1970-75 . For present purposes, the most recent Soviet performance is o f
particular interest, but the interval 1970-75 is a very brief and somewha t
dated one from which to gauge any enduring trends . The terminal year o f
that interval was marked by a harvest failure that was severe even b y
Soviet standards . For that reason too the 1970-75 tempo is difficul t
to interpret . It should be observed, therefore, that the recent growt h
of factor productivity continues to be depressed, though not as much a s
before, when we refer to decadal periods terminating in very recent years
9.
(Table 3) .
A tendency towards further retardation is also evident a s
the interval considered advances .

In trying to gain perspective on future prospects as to technologica l
progress in the USSR, one might wish to know about trends in factor productivity there not only in post-WW II years but in earlier times . O f
particular interest is the pre-WW II peacetime interval that commence d
with the initiation of the First Five-Year Plan in 1928 . Unfortunately ,
the violent shifts in economic structure that this program initiated ha d
a statistical corrolary that bedevils any attempt at incisive appraisa l
of trends such as in question . I refer, of course, to the extrem e
relativity of aggregative measures of performance to the valuation yea r
considered . There are reasons nevertheless to discount the high rate s
of growth of factor productivity that one obtains when valuation is i n
" early " ruble prices . If that is done, the 1928-40 performance may no t
have been much superior to that of the fifties . Possibly it was inferio r
to the latter (see Bergson, 1978--C, pp . 117ff ; p . 168, n . 21) .
To return to the post-WW II years, I more or less implied that productivity growth in the USSR has been undistinguished by Western standards .
Although the concern of this essay is with Soviet technological progress ,
comparison with Western experience can put Soviet trends in perspective .
Hence, it should be observed that in respect of productivity growth suc h
a comparison is in fact unfavorable to the USSR . The Soviet performanc e
falls within the range of Western experience, but in the West the rate o f
productivity growth since WW II has tended to vary inversely with th e
stage of economic development as manifest by one or another conventiona l
indicator (the level of output per worker, GNP per capita, and the like) .
Table 3 . Average Annual Rate of Growth of Factor Productivity, USSR, Selecte d

Period s
(Percent )
Period
Al l
sectors
Materia l
sector s
1950-60
1 .87
3 .6 3
1960-70
1 .51
1 .83
1965-75
.94
1 .3 2
1966-76
.86
1 .22
1967-77
.76
1 .12
1968-78
.57
.91
aThe calculations proceed essentially as in Table 1 . Additiona l

data for 1965-68, for output and employment, from sources of correspondin g
data in Table 1, armed forces being taken as constant at 1965 level . Fo r
capital stock and farm land, see TSU (1968, p . 61 ; 1969, p . 334 ; 197 0
p . 45) . For 1976-78, for often rough extrapolations from 1975, I rel y
mainly on data in CIA (Aug . 1979, pp . 64-65) ; Feshbach (1978) ; TSU (1978 ,
pp . 40-41, 224) .
For well-known reasons relating to " advantages of backwardness , " such a n

inverse relation is not at all surprising .
If as seems in order, then, we allow for the
Sovie t
development stage, we find the Soviet performance in regard to productivit y

growth sub-standard . Over protracted post-WW II periods, the Soviet temp o
surpasses those of the United States and United Kingdom, two relativel y
advanced countries, but falls short of those of
Italy and Japan . Bot h
the latter countries were, midway through the interval in question, a t

development stages more or less comparable to that of the USSR . The USS R
also underperforms in comparison with two more advanced countries ,
Western Germany and France . Here are data on the annual percentage growt h
of output per unit
of inputs during
1955-70 that are broadly comparabl e
to those for the whole economy in Table 1 : USSR, 2 .4 ; USA, 1 .6 ; France ,

3 .9 ; Germany, 3 .4 ;
United
Kingdom, 1 .8 ; Italy, 4 .4 ; Japan, 5 .9
(Bergson ,
1978-C, chs . 9-11 ; also Bergson, 1968 ; Cohn, March 1976) . These results res t
on use of the Cobb-Douglas formula with a 12 percent return imputed to Sovie t
capital, but the Soviet performance is still undistinguished when alternativ e
methodologies are employed (Bergson, 1979) .
I have been considering productivity growth In the USSR both fo r
the economy as a whole and material sectors .
Western productivit y
research has very often focused on the first of these two spheres, but ,
for familiar reasons revolving about the conventional practice of measurin g
service output by inputs, the second is decidedly of more interest here .
to
To sum up/this point, then, in respect of Soviet productivity increase in
10a
material sectors, the rate of growth has declined in post WW II year s

to a quite modest level .
(Table
1) .
is
indicated
by my initial calculations
I shall rely primarily on these results in this essay, bu t
the deceleration
degrees,
That
is
also
in alternative
evident,
though in somewhat
differen t
computations that have been considered .
How the Soviet performance during post-WW II years compares with tha t
under the pre-WW II five year plans is uncertain, but
seem to compare well with
it
does no t
contemporary Western achievements .
II I
Productivity Growth and Technological Progres s
I have been referring to factor productivity growth . Our mor e

ultimate concern is with technological progress . So far as technologica l
progress is manifest in a divergence between the increase of output an d
the resultant " residual " is properly taken (as it ofte n
factor inputs,
is) as an indicator of such progress . As usually calculated ., however ,

the residual also reflects other forces .
That is also true
here .
To begin with, the period In question witnessed a marked advanc e

in the educational attainment of the labor force . If we now adjus t
the growth in employment for the resultant increase in labo r
quality
in
the well-known way pioneered by Denison, we still observ e
the previous trend downward in the rate of growth of factor productivity .

The tempos throughout, however, are appreciably reduced . During 1970-75 ,
there is now an absolute decline instead of very modest increase i n
-factor productivity7
Without
Wit h
adjustment of
adjustment o f
employment for employment fo r
educational
educationa l
attainment
attainmen t
1950-60
3 .63
3 .2 6
1960-70
1 .83
1 .2 9
1970- 75
.26
- .21
In proceeding here in a Denison-like way, I also apply to the USSR indexe s

of the value of different levels of educational attainment that Deniso n
derived for the United States . The results would be little affected, however, i f
12 .
instead reference were made to indexes reflecting Northwest Europea n

experience . Deniso n ' s educational value indexes, as well known, ar e
rather arbitrary even in respect of the countries concerned ; thei r
application here to the USSR has to be read in that light . 8
Labor quality can vary also as a result of shifts in the sex composition of the labor force . Trial calculations similar to those mad e
for education suggest that such shifts were not a consequential elemen t
in the variation in Soviet factor productivity over the period in question . 9
The omission of labor quality improvement due to advances i n
educational attainment means that, as originally computed, factor productivity growth was overstated . This is so, rather, so far as suc h
growth is taken as an indicator of technological progress . From the same
standpoint, another source of bias in our computations, though of
contrary sort, is the failure in the case of farm land to allow for th e
undoubted deterioration that occurred as the cultivated area was expanded .
If only climatically, the deterioration must have been particularl y
marked under Khrushchev ' s famous New Lands Program, with its attendan t
great increase in the cultivated area in Kazakhstan and Siberia . I n
view of the limited share of farm land in total output, however, th e
10
resultant distortion in our data must be slight .
On similar reasoning, we may also discount, I think, the magnitude o f
a comparable distortion, due to the failure to account for inputs o f
mineral resources . The distortion is comparable to that in the case o f
farm land, for here too there must often have been a qualitative
deterioration . That would occur simply as resort is had to less ric h

deposits, but economically the result is the same when extraction mus t
proceed to increased depths or to deposits that are less favorabl y
located geographically . In common parlance, all such circumstances alik e
give rise to " diminishing returns . "
Although that is not the preferre d
analytic usage, the effect is nevertheless a tendency towards highe r

costs and lower productivity of labor and capital as output expands .
One need not subscribe fully to the more pessimistic Western
appraisal s
that lately have been published on Soviet oil to conclude that suc h
diminishing returns have indeed come to prevail, at least lately, in tha t
industry (see CIA, June 1977 ; NATO, 1974) . In the USSR diminishin g
returns have by all accounts also been encountered in respect of numerou s
minerals other than oil . .
As for the magnitude of the resultant distortion of factor productivity ,
of
we may obtain some indication/that if we consider that,on the average ove r
the years studied, the ratio of mineral resource inputs to the GNP, excludin g
selected services, in the USSR should not have been far from 9 .3 percent ,
that being approximately the magnitude of the ratio in 1966 .
The rea l
cost per unit of mineral output increased perhaps about 1 .5 percent yearly ,
or by 45 percent overall, during the period 1950-75 . 11
What this may hav e
meant for factor productivity can most readily be seen by reference to a n

ingenious model that Solow (1979) has used in a similar context . Imagin e
that over the period studied the USSR produced no mineral resources but ha d
to import all of them . The rising real cost of such production accordingl y
translates itself into a corresponding increase in real import prices . Then,
Soviet final output net of resource costs would have grown by 0 .14 o f
a percentage point (i .e .,
.015 x .093)less than if the real price o f
resources had been constant throughout . The USSR, of course, does no t

import,but produces domestically the great bulk of its mineral resources ,
but the Solow model may still be applied on the understanding that referenc e
is to the real price of mineral resources in terms of final product tha t
must be foregone in order to free factors for their production .
The foregoing do not comprise all the forces other than technologica l
progress that might have contributed to the productivity residual tha t
we computed, but we may conclude, I think, that technological progres s
probably was somewhat less rapid than that residual indicates .
The
pace of technological advance also declined more or less a s
the residual does .

In the previous section I compared post-WW II productivity growt h
in the USSR with that in pre-WW II years . In view of the uncertaintie s
regarding that comparison, it would be footless to try to extend it no w
to allow for aspects of the sort just considered . I also concluded tha t
Soviet post-WW II productivity growth has been undistinguished b y
Western standards .
Judging from Cohn
(1976),
the comparativ e
Soviet performance becomes the less impressiv e

when factor productivity is adjusted to allow for improvement of labo r
quality . Because of their greater participation in world trade ,
Western countries until recently have probably been less affected tha n
the USSR by diminishing returns in extractive industries, so calculate d
productivity growth may understate Western less than Soviet technologica l
advance on that account . All things considered, however, Sovie t
technological progress should compare little if at all more favorabl y
with the West than in respect of our calculated productivity residual .
IV
Technological Progress Prope r
I referred at the outset to two sorts of technological advance :

technological progress proper (TPP) and technological progress extende d
(TPE) . TPP occurs through introduction and spread of new productio n
methods that enlarge the technological opportunity sets of productio n
units .
On that basis, a larger output is produced at a given resourc e
cost . TPE embraces output expansion at given resource cost that i s

achieved not only through use of such new technologies, but also throug h
other causes . The data on factor productivity growth that we hav e
considered thus far should reflect output expansion at given resourc e
cost due to any cause, and, so bear more immediately on TPE than on TPP .
Allowance for resource cost variation due to causes discussed in th e
previous section should make calculated productivity growth the mor e
congruent with TPE . Results of my calculations, summarized in Table 4 ,
are hopefully more or less indicative of what such allowance might come to .
Our primary concern, however, is TPP . How, if at all, might the pace o f
that have diverged from that of TPE ?
As we saw, the two sorts of technological progress are not easil y
delineated one from another even in principle, but on the narrow constructio n
of TPP that is favored here, a principal cause of its divergence from TP E
in the West has often been the transfer of " surplus " , that is, relativel y
unproductive, farm workers to more productive uses in industry whic h
occurs as industrialization proceeds . As a result, output produced in th e
two sectors together at given resource cost increases . While contributin g
in this way to TPE, the transfers are seen here as beyond the reach of TPP .
Table 4 . Measured Factor Productivity Growth and Technologica l

Progress, USSR, 1950-7 5
Average annual
growth, factor
productivity,
material
sectors-a s
in Table 1,
percent
Adjustment t o
obtain .TPE,percentage points
to account for :
1950-60
3 .63(3 .69)
- .37
1960-70
1 .83(1 .75)
- .54
1970-75
+.65
.26( .35)
- .47
aAssumed negligible
Labor quality
improvement
due to
educational
advance
Natural
resource
exhaustion
+ .14
Adjustment t o
obtain TPP, percentage points ,
to account for :
Farmindustry
labor
transfers
Economics Weather Plannin g

of
reforms ;
scale
other change s
in workin g
arrangement s
- .39
- .13
- .33
- .12
- .30
- .12
. . .
lb .
Transfers of farm labor to industry have been occurring in the USS R

in the years studied, and very likely have involved shifts from les s
productive to more productive uses . Allowing for possible differences i n
skill levels, average farm earnings perhaps have not been inordinatel y
low compared with those in industry . That seems so even if an adjustment ,
such as described above, is made for the difference in sex structure o f
the farm
:12 and non-farm labo rfoce
Average income per worker ,

1970, rubles
Wit h
Without
adjustment
adjustmen t
for sex
for sex
Farm
1473
178 7
Non-farm
1761
207 3
Farm-city price differences favor the farmer in the USSR as in the West ,
though probably to a less degree .
But Russia began industrialization with a vast agricultural labo r
force, and in 1950 farmers still constituted nearly three-fifths of al l
workers . In such circumstances in the West, the productivity of margina l
farm workers has often been low relatively to that of marginal industrua l
workers, whatever the comparative levels of average earnings . Despite it s
non-market economy, the USSR should not be an exception to that rule .
Soviet industrialization has been notable, however, for the relativel y
limited contraction occurring in the farm labor force . Although the far m
labor force was accordingly still large in 1950, transfers of farm labor t o
industry have still been comparatively restricted more recently (Table 5) .
The resulting gains in output relative to resource cost should have bee n
reduced on that account .
We must try, though, to assess the gains qualitatively . To do so ,
I apply separately to farm and non-farm sectors Cobb-Douglas
, IC
Table 5 .
Farm and Non-Farm Employment, USSR, 1970-75 a
(millions )
1950
1960
1970
197 5
Farm
41 .4
38 .4
36 .4
34 . 8
Non-farm
29 .4
43 .2
60 .1
67 . 5
All
70 .8
81 .6
96 .5
102 .3
aThe data relate to material sectors, and so exclude services .

They are essentially from sources of employment data in the Appendix .
17
production functions corresponding to the one already employed for th e

On this basi s
two sectors together ./I compare the actual growth of factor productivit y
for the two sectors together with what it would have been if in eac h
interval considered inputs in each sector were constant at their initia l
levels . Thus, there are no transfers of either labor or capital and, in deed, no changes in the proportions in which the two factors are allocate d
between sectors . Calculated in this way, factor productivity growth i n
the two sectors together is simply an average,with initial-year weights ,
of the tempos achieved in the two sectors separately .
The indicated reduction in the rate of growth of factor productivit y
compared with the tempo originally computed (Table 4) is much less tha n
the related magnitude, 1 .04 percentage points, that Denison (1967, pp . 202ff ,
300ff) obtains in analyzing productivity growth in Italy during 1950-62 .
That reflects to some extent the relatively more limited farm-industr y
labor transfers in the USSR, but, more importantly, in my calculation th e
marginal productivity of farm labor is in effect well below, but still a
sizable fraction (in 1970, 46 percent) of, that of non-farm labor .
Denison assumes the marginal productivity of farm labor in Italy to be zero .
Curiously, my adjustment at this point turns out to be of a similar orde r
to Denison ' s related imputation for Northwest Europe during 1950-62 ,
3
.46 of a percentage point . 1
In the West, depending on the stage of development, labor may be i n
"surplus" not only in agriculture but elsewhere . Accordingly, transfer s
of such labor too can be a source of growth of output at given factor cost .
So far as they are, they contribute to TPE but might properly be excluded ,
along with farm-industry transfers, from TPP . A major instance in the West,
however, has been transfer of labor from family enterprises in trade, craft s
and the like . In the USSR, such enterprises were already largely eliminate d
under the early plans . Resultant gains in output, therefore, shoul d
have been realized before the years on which we focus .
In economics texts, exploitation of economies of scale i sualy
assumed to be quite another thing from application of a novel technolog y
that enlarges the opportunity set of a production unit . The distinctio n
nevertheless is not always easy to make in practice, but scale economie s
are considered here as falling outside of TPP and so as a further source
. 18 .
of divergence of that feature from TPE . With a GNP of $330 billio n

1978 dollars, the Soviet economy of 1950 was already rather big by any
standard . Reflecting the Stalinian proclivity for giantism in earlie r
years, the typical industrial firm was also already large compared wit h
those in the West . As early as the fifties, plant size often approache d
or exceeded least-cost levels such as delineated by Bain . 14
Scal
omies, then, should not have been very consequential in the period studied
econ
Econometric inquiries, such as have been referred to (Weitzman, 1970 ; Desai ,

1976), seem to point in the same direction, for scale economies are foun d
to have little, if any, explanatory power regarding the growth of post WWII Soviet industrial production .
Soviet plant scale, however, has continued to increase in size, an d
so too has the Soviet economy . According to serial data available fo r
diverse industries, the increase in plant site since the fifties might
have accounted for a major fraction of the growth of output in industry .
In recognition of possible gains from scale economies, I
assum e
that one-half of the growth in factor inputs of material sectors as a whol e

has been of a sort generating such economies, and that a scale coefficien t
inferred by Grilliches and Ringstad (1971, p . 63) from Norwegian data applies her e
overstat e
as well . The resultant adjustment (Table 4) is small, but should, if anything /
economies of scale . Because of the relatively modest size of Norwegia n
enterprises, such gains should be more consequential there than for th e
6
USSR . 1
The weather
affects TPE but is clearly outside the range of TPP .
I impute the difference between productivity growth during 1970-75 an d

1968-78 entirely to sub-normal weather during the former interval (Table 4) .
Weather during 1950-60 and 1960-70 is taken to be normal . According to th e

CIA (Oct . 1976), though, weather in the USSR tended to be relatively favor able to agriculture during much of the sixties . In Table 4, perhaps som e
downward correction of TPE would be in order for the period 1960-70 .
Productivity performance during 1968-78 no doubt differed from that o f
1970-75 to some extent because of factors other than the weather, but b y
adjusting for the entire difference between the two intervals in respec t
of productivity growth we should obtain a closer approach to more persisten t
aspects . For our purposes, that should be to the good .
The period studied witnessed a host of changes in Soviet economi c
institutions and policies or " working arrangements . " Many of these shifts were in tended to stimulate the introduction and spread of new production technologies .
So far as they had such an effect, they would have contributed to both TP P
and TPE . Discussion of these shifts is postponed .
Many changes in working arrangements, however, could have affected outpu t
relatively to resource cost quite apart from their impact on the introductio n
and spread of new technologies . So far as they did, the shifts are properl y
considered here as affecting TPE alone, and so would be still another caus e
of divergence of TPP from TPE . I refer to the almost innumerable shifts tha t
have occurred in arrangements bearing on labor and managerial incentives ,
7
organizational structure, coordinating procedures and the like . 1
Most, if not all, of the changes were initiated at least in part, fro m
a concern to remedy acknowledged deficiencies in existing working arrangements .
In the process, the system ' s directors(to refer in a convenient way use d
elsewhere to those with ultimate economic responsibilities) clearl y
sought to increase output .
20 .
relatively to resource cost . It would be surprising if in the upshot ther e

had not been a gain in that respect, yet the Soviet economy has becom e
ever more complex : in terms of the numbers of production units and varietie s
of products to be coordinated, and technological specifications to be met .
Were it not for the shifts in working arrangements, performance as to out put relatively to resource cost could have retrogressed . We must I think
consider seriously a possible tendency in that direction in any event, a t
least in some sectors . Diminishing returns in petroleum, for example, mus t
have been compounded by the particular policies pursued in oil developmen t
and extraction (see CIA, July 1977 ; June 1977) .
Where in reforming working arrangements aims other than economy o f
resource cost have been pursued, they must sometimes have conflicted wit h
the latter : a concern for equity, for example, could have been counter productive in respect of output at given resource . At any rate, the perio d
studied was marked by successive wage reforms resulting in a distinc t
that must have affected labor incentives adversely .
compression of differentials / One reform in working arrangements has some times only cancelled out another . The reorganizations of industry by Khrush chev and his successors are the outstanding but not the only case in point .
Proverbial abberrations and oddities in planning and management continu e
to be a subject of complaint in the USSR long after the initiation o f
measures designed to remedy them .
In order to round out my calculations, I assume that shifts in working arrangements, on the one hand, and offsetting tendencies in complexity and the like, on the other, more or less balanced each other, and together have/had no impact to speak of on output at given resource cost (Tabl
4) . Should there have been a positive effect, I suspect it would have
been modest . Possibly, as suggested, there could have been some retrogression . But any evaluation of the complex matter at issue must be speculative ,
and mine is clearly no exception . That should be borne in mind .
r
That completes my accounting for possible sources of divergence, firs t :
between TPE and factor productivity as initially calculated, and, now, between TPP and TPE . Here, in sum, are the results, in terms of annua l
percentage growth rates . :
Factor
productivity ,
materia l
sector s
(Table 1 )
TPE
TP P
1950-60
3 .63
3 .40
2 .8 8
1960-70
1 .83
1 .43
.9 8
1970-75
.26
- .07
.16
My initital calculations were inexact and the adjustments that have now bee n
made are egregiously crude, but the indicated deceleration of TPP is shar p
The presumption is that TPP, along with TPE and productivity growth as initially calculated, has slowed in the course of time to a relatively lo w
tempo .
18
Previously I compared Soviet performance with that in the West . I n

respect of TPP, that is especially difficult to judge . Suppose, as I hav e
reasoned, that the Soviet performance in respect of TPE has been substandard .
We must still consider that TPE may sometimes have been buoyed up in th e
West more than in the USSR by forces other than those contributing to TPP .
With-due regard for the development stage, for example, that may have bee n
so regarding farm-industry labor transfers (see above, p . 000) .
Concerning comparative Soviet and Western TPP, however, we have som e
22 .
further evidence . Taking Boretsky (1966) as a point of departure, Amann ,

Cooper and Davies (1977) have compiled post-WWII data for the USSR an d
several Western countries on a number of technological indicators tha t
are deemed especially significant . The import of each measure as a barometer of technological progress could be the subject of disquisition b y
itself, and as might be expected the comparative Soviet performance varies .
But the Soviet rate of advance (Table 6) seems generally no more impressiv e
than my comparative factor productivity would suggest . Relatively to th e
USA and the UK the USSR does less well than might have been expected .
The data in Table 6 refer to the period 1960-73 . A-C-D have als o
compiled figures for some indicators for 1955-60 and for sub-intervals o f
the period 1960-73 . These depict a fluctuating Soviet performance rathe r
than any clear trend .
For some novel technologies and products, A-C-D have also compile d
comparative data for the USSR and the West on the dates of first prototyp e
or commercial production or first industrial installation . They have als o
determined for each country the length of time taken for the new technolog y
on product in question to represent a given share or output . The resultin g
indications of leads and lags for one country relatively to another bea r
immediately on relative technological levels . What counts for comparativ e
TPP is the degree to which such relative levels are changing over time ,
but a systematic difference in level would be consistent with a persisten t
corresponding difference in TPP . From that standpoint the A-C-D data i n
question (Table 7) seem broadly in accord with, though perhaps somewha t
more favorable to the USSR than, the technological indicators
in
Table 6 .
Table 6 . Comparative Indicators of Technological Change, USSR and Western Countries, 1960-73 a
Item
1960 b
USSR
USA
UK
5 .66
1 . Electricity consumed per perso n

employed in industry an d
construction, thous . kwh
7 .80
20 .33
2 . AC transmission lines of 30 0
kv and above, share of total ,
percent
5 .3
2 .4
3 . Nuclear power, share of tota l

electricity output, percent
4.
0 2 steel, share of tota l

steel output, percent
.31
.32
8 .32
1973/1960 c
FRG
Japan
USSR
USA
UK
FRG
Japa n
5 .96
5 .94
1 .7
1 .6
1 .7
1 .9
2. 5
2 .1
n .a .
2 .0
n .a . e
n .a .
2 .7
n .a .
.02
4 .1
13 .4
1 .2
56 .1
136 . 0
16 .3
27 .8
25 .1
6.8
2 .1
7 .8
20 . 7
.07
3 .8
3 .4
1 .7
2 .7
11 .9
5 .6
1 .3
0 .8
1 .4
2 .1
1 .0
4 .1
n .a .
6 . Metal-forming machine tools ,

share of total stock in machiner y
and metal-working, percent
16 .2
23 .9
16 .1
n .a .
n .a .
1 .1
1 .0
.9
0 .36
.04
59 .0
.8
15 .77 11 .20 17 .39
7 .91
6 .4
3 .0
5 . Continuously cast steel, shar e

of total output, percent
7 . NC machines, share of tota l

metal-cutting machine too l
output, percent
8 . Plastics and synthetic resins ,
per capita output, kg .
.03
1 .46
1 .14
0 .11
n .a .
n. a.
5 .7
2 .4
32 . 5
3 .2
5 .9
n .a .
(continued )
Table 6, (continued )
9 . Chemical fiber all, per capit a

output, k g
10 . Synthetic (non-cellulose )
fibers, per capita
output, k g
1973/6 0
1960
Item
USSR
USA
UK
FRG
Japan
USSR
USA .
.98
4 .28
5 .12
5 .07
5 .92
3 .4
.07
1 .70
1 .16
.94
1 .26
UK
FRG
Japan
3 .9
2 .6
3 .2
2.9
16 .4
8 .0
7 .0
13 .9
9.6
11 . Synthetic rubber, per

capita output, k g
2 .1
8 .1
1 .8
1 .5
0 .2
1 .7
1 .3
3 .1
4 .3
33 . 5
12 . Telephones per thous .

of population
20
411
156
108
59
2 .7
1 .5
2 .0
2 .5
5 .4
a Amann, Cooper and Davies (1977, pp . 67ff) .

b For nuclear power 0 2 steel, and NC machines, 1965 ; for metal-forming machine tools, 1962 .
c For electricity consumed and AC transmission lines, 1972/1960 ; for nuclear power and NC machines ,
1973/1965 ; for metal-forming machine tools, 1973/1962 .
d . . . = negligibl e
en .a . = not available .
Table 7 . Comparative Timing of Introduction and Diffusion of New Technology ,

USSR and West a
USSR
USA
UK
FRG
Japan
1956
1954
1960
1955
195 7
16
12
11
1955
1962
1958
1954
196 0
17
16
14
10
1948
1938
1941
1941
194 2
25
21
23
23
21
1941
1937
1944
195 4
17
15
18
21
5 . HVAC (300 kv and over )

transmission line s
First line
Years to 10 percent o f
lines over 100 kv
1956
1954
1962
1955
14
16
6 . Nuclear powe r
First commercial station
Years to 2 .0 percent o f
electric power
1954
1957
1956
1961
n .a .
21
14
n .a .
1958
1952
1956
1958
195 8
13
13
12
Item
1 . Oxygen steel makin g

First industrial installation
Years to 20 percent of stee l
output
2 . Continuous pasting of stee l
First industrial installation
Years to 5 percent of stee l
output
3 . Synthetic fiber s
First commercial production
chemical fiber output
4 . Polyolefin s
First commercial production
plastics output
7 . NC machine tool s
First prototype
Years to 1 .0 percent o f
machine tool output
195 3b
aAmann, Cooper and . DAvies

f
(1977, pp .5f
b Estimat e
c n.a . - not availabl e
18+
15+
n .a . c
n. a.
15
In their inquiry, A-C-D focus mainly on industry, and in that secto r

on a limited sample of technologies in basic branches . As they observe ,
the technologies covered are ones "in which the USSR is normally believe d
to be in a strong position . "
Their findings must be read accordingly .
In respect of TPP, I conclude provisionally that the USSR has tende d

to underperform relatively to the West at a similar development stage . Th e
pace of TPP in the USSR probably has tended also to slow in the course o f
time . Why has the tempo of TPP in the USSR been modest by Wester n
standards and why has it slowed? I turn to these questions .
V
Conditioning Factors : R and D versus Technological Borrowin g
In order to advance technologically a country need not always b e

inventive . It may instead be able to import new technologies from abroad .
Yet importing technologies takes time . Some domestic R and D effort ca n
scarcely be avoided, if only to adapt imported technologies to loca l
circumstances . The nature of the adaptation often determines the resultan t
economic benefit . Although imported technologies tend to be of a dramati c
sort, technological advance must also turn on more pedestrian innovation ,
which may not be made at all unless prompted by domestic R and D .
Granting all this, a country at an early stage of development may stil l
find it economical to limit domestic R and D and to rely for technologica l
advance primarily on imports of technology from abroad . As economic development proceeds, however, an inadequate or ineffective domestic R and D effor t
can become costly . How different countries compare in respect of technologi cal progress, therefore,could turn in part on the relative magnitudes and
24 .
effectiveness of their domestic R and D efforts . Differences in thes e

respects should affect not only technological progress generally but TPP .
In trying to understand the sub-standard Soviet performance regardin g
TPP, then, it should be observed that the Soviet R and D effort, rathe r
than being deficient in magnitude, appears to have been notably large .
Available data on Soviet and Western R and D outlays are not fully comparable in scope, but in relation to GNP the Soviet expenditures have clearl y
matched or surpassed those of even many advanced Western countries (Tabl e
(Table 9) ,
Lately, as manifest also in related manpower data/the Soviet effor t
8) .
.19
probably has even surpassed that of the United State s
Our concern, however, is with TPP, and not all R and D outlays contribute to that process . Indeed, productivity measurements such as have bee n
considered in this essay for the USSR and Western countries are often under stood to exclude a major result 'of R and D : creation of new products yielding increased final user values at given resource cost . To what extent tha t
is so is a matter that perhaps merits more attention than it has received ,
but one need not probe too deeply to conclude that the productivity measure s
are apt at best to embrace only very partially final user gains such as ar e
in question in the case of one sort of consumer : defense .
In pondering the import for TPP of comparative Soviet and western R an d
D outlays, therefore, we must consider how much of the funds going to R an d
D in the USSR is assigned to defense . That is a matter on which the Sovie t
government is highly secretive, but, according to a careful inquiry o f
Nimitz (1974), defense, together with space, absorbed as much as one-hal f
of all Soviet R and D outlay in the sixties . That is the same share of R and
D as has gone to defense and space in the United States, but the Soviet
24a .
Table 8 . Expenditures on R and D ,

Selected Countries a
(percent of GNP )
All outlays
All outlay s
excluding thos e
for defens e
and spac e
1967,
1967,
Country
1975
circa b
197 5
circ a b
United States
2 .9
2 .2
1 .2
1. 4
France
2 .2
1 .5
1 .5
1. 1
West Germany
1 .8
2 .2
1 .6
2.1
United Kingson
2 .7
2 .1 c
1 .9
1 .6 c
Japan
1 .8
2 :0 d
1 .8
2 .0 d
Italy
0 .6
n .a . e
n .a .
USSR
2 .9
1 .4
n .a .
.9-1 .0 c
3 .7
a For Western countries, see National Science Board (1977, pp .

184-187 ; for the United Kingdom and Italy,OECD (1967, p . 15) and OEC D
(1979, p . 42) . For USSR, R and D from TSU (1976, p . 744) ; for defens e
and space R and D, mid-point of range of percentage shares in Nimit z
(1974, p . vii) . Soviet GNP from National Science Board (1977, p . 185) .
b Reference is to these years : USA 1966-67 ; France, 1967 ;
West Germany, 1966 ; United Kingdom, 1966-67 ; Japan, 1969-70 ; Italy ,
1963 ; USSR, 1965 .
c R and D as share of GD P
d 197 4
e n .a . : not availabl e
24b .
Table 9 . Scientists and Engineers Employe d

in R and D, USSR and USA a
Per 10,000 worker s

in whole economy
Thousands
Year
USSR
USA
USSR
US A
195 0
125 .2
158 .7
14 .7
26 . 2
195 5
172 .6
254 .3
18 .5
39 . 0
196 0
273 .0
380 .9
27 .5
55 . 8
196 5
474 .5
494 .5
42 .6
67 . 0
197 0
661 .9
546 .5
54 .2
66 . 8
1975
873 .5
534 .8
66 .0
61 .5
aScientists and engineers in United States excludin g

humanities specialists in all sectors and social scientists an d
psychologists in industry ; and in the USSR, excluding humanit y
specialists . See Nolting and Feshbach (1979, p . 746) . On employ ment in whole economy in USSR, see Appendix ; in USA, Economic Repor t
of the President (1978, pp . 288, 290) .
25 .
defense and space component has been inordinately large compared with tha t
20
in Western countries other than the United States . The margin of superi ority that the Russians enjoy over Western countries as to the share of R
and D in the GNP is largely, if not entirely, obliterated when reference i s
made to civilian R and D alone (Table 8) .
The Soviet margin of superiority is reduced the more if allowance i s
made for the familiar fact that a ruble is not always a ruble . Especially
in the case of military expenditures it is often more than a ruble . I n
respect of both manpower and supplies, priorities to the military secto r
of one sort or another mean that the effective share of defense in R and D
outlays in the USSR is greater than data on R and D outlays in rubles migh t
indicate (Ofer, 1975) .
In seeking to understand the sluggish technological progress in th e
the USSR, then, Western analysts have rightly stressed the Soviet preoccupatio n
with R and D for defense . R and D is devoted, however, to creation of not onl y
new weapons but new products for household consumption . Here available productivity measures perhaps are not as incomplete as often assumed in thei r
coverage, but no doubt they are incomplete . Moreover, ther e
is at this point something of a counterpart in the West to the inordinatel y
large Soviet allocation of R and D to defense . Of the continuing, vast flo w
of new models and kinds of consumers' goods that is a proverbial feature o f
Western mixed economy, a good part can require no R and D to speak of fo r
their generation, but a significant fraction of R and D must often go t o
generation of new goods for households (see National Science Board, 1977 ,
pp . 29, 251-253 ; Denison, 1962, pp . 241-244) . As for the USSR, varietie s
of consumers ' goods are often observed still to be relatively limited, and
so too is the frequency of introduction of style and model changes, an d

in fact new products generally . Marginal changes are often reported, bu t
many of these apparently are a means to evade price controls and entai l
hardly any R and D .
Available data on R and D outlays for both the USSR and Wester n
countries can at most reflect only very fractionally the activities o f
independent inventors . Although not as important as they once were, in dependent inventors continue to play a significant part in the creation o f
new technologies in the West : in a limited sample of inventions mad e
during 1953-73 that authorities deemed
" important " , independent inventor s
accounted wholly or in part for 17 percent in the United States, 16 percen t

in France, 34 percent in West Germany, 2 percent in the United Kingso m
and 7 percent in Japan (Gellman Research Associates, 1976, pp . 69-72 ;
see also Jewkes et al ., 1959, pp . 91 ff) . Independent inventors are als o
active in the USSR, but their contribution at most probably only rivals tha t
in the West where independent inventors are relatively inactive . Reportedl y
they account for no more than 7 percent of all inventions that are awarde d
a certificate in the USSR . The certificate is the Soviet counterpart o f
the Western patent (see Martens and Young, 1979, p . 477 - Berliner, 1976 ,
pp . 108-111 ) .
To conclude, the precise magnitudes of Soviet and Western R and
efforts that might contribute to TPP is uncertain . The Russians, however ,

enjoy no advantage over the West such as their notably large outlays fo r
21
R and D of all sorts might suggest .
So much for magnitudes . In respect to R and D, effectiveness also matters ,
and that at least must be a source of Soviet slugglishness in respect o f
TPP . So at any rate we are led to conclude by a number of Western studies
27 .
of Soviet R and D administration . Apparently as in Soviet plannin g

generally, costly aberrations have abounded . The system's director s
have been by no means oblivious of or indifferent to such features . Ove r
the period studied they have sought to counter them, but dubious practice s
somehow persist and R and D administration continues to be a subject o f
complaint.22
The abberations, not surprisingly, often parallel those in Sovie t

planning generally . By now they are fairly familiar . These seem to b e
among the more noteworthy : imperfect, though as a result of successiv e
reorganizations probably improving, integration of R and D with production ,
with a resultant tendency of R and D proposals to be of doubtful practicality ;
a tendency often reinforced by dubious , incentive arrangements(especially
in earlier years these seemingly provided R and D personnel with little, i f
any, inducement to be concerned with ultimately successful application ,
a paper " for the shelf " being a not unusual end result) ; a further tendency ,
related to the foregoing features, towards underemphasis on developmen t
work, particularly preparation of prototypes ; the lack of competition i n
R and D work on one or another theme ; overspecialization of R and D
personnel and agencies and bureaucratic obstacles to collaboration amon g
agencies in different ministries .
This comment by Pravda (Oct . 19, 1973 ; quoted in Parrott, 1980, p . 86 )
indicates some of the more persistent deficiencies :
The essential criteria for evaluating the activity of institute s
and design offices must be the newness, promise and significanc e
of their inventions and discoveries, the economic effect of thei r
application and the number of licenses sold . . .The various possibilities
27a .
for this have yet to be fully exploited, Some institutes remai n

for years outside of public and administrative influence and criticism .
The lack of differentiation in terms of material incentives stil l
persists . At times,
. . . those who provide our science an d
technology with original achievements and those who only repea t

what is already known receive equal compensation . Bonuses ar e
usually given out for all machinery and equipment that is develope d
or put into production, even if it is really not at all new .
a result, sizable funds are wasted as rewards for the redevelopmen t
of equipment and technology from the past .
Sales of licenses referred to must be those to foreign concerns . A s
indicated, in the USSR inventions are made available domestically withou t
charge .
A comparative study of Soviet and Western R and D administration ha s
yet to be made . R and D administration in the West doubtless has it s
limitations, but whether overall they can compare with those of suc h
administration in the USSR is doubtful .
All of this, of course, is not to say that the USSR has suffered an y
corresponding deficiency in respect of new technologies . What is lackin g
in the output of domestic R and D can in a degree be compensated for b y
borrowing from abroad . As explained, however, inordinate reliance on
28 .
technological borrowing could be a source of sluggishness in TPP . Where- as in the case of the USSR--consider a ble funds are actually expended on TP P
relevant R and D, inordinate borrowing from abroad must put in doubt the effectiveness of R and D administration . For the USSR that would tend to compoun d
misgivings already in order .
Of interest, therefore, is a massive inquiry by Sutton into the ori gins of Soviet technology . Sutton (1973, p . 370) summarizes in this wa y
his findings as to the sources of technologies employed in some 76 activitie s
in a wide range of industries :
In the period 1917 to 1930 no major applied technologie s
originated in the USSR . In the period 1930 to 1945 only tw o
such processes originated in the USSR, but in another fiv e
areas the Soviets developed and applied some major techno logy and we find both Soviet and Western processes used .
In the period 1945 to 1965 three processes were of Sovie t
origin and again five technical areas used both Soviet an d
Western processes .
If the USSR borrowed foreign technologies extensively during the perio d
in question, it was not alone in doing so . Since World War II the USA b y
all accounts has been by far the chief contributor to the world ' s technological pool . Not only the USSR but most Western countries must have borrowed extensively of foreign technology, with the USA as a principal source .
It seems doubtful, however, that the borrowing by Western countries coul d
have matched that by the USSR, as depicted by Sutton . In any compariso n
between the USSR and the West, due regard must be paid the still not ver y
advanced Soviet development stage . Reliance on borrowing might be expected
29 .
to be greater the less advanced the country . But also to be considere d

is the large size of the Soviet economy, as indicated by a GDP in 1960 o f
over half that of the United States and several times that of such countrie s
as France, Western Germany, the UK, Italy and Japan . Other things equal ,
comparative contributions of domestic inventive activity and borrowin g
abroad should vary with size .
Sutton ' s findings are sometimes questioned, but, after a careful re view of Soviet chemical technology, A-C-D conclude only that Sutton ma y
overstate the degree to which the USSR has imported equipment embodying th e
Western technology . As they acknowledge (pp . 43, 275-276),"the Sovie t
Union alone in this entire group of countries [the USSR, USA, FRG, UK, France ,
Italy and Japan] has never been the original innovator of a major plasti c
material or chemical fiber
" A-C-D findings as to the first introductio n
of new technologies (Table 7) also seem consistent with Sutton's conclusion s

as to the origins of Soviet technologies .
I conclude that limitations in the effectiveness, though no t
the volume, of Soviet R and D probably contributed to the relatively sluggish pace of TPP in the USSR . We also wish to know to what extent, if a t
all, the decline in tempo of Soviet TPP since the fifties may have originate d
in the same factors . The known facts are readily stated . As a share o f
GNP, Soviet R and D outlays rose sharply over the period in question (Table s
8, 9 ; Greenslade, 1976, pp . 273, 297) . The share of such outlays devote d
to defense must also have risen, but it is difficult to discover at thi s
point any reason for the slowdown in TPP . Similarly, in R and D, as i n
planning generally, reform in the USSR has again and again only been a prelude to more reform, while familiar complaints about underperformance have
30 .
continued . The effectiveness of R and D, however, should not have deteriorated . There may well have been some improvement . Here, therefore, n o
explanation is found of the slowdown in TPP . I turn next to the Soviet i
e
nther
novation process . Perhaps we can gain insight there into the slowdown as
well as further understanding of the relatively slow pace of Soviet TPP .
VI
Conditioning Factors : The Innovation Proces s
Understood to embrace not only the first introduction but later sprea d
of new technologies, innovation is generally agreed to be a flawed proces s
in the West . Most importantly, patents may be used to preven tdisemnation of new technologies . Even if that is not done, and licensing i s
allowed, the fees charged must be viewed as an uneconomic impediment ,
for as the primers teach new technological knowledge is from a socia l
standpoint ideally distributed as a free good . In the absence of patents ,
commercial secrecy can still constitute an effective barrier to the sprea d
of new technologies .
In the USSR, restrictive patents are practically unknown 23 an d
commercial secrecy too, although sometimes reported, can be of onl y
relatively limited significance . The Soviet innovation process, however ,
has limitations of its own, and these could easily be an important caus e
of the relatively modest pace of TPP in the USSR .
The limitations relate in part to the behaviour of the individua l
enterprise (predpriiatie) . The enterprise under Soviet centralist planning ,
of course, has only restricted autonomy, but, with responsibilities typicall y
limited to a single production unit, its management possesses detailed knowledg e
of technologies
31 .
use . How vigorously potential innovations are pursued and what is achieve d
by their introduction necessarily depends on the management ' s interest i n
engaging in such activities . That interest is very often weak at best . Evidence of this began to surface long ago, but owing chiefly to Amann ,
Berry and Davies (n .d .) and Berliner (1977) we now grasp more clearly tha n
we could before the main underlying causes : proverbial bureaucratic hurdle s
attendant on obtaining clearances and interdepartmental cooperation for a
new technology, with
its associated variations in inputs and outputs ; uncertainty as to results an inevitable feature anywhere that seems often compounded under centralist pla
. supplies are required ; nig,partculyifnovekds quipmentor
relatively modest material rewards compared with those obtainable if a risk y
innovation is not undertaken .
Here as elsewhere the system ' s directors have been aware of and hav e
struggled to alleviate defeciencies, but apparently with only limited success . Writing in 1977, for example, the distinguished Soviet economist ,
Academician A .G . Aganbegian had this to say on the Soviet innovation process :
. . .The introduction of many experimental systems is being hel d
up by the excessive complexity of the instructions concernin g
the rights and possibilities of enterprises in this regard .
Every change, even an insignificant one (in table of organization, pay, personnel assignments) requires paperwork o f
such proportions as to make even the most optimistic executives lose their taste for change .
Here is how Z . Sirotkin, Chief Design Engineer of the Belorussia n
Motor Vehicle Plant and USSR State Prize Laureate,viewed matters regarding
32 .
incentives as recently as 1974 (quoted in Berliner, 1977, p . 490) :

Unfortunately the "mechanism " of the Economic Reform ha s
proved insufficiently effective when applied to the question of putting new equipment into production . After all ,
for production workers, the manufacture of a new machin e
means, first of all, new concerns and difficulties . Th e
work rhythm is disrupted, and many new problems appear .
Under the existing situation, this causes the performanc e
indicators to decline and the enterprise incentive fund s
grow smaller . It is for this reason that some plant executives brush aside innovations proposed by science .
. . .This is especially true if the plant has achieved
stable work rhythm and high-quality output and has al l

the benefits the Economic Reform provides ; as for materia l
incentives to induce changes, there are none .
In a time of general well-being the plant manager woul d
have to be a very farseeing person indeed to feel an y
concern or anxiety and to undertake the preparatory wor k
for producing a new model of the machine . For in the
next few years that promises many difficulties .
As often the case with Soviet "self-criticism," Sirotkin exaggerate s
the inadequacy of incentives for innovation . But, having probed care fully the intricate arrangements that prevail, Berliner concludes, perhaps too cautiously (p . 490) :
Our guess is that the differential reward for innovation, relative to the reward for competent but non-innovative
33 .
management is too small to induce a high rat e

innovation, and that the small differential i s
a major obstacle to innovation .
Berliner focuses on managerial bonus arrangements . Soviet policy and
practice regarding promotion, demotion and dismissal of managerial personnel have yet to be explored in any depth, but an adverse impact on caree r
prospects must be among the possible penalties for failure that are o f
concern to enterprise management when pondering potential innovations . Th e
adverse impact must be the greater in an economy where ultimately there i s
only one employer . On an abstract plane, Bergson(1978-B) has shown that ,
for risk-averse personnel, even modest career penalties might discourag e
risk-taking unless success were rewarded not only with corresponding caree r
gains but bonuses possibly much exceeding the basic wage . Rewards for successful innovation in the USSR are the less potent when seen in that light .
In the West an enterprise is penalized when an innovation turns ou t
awry, but it may also be penalized for not innovating, for a more venture some competitor may encroach on the market of a less venturesome one . Th e
competitive threat that is thus posed must be a major spur to innovatio n
generally . And so far as there are laggards, and the threatened encroachmen t
on their markets by innovative firms materializes, that in itself represent s
a way in which new technologies may spread . The fact that the spread i s
only indirect, via the supplanting of lagging by innovative firms, makes i t
none the less effective . Such indirect extension of new technologies mus t
be a significant source of TPP in the West .
To what extent similar forces are operative under Soviet centralis t
planning is yet another relatively unexplored aspect of that system, but
34 .
the counterpart to the Western competitive process must be attenuated a t

best . The consequences for TPP should have been correspondingly adverse .
True, determination of technologies of new firms is essentially the province of superior authorities rather than of managers of existing enter prises, and superior authorities have not been lacking in initiative i n
that sphere . The systematic introduction of advanced technologies in ne w
enterprises became a hallmark of Soviet development under the earliest five year plans and has remained so ever since .
That is an important fact in itself . But for it Soviet TPP would hav e
been even more sluggish than it has been . The resultant threat to and encroachment on the "markets" of older enterprises, however, must have bee n
comparatively limited in an economy where superior authorities themselve s
are continually pressed to achieve intensive utilization of capacity in th e
partly for this reaso
interests of fulfilling taxing output goals . No doub t, enterprise
liquida n,
tion is seemingly an extraordinary rarity . Because of a concern to limi t
involuntary unemployment, staff curtailment which might free labor in olde r
firms for employment in newer ones also encounters legal and administrativ e
obstacles . On that account, even the venturesome firm might find it difficult effectively to exploit an innovation . 2 4
So much for the domestic counterpart in the USSR, such as it is, o f
the competitive process that is so important to innovation in the West .
In the West that process also embraces active foreign competition . Wit h
imports as a spur and direct investment from abroad as a carrier, innovatio n
proceeds all the more expeditiously .
Not the least of the reasons for a
sluggish TPP in the USSR, therefore, must be the state trading monopoly ,
which carefully controls and mediates foreign access to Soviet markets and
35 .
excludes altogether direct investment from abroad .

I have been discussing working arrangements as to innovation in th e
USSR . In gauging Soviet performance in this sphere, reference shoul d
again be made to the comparative data of A-C-D that I discussed earlie r
(Tables 6, 7) . Some of these data bear particularly on innovation, thoug h
as noted they relate more to relative technological levels than to change s
in those relative levels over time . The latter are more immediately indicative of comparative TPP .
Also illuminating, though with the same caveat, are comparative dat a
compiled by Martens and Young (1979) on "lead" times between applicatio n
for a patent (in the USSR, certificate) and recorded first introduction o f
an invention . The data for different countries are admittedly not full y
commensurate, but it is still of interest that among samples considere d
for different countries the Soviet lead time tended to be relatively long :
at the end of two years, but 23 per cent of Soviet inventions had bee n
implemented . The corresponding figure for the United States was 66 per cent ,
and Western Germany, 64 per cent .
Results of a survey of the experience of British exporters of machin e
tools and chemical technology to the USSR (Hanson and Hill, 1979), bea r
immediately on technology transfer to that country but should also be indicative of the functioning of the Soviet innovation process more generally .
In both industries, the time elapsing between receipt of an inquiry an d
final commissioning was found typically to be distinctly longer than fo r
comparable transfers to Western countries : in machine tools, "an estimate o f
two and three times" that required for a comparable transfer to a Wester n
country "would not appear to be too inaccurate" ; in chemicals, lead-times
36 .
averaged 6 years and 10 months, or "3 1/2 to 4 years longer than a character istic West European lead time ." For machine tools, Soviet performanc e
is compared with that of " advanced " Western countries . The particula r
West European countries considered in the case of chemicals are no t
indicated . In both cases, a comparison with less advanced Western countrie s
would also be of interest .
I have been focusing on aspects of the Soviet innovation process tha t
prevailed more or less generally during the period studied . Like the fact s
set forth previously on R and D, those that have been considered regarding innovation appear to fit in with our prior finding as to the likel y
substandard Soviet performance regarding TPP . We also inferred previously ,
however, that the pace of TPP in the USSR has slowed . We discovered n o
explanation for this slowdown in the sphere of R and D . I turn for a n
alternative explanation to aspects of the innovation process that migh t
have caused its performance to vary over time . These admittedly do no t
act in only one direction, but on balance they could have produced
slowdown in TPP .
One feature affecting the Soviet innovation process over time ha s
already been alluded to : reforms in working arrangements bearing o n
coordination and managerial incentives . These apparently have not bee n
especially effective, but should at least have been more a source o f
acceleration, than of retardation of TPP . The reforms in manageria l
compensation, for example, should have been to the good, thoug h
incentives for risk-taking must still be weak .
The impact on the Soviet economy of technology transfers to th e
USSR - that have been occurring under detente since around the mid-sixties
has become a somewhat controversial issue . It is also a matter not to b e

settled here, but our concern in any event is with the long-term variatio n
in Soviet performance regarding innovation . From that standpoint, i t
should be observed that Soviet technological borrowing is not exactl y
novel . It is true that transfers lately have, more often than previously ,
been of a turnkey or otherwise negotiated sort, but Soviet borrowing i n
one form or another has been occurring on a wholesale scale ever sinc e
the earliest five year plans .
Moreover, whatever the impact of detente, technology transfer s
if anything, should have been more consequential in earlie r
post-WW II years than under that relationship . If so, a resultant down-trend in
transfers could have been a source of slowdown in TPP .
I refer particularly to the impetus to Soviet borrowing provided b y
the backlog of Western technologies that must have been available to th e
USSR for exploitation after the war . Gains from " catching up " in tha t
sphere would have been compounded by the possibility of applying advance d
technologies in the restoration and reconstruction of partially-destroye d
industrial works . Although the USSR in 1950 had already exceeded it s
pre-war output (GNP in 1950 was 124 percent of 1940 ; Bergson, 1961 ,
5
p . 210), much of the vast war-time destruction remained to be made good . 2
As for the impact of technology transfers under detente, eve n
according to an optimistic view that appears to be rather modest overall .
though significant in some industries . Thus, a hypothetical reductio n
of imports of Western machinery cumulating to some 16 percent of th e
entire stock of such machinery on hand in the USSR in 1973 would have meant
Jo .
a reduction of but 0 .1 of a percentage point in the rate of growth of th e

GNP during 1968-73 . (Greene and Levine, 1977) . Reference, however, is onl y
to technology transfers associated with imports of
machinery .
Although "indirect effects " through diffusion are supposedly also represented, the underlying statistical analysis hardly could have capture d
these fully . The calculation is also not intended to and could no t
represent gains to the USSR from any and all technological borrowing ,
whether occurring through machinery imports or otherwise . But, to repeat ,
the gains from such borrowing in pre-detente years could well have bee n
even greater . On this view, detente may only have arrested a downtren d
that was in process as catch-up phenomena were progressively exploite d
.26
In the course of time, opportunities for borrowing technologies from
abroad should have declined in any event, but they would have diminishe d
the more as a result of any slowing of technological progress in the West .
In fact, the pace of Western advance has apparently slowed .
In th e
United States, the chief contributor to the world ' s technological pool ,
the slowdown has been marked . It seems to have occurred, however ,
primarily since 1973 (Denison, 1979, p . 105) . Soviet TPP would hav e
been affected, but only in the most recent years .
To the extent that new technologies are embodied in and requir e
introduction of new sorts of capital goods, the innovation process i s
in part but an aspect of capital replacement policy . We must record i t
as one more source of sluggishness in Soviet TPP, therefore, th e
tendency in the USSR to discount obsolescence as a factor warrantin g
capital replacement, and to seek rather to prolong service lives through
39 .
continuing maintenance and repairs . As a result, service lives probabl y

have often been unduly lengthy by Western standards (Cohn, 1976 ; 1979) .
Obsolescence, however, while neglected in earlier years, has bee n
accorded increasing attention in the course of time, and service live s
have been correspondingly reduced . That by itself should have tende d
to accelerate TPP, but a related offsetting factor has been the progressiv e
slowdown in the growth of investment volume : for gross invesment in fixe d
capital, from 12 .6 percent annually in the fifties to a planned increas e
of 3 .6 percent annually in the late seventies (Bergson in NATO, 1978 ,
p . 232) . The resultant retardation in TPP could have been material ,
though probably well below 0 .4 of a percentage point annually . 2 7
The sharp decline in the rate of growth of investment volume sinc e
the fifties is part of a larger process that has been unfolding sinc e
Stalin and which has embraced also persistently rapid growth of consumptio n
(Bergson 1978 -A) .
Although defense outlays have also tended t o
expand more or less in step with the growth of GNP, expansion of industrie s
primarily serving the investment and defense sectors has come to be muc h
more nearly in balance with expansion of those primarily serving consumption . I offer it as a hypothesis which I cannot try to verify her e
that in the USSR TPP has traditionally been more rapid in the former tha n
in the latter industries . If so, the structural change that has occurre d
could be one more reason for a slowdown in TPP in the economy generally .
40 .
VI I
Conclusion s
I have distinguished between two concepts of technological progress :
technological progress proper (TPP), representing in a restricted way th e
introduction and spread of new technologies enabling the community to increase output at a given resource cost, and technological progres s
In this essay I have focused primarily on TPP, but technologica l
in output per unit of factor inputs, or factor productivity, as such a
therefore, I first compiled data of a conventional sort on the growth o f
additionally for the impact of causal aspects other than the introductio n
The initial computation of factor productivity is flawed by limitations in both underlying data and methodology, while further adjustment s
economy :1950 -60,2.88;1960-70, .98 ; 1970-75, .16 .
Granting all th e

41 .
In respect of TPP, the Soviet performance appears to have bee n

within the range of Western experience, but inferior to that expecte d
of a Western country at a comparable stage of development .
The ultimate concern of this essay is with prospects for th e
future . Turning finally to that aspect, on such a complex matter th e
inclination must be simply to opt for the " naive " hypothesis that pas t
trends will continue . On reflection, some such outcome does seem likely ,
but perhaps we can gauge prospects more clearly and with a better gras p
of probabilities if we consider that a substandard Soviet performanc e
hitherto could be a ground for optimism . There is clearly room fo r
improvement . '
And, while reforms in relevant working arrangements do not appea r
to have been especially effective thus far, numerous revisions wer e
initiated only in the latter part of the period studied . They may
require more time fully to bear fruit . It would be surprising if th e
years ahead are not also marked by still other reforms that have ye t
to be initiated or even conceived .
Yet, among all the sources of difficulty that the Russians hav e
experienced in respect of TPP, three or four appear to stand out a s
relatively decisive : bureaucratic obstacles attendant on multipl e
clearances and organization of interdepartmental cooperation for a ne w
technology ; the weakness of domestic and foreign competition, that migh t
spur innovation ; impediments to labor transfers from lagging to mor e
technologically advanced enterprises, and inadequate incentives .
While subject to amelioration, the first two aspects are more o r
less integral to the system of centralist planning that in essentials
42 .
has now been in effect in the USSR for over six decades . There is no
indication now of its prospective demise . Impediments to labor transfer s
originate chiefly in a commitment, apparently deemed fitting in
socialist society, to minimize involuntary unemployment . As for incentives, the system directors hitherto have proceeded with distinc t
caution in this regard . The USSR today is not notable for egalitarianism ,
but large and conspicuous managerial bonuses, such as might be needed t o
induce more adequate interest in innovation, probably are felt to b e
politically, if not ideologically dubious .
The slowdown in TPP is not due to any deterioration in workin g
arrangements--as indicated, these should have improved . Rather, th e
reduced pace of TPP probably reflects the unfolding of other forces ,
principally the progressive exploitation of " catch-u p " opportunitie s
present after the war and the shift in the course of time towards a
structurally more nearly balanced growth . By now these forces hav e
practically run their course and should not be a further source o f
retardation of TPP in future .
Encouragement of forded to technology transfers from the West b y
detente must have served to dampen somewhat the slowdown in TPP, but a s
Afghanistan reminds us such transfers can be discouraged as well a s
encouraged . Soviet technological borrowing from the West must suffe r
in any event should the recent slowdown in Western technologica l
advance persist .
WO can only speculate as to the sum of the diverse forces determining the future pace of Soviet TPP . A distinct acceleration is no t
precluded, but more likely advance will continue at a slow pace more or
43 .
less comparable to that which has prevailed lately . A negative rat e

presumabl y
of TPP, although imaginable, is presumably not among the contingencies to b
e
seriously reckoned with .
Although TPE was derived primarily as an element in the computatio n
of TPP, it has an interest of its own . Given prospective TPP, th e
corresponding TPE now follows from a reversal of adjustments such a s
I made previously to derive TPP for the past years . In calculating TP P
for 1970-75, however, one of the adjustments made to TPE was an additio n
to allow for abnormal weather (Table 4) . In reversing the previou s
computation, no corresponding deduction from prospective TPP is now in
order, so far as reference is to TPE in the long run .
By projection of past experience on that understanding, TPE migh t
be expected to exceed TPP by from 0 .4 to 0 .5 of a percentage point . A large r
differential than that is possible in future, but that does not seem very likel y
when it is considered that a deduction made previously from TP E
for economies of scale probably overstated gains from that source .
Reversal of the previous deduction now should be even more of a n
overstatement, for gains from scale economies are usually supposed t o
diminish as scale increases .
Still another deduction from TPE was made previously for output gain s
from farm to industry labor transfers . By Western standards suc h
transfers have been inordinately low, and the farm labor force of th e
USSR has come to be notably large for a country at the Soviet stage o f
development (as measured , of course, by indicators other than that o f
the share of agriculture in the total labor force ; say, by GNP per capita) .
There is thus a potential for increased output gains from this source,
44 .
But additonal costs for urban housing and infrastructure needed t o

accommodate transferees probably have caused the government to limit its exploitatio n
previously . They should continue to do so in future . In deriving TPP
from TPE I made no allowance one way or the other for the impact o f
changes in economic working arrangements apart from those bearing o n
R and D and innovation . Any gains in respect of output at given resourc e
cost, in other words, were supposed to be offset by planning difficultie s
associated with increasing economic complexity and the like . If tha t
supposition should be projected to the future, it must he understoo d
that at this point an error is possible in either direction .
Note that TPE was obtained in turn by deducting from facto r
productivity as initially computed ,
an allowance for labor qualit y
improvement due to educational advance .
I also added to factor pro-
ductivity as initially calculated an allowance for natural resourc e

exhaustion . Since the former adjustment exceeded the latter, facto r
productivity as initially computed exceeded TPE : by t)
to 0 .4 of a
percentage point . In future, the educational quality of the labo r

force can change only slowly, but if the CIA is at all reliable on oil ,
natural resource exhaustion should be decidedly more costly to th e
USSR in the years ahead than it has been hitherto . The margin betwee n
these two aspects, therefore, should dwindle if it does not vanish altogether . 2 8
In considering the sources of past productivity growth I made n o

allowance for labor quality variation that may have occurred on accoun t
of the rapid increase experienced in consumption standards . Standard s
tended to increase practically throughout the period studied, but th e
gains over the low levels that prevailed under Stalin could have been
.
44a
particularly favorable to worker morale and productivity in the earlie r

post-Stalian years . If they were, that would have been a furthe r
source of divergence of factor productivity as initially computed from TPE .
In any event, in appraising prospects we must consider that any marke d
deceleration in consumption standards might have an adverse impact o n
Hence, calculated productivity woul d
n in consumption standard
.
Such
a
deceleratio
s se ms a distinc t
be further depressed relatively to TPE
29
possibility (Bergson, 1978-A) .
productivity growth in future .
In sum if my projection of TPP is not too far from the mark, the Russian s
should find it difficult in future to raise the rate of growth o f
calculated factor productivity much above the very modest tempo that ha s
30
. :.ore likely d decline from thi s
prevailed lately :, 91 percent -yearly .
tempo is in prospect .
I have been referring to productivity in material sectors . I t
should be recalled, therefore, that for the entire GNP productivity growt h
has been distinctly slower than for material sectors alone : during 1968-78 ,
.57 compared with .91 percent annually . Productivity growth for the entir e
GNP has for some time been drifting downward relatively to that for materia l
sectors (Table 3) . There is no basis to think that trend will be reverse d
in future . I have now ventured well beyond
TPP,
the primar y
concern of this essay, and often into areas that are being explored i n
other contributions to this volume .
Even a very provisional appraisal ,
however, may facilitate juxtaposition of my results with related finding s

of others .
44b .
To return to TPP, I tacitly omitted the possibility that in orde r

to accelerate TPP, the government might increase the relative volume o f
resources devoted to civilian R and D . Although such outlays are alread y
sizable, they, could still be increased . Without a radical improvement in
45 .
working arrangments for R and D and innovation, the resultant gains i n

TPP likely would be modest, but doubtless there would be gains . Th e
gains would be more consequential if the increase in civilian were a t
the expense of military R and D, for as indicated ruble-for-ruble th e
resouces devoted to military must be higher-powered than those devote d
to civilian Rand D . On any scale, however, a shift from military t o
civilian R and D is apt to occur only as part of a larger reallocatio n
of resources from defense to civilian uses generally . I must leave fo r
separate inquiry that contingency and also the further possibility of a
shift in resources from consumption to growth, including capital in vestment and civilian, R and D .
Civilian R and D might also be increased at the expense of investment .
To what extent that might be in order must depend on the comparativ e
returns to the two sorts of outlays . That is an elusive matter o n
which Soviet authorities themselves are probably not too clear .
Expenditures on all R and D, military as well as civilian, on the on e
hand, and investment, on the other, have varied closely together in th e
course of time . 31
Perhaps that reflects a policy decision that will no t
easily be abandoned .
In discussing prospective TPP and TPE, I assumed that in futur e
Soviet planning will continue to be of the centralist sort . Should tha t
system of planning finally be abandoned, the alternative presumabl y
would be some form of market socialism that would allow relativel y
great autonomy to the enterprise and involve extensive use of market s
as a coordinating device . With such a change in working arrangements ,
the presumption must be that both TPP and TPE could be affected favorably,
46 .
32
but that too must be left for another inquiry .
The subject of this essay, Soviet technological progress, is a familia r
one . To my profit, I have been able to draw here on much previous researc h
by Western scholars . It is striking, however, how much remains unsettled .
That is inherently so regarding prospects for the future, but uncertaintie s
also abound regarding past trends . To resolve such doubts I have ofte n
been able only to offer conjectures,
Hazardous as such a procedur e
must be, it may serve at least to underline the need for still mor e
research on an important theme .
Footnote s
1 I thus apply the familiar formula :
20n the comparative growth of Soviet GNP since 1950 in terms o f

alternative valuation years, reference may be made to these alternativ e
measures of annual percentage tempos : for 1950-55, in Bergson (1961) i n
1937 prices, 7 .6, and in 1950 prices, 7 .6 ; in Cohn (1970), as revised i n
Bergson (1974), in 1959 prices, 6 .3, and in Greenslade (1976), 6 .0 ; fo r
1950-60, in Cohn (1970) as revised in Bergson (1974), 6 .3 ; and in Greenslad e
(1976), 5 .9 ; and for 1960-70, in Cohn (1970), as revised in Bergson (1974) ,
5 .5, and in Greenslade (1976), 5 .3 . Unfortunately differences in result s
from different sources are difficult to interpret because the calculation s
differ not only in valuation years but in other ways . Moreover, valuation s
are sometimes only partially made In the year to which they supposedly refer .
Actually,
according to further
computations ,
the observed divergence for 1950-60, between Cohn (1970) -- Bergson (1974 )
and Greenslade (1976) could be due practically in its entirety to th e
difference in the nature of the weight imputed to " services " , particularly th e
reduced interest allowed on housing and the exclusion altogether of interes t
on other fixed capital in the former computation . For purposes of compilin g
data that are comparable to those available for Western countries, however ,
there is, I think, much to say for the Cohn (1970)-Bergson (1974) procedure ,
so the Greenslade tempo for 1950-60 might be
understated at least on that account .
considered as somewha t
47a .
3 For both the whole economy and industry, use of = 0 . 5

instead of 1 .0 evidently reduces the tempo for pre-1970 and raises it fo r
post-1970 years . Recall that 1970 is our base year . As explaine d
elsewhere (Bergson, 1979,
p . 124), with factor inputs growing a t
different rates, a reduction in
must have such contrary effects o n
pre-and post-base year factor productivity .

4Whether
= 1 .0 or .5, the earnings share imputed t o
capital in the base year is, for the whole economy, .52 of tha t
for labor, and, for material sectors, .54 of that for capital . With
1 .0, of course, the same shares obtain for 1950 . With = .5 , =
however, the corresponding ratios in 1950 are 2 .1 and 2 .4 . On the rate s
of return on capital that such earnings shares might imply, se e
Bergson (1979) .
5More precisely, without explicit charge . Under the governments'
complex arrangements for procuring farm products, Soviet farmers, o f
course, have by no means been allowed to retain for themselves th e
entire proceeds of their labor .
6 To return to the rates of interest allowed on capital, that o f
12 percent, as indicated, was suggested by norms used in Soviet project
appraisal . In order to determine the capital earnings share, therefore ,

it seemed appropriate to apply the assumed rate to the capital stock i n
prevailing rubles . In the USSR, however, ruble prices cover not onl y
labor costs but a variety of additional and often more or les s
arbitrary charges, principally turnover taxes, subsidies and profits .
At the same time, no systematic charge is made for interest and rent .
If for comparison with rates of return familiar in the West we revalu e
capital to exclude Soviet non-labor charges and to include interest an d
rent the assumed 12 percent return would rise to 13 .6 percent . Wit h
the total of interest and rental charges taken to be the same as initiall y
allowed, the revaluation assumes that the price of capital goods change s
in proportion to the price level generally . Similarly a 6 percen t
return on capital in prevailing rubles translates into an 8.2 percen
t
return on capital when that is revalued to conform to Western pricing .
7Here and below, unless otherwise stated, factor productivit y
data cited relate to material sectors .
8 To be more precise, I apply educational value indexes whic h
are adapted from those Denison derived for the United States an d
represent slight revisions of those in Bergson (1964, p . 371) .
assume that the educational attainment of workers in material sector s

is in 1950 the same as that of employment in all sectors and in late r
years the same as that of the entire labor force . Data that ar e
needed on the distribution of employment and the labor force b y
educational attainment are from DeWitt (1962, p . 136) and CIA (Jun e
of
1979, pp . 10, 14) . On the comparative impact of use of United State s
and Northwest European educational value indexes, see ibid .
9
I assume one female worker to be equal to 0 .7 of a male worker .
Earnings of female workers appear to have averaged about that amoun t
relatively to those of male workers in the USSR . See Riurikov (1977 ,
pp .
118-119) . Taken together with available Western and official dat a
on the branch and sex structure of the labor force, the indicated discount means that with adjustment for changes in sex composition employ ment growth would on the average be compounded by .05 of a percentag e
point yearly over the period 1950-75 .
10
A discount for quality of one-half applied to the increas e
in cultivated area in the fifties, when the New Lands Program was i n
full swing, would raise factor productivity growth during that decad e
by one-tenth of one percent .
11
The volume of mineral resource inputs relatively to GNP in 196 6
is inferred chiefly from data in Treml et al .
(1973, pp . 46, 116) indicatin g
that the gross output, less net exports of minerals, in 1966 amounte d
to 15 .4 billion rubles at producers ' prices . This represents, I believe ,
a nearly comprehensive total, but, improperly for our purposes include s
some fabrication and also limited inputs of minerals into the minera l
extraction branches themselves . In the light of Becker (1969, pp . 477-478) ,
I raise the indicated total to 18 .9 billion rubles in order to allow fo r
subsidies . This is 9 .3 percent of the Soviet
1966 GNP, which exclusiv e
of services is taken, from data in diverse sources, to amount to 20 4

billion rubles at factor cost .
49a .
As for the real cost of mineral extraction, for purposes of th e

Solow Model (see below) reference is appropriately to the trend over tim e
in the comparative real cost of mineral extraction, on the one hand, and o f
final output in the economy generally, on the other . The cited averag e
annual increase of 1 .5 percent is intended to represent the trend i n
mineral extraction costs in that comparative sense, and results from
somewhat impressionistic summarization of official price index number s

in different extractive branches, as given in TSU (1971, p . 175 ; 1978 ,
p . 142), and comparative trends in average money wages and output pe r
worker in material sectors as a whole . On money wages, see TSU (1978 ,
p . 385) ; output per worker in material sectors is calculated from dat a
compiled in this essay . I use the implied measures of wage cost per uni t
of output to deflate nominal price changes in extractive branches, and s o
to obtain an indication of changes in real costs in the desired sense .
The official prices considered are net of turnover taxes, but are stil l
distorted by subsidies ; how these may have varied over the perio d
studied is conjectural .
50 .
Regarding the underlying calculation of the impact of the increas e

in the real cost of minerals, let Y be net output of the final good ,
Then
12 Aggregate farm and non-farm household earnings from CI A

(Nov . 1975) ; corresponding employment data from Table 5 . On th e
adjustment for sex, see note 8 .
13
To be more specific, I assume Cobb-Douglas functions for th e
farm and non-farm sectors whose coefficients for capital and labo r
are proportional to those in the Cobb-Douglas function that I
applied to the two sectors together . With farm land rent amountin g
as before to 16 .1 billion rubles, or .23 of farm output in 1970 ,
the resulting labor and capital earnings shares are for agricultur e
.51 and .26, and for industry .66 and .34 . On actual labor inputs ,
see Table 5 . On correpsonding capital inputs, see sources and method s
cited in Appendix for such inputs in the two sectors together . O n
farm and non-farm outputs, see Greenslade (1976) .
With inputs and outputs as so determined, I find that the margina l

productivity of labor in 1970 is 960 rubles in agriculture and 2110 ruble s
in non-farm sectors . Note that the computation also implies a highe r
marginal productivity of capital in agriculture than in non-farm sector s
in 1970, but the difference is slight : 16 .7 compared with 14 .9 percent .
51 .
14I am indebted to Leon Smolinski for allowing me to se e

results of his unpublished study of the size of the firm in the USSR .
15 For the industries in question, the rate of growth o f
plant size, seems to average out at about 5 percent annually over th e
years 1956-65 . Among industries for which Smolinski could compil e
serial data on plant size (I rely again on his unpublished study) I
refer to 28 non-machinery branches . Regrettably, among the machinery branches ,
only two industries--motor vehicles and tractors, with rates of growt h
of plant size of (-) 2 .1 and 7 .4 percent respectively--are covered .
During 1956-65, industrial output grew by 7 .7 percent yearly .
0f 20,944 mining and manufacturing establishments counte d
in the Norwegian census of 1963 (Grilliches and Ringtad obtain thei r
basic data from this source), but 73 had 500 or more employees . I n
the USSR in 1970, the average enterprise employed 644 workers .
17Among the more noteworthy : the progressive transformation
of agriculture through the liquidation of the Machine Tractor Station ;
the increasing stress on the state farm compared with the collectiv e
farm form of organization ; introduction of wage-like payments in th e
collective farm itself and the sharp post-Stalinian increases i n
procurement prices ; successive reorganizations of industry, with th e
traditional preeminant industrial ministry being superceded by regiona l
councils under Khrushchev and then reestablished as the preeminant entit y
by his successors ; the fluctuating responsibilities of the industria l
enterprise (predpriatie) under the 1965 planning reform and its
20
For Western countries, reference is to defense and spac e
R and D that is government funded and supposedly represents activitie s
that are " directly related to military purposes . "
Just what this mean s
is not entirely clear . One wonders whether, in addition to work on ne w

weapons, some funds do not go to activities of sorts that might raise th e
output of old weapons, and so clearly contribute to TPP . In compilin g
data on Soviet defense and space R and D, however, Nimitz has sought to
evolving implemintation ; since 1973, the progressive shift to th e

association (ob'edinenie)
as the basic operating agency in industry ;
the successive revisions of incentives for industrial management unde r

and after the 1965 planning reform ; the reforms in the industria l
wage system and structure in the late fifties and more recently ; th e
successive reforms of industrial wholesale prices ; and last bu t
no doubt not least the progressively increased application o f
mathematical techniques and conputers to planning .
18
The shifts in working arrangements were rather spread ou t
temporally, but I suspect any favorable impact on productivity would hav e

been more pronounced in later than in earlier years . With allowance fo r
such gains, therefore, TPP might, if anything, decline more sharply than
calculate . On the other hand, allowance ' for possible biases referred t o
below, n . 26 and p . 00, would have a contrary affect . In the summar y
tabulation in the text, I assume that the adjustment rate for natura l
resource exhaustion that was derived for 1970-75 applied to each sub-interva l
considered .
19 A chief source of incomparability in the R and D expenditure
data is the exclusion of capital expenditures from U .S . totals . Depreciation ,
however, is apparently included in R and D outlays of the U .S . busines s
enterprise sector . With the exclusion of investment in construction ,
the Soviet R and D ratio for 1965 falls to 2 .4 and for 1975 to 3 . 2
percent .
The Soviet totals also include social science R and D i n
higher education . Such outlays are omitted from data for the Unite d
States and some other Western countries . On the other hand, the Sovie t
data are probably less inclusive than most Western data in respect o f
outlays for the development of prototypes . On the comparative scope o f
Soviet and Western Rand D data, see Nimitz (1974) ; Nolting (Sept ., 1973) ;
OECD) (1977) ; Campbell (1978) .
wit h
achieve comparability / Western data . The result should be broadl y
indicative of the size of Soviet allocactions to defense and spac e
relatively to those in the West .
21
To return to the issue regarding the inclusion, in productivit y
measures such as are in question, of increased values relatively to resourc e

cost that final users obtain from new products, note that such value s
would indeed be completely omitted if new products were included i n
underlying data on aggregate output at their long-run resource cost .
Furthermore, such a valuation of new products is clearly the desideratu m
where the output data are taken, as is often the case, as observation s
on the community's " theoretic " production possibilities . Should th e
new products be valued at prices that include above-normal profits, however ,
the resulting productivity measures are apt to reflect in adecrsin
additional final user values at given resource cost . That could be s o
whether reference is to market prices or factor cost, for the latter a s
well as the former might include above-normal profits .
To what extent do underlying output data reflect additional use r
values in these ways? This is an intricate theme . I can only recor d
here that, regarding output data for Western countries, it would b e
surprising if above-normal profits generated by new final products di d
fo r
not often have an imprint on calculated output . As for output data fo r
the USSR, I have used those of Greenslade where valuation is supposedl y
at an imputed factor cost that is exclusive of any and all profits .
In fact, Greenslade's valuation procedure (1976, pp . 284) is decidedl y
more complex than that, and one wonders whether enhanced user values from
54 .
new products may not sometimes have an impact even here .

Although I have focused on new products, all that has been sai d
applies as well to quality changes Indeed, it is difficult to know wher e
one leaves off and the other begins . Note, though, that the question a t
issue here concerns the degree to which output measures reflect additiona l
user values relatively to resource cost . In discussion of qualit y
changes, reference is often simply to the degree to which output measure s
reflect such variations . Whether there are additional values surpassin g
additional resource cost may not be addressed .
On previous discussion of final user values and productivit y
measures, see Denison (1962, pp . 156-157 ; 1967, pp . 27-29 ; I979, p . 124) .
g
22See particularly Amann, Berry and Davies (n .d.); Noltin
(Sept . 197J, Sept I976, 1978) ; Nimitz (1974) ;Campbell (July 1978) ; Parrott(1980) .
Also informative on the Soviet R and D process generally is Germashe v
(I962) .
h
23I refer to patents issued to Soviet citizens . Although suc
patents ar e
/legally obtainable, and theoretically confer
a restrictive en -
titlement on the recipient, Soviet inventors practically always fin d

it expedient to apply rather for a " certificate of authorship . "
The invention is then available for general use, though the person s
responsible are suitably rewarded .
24A principal obstacle to staff curtailment is the need to fin d

alternative employment for released workers .
See McAuley
(1969, pp . 121ff) ; Berliner (1976, pp . 158ff) ; Granick (1979) ;
also Manevich
(1971, pp . 17, 20) ; Mikul'skii (1979, pp . 116, 249) . I am
indebted to Dr . Tibor Bais for the last two references .

24
The catch-up process must often have also involved restoratio n

to full-operation, with relatively-limited commitment o fnew-capitl,o
and
plant and equipment that had been largely or entirely written off . That ,
however, would only nominally boost TPP, for there would then be one mor e
reason, additional to those considered in Section III, why calculate d
productivity growth would have failed to account accurately for the ac
al
growth of inputs .
26
It remains to say that Soviet Imports of Western machinery hav e
been relatively very small through much of the period studied, though ther e
has been some increase since

Hanson
1955 .
Here are some benchmark estimates b y
(1976, p . 796) of the percentage relation between imports o f
Western machinery and domestic machinery investment :
1955, 1 .0-2 .0 ; 1960 ,
1 .7-3.4 ; 1965, 1 .1-2 .2 ; 1970, 1 .7-3 .4 ; 1975, 2 .4-4 .8.

Note that Green and Levine refer to imports of Wester n
machinery, exclusive of transport equipment . On the impact of technolog y
transfers under detente, see in addition to the cited essays of Green an d
Levine, Hanson (1976), Weitzman
(1979) . Green (1979), and Toda (1979) .
56 .
upper limit of 0 .4 of a percentage point follows from a n
27An
assumption that the capital stock consists of a single kind of asse t

with a service life of 25 years . I also assume that as of 1950 th e
capital stock had an average age such as would have materialized i f
prior to that year
gross investment had grown steadily for at leas t
25 years at a rate of 12 .6 percent annually, and that as of 1980 th e

capital stock had an average age such as would have materialized i f
prior to that year gross investment had grown steadily for 25 year s
at a rate of 3 .6 percent annually . The resultant average ages ar e
6 .I8 and 10 .57 years . Hence, over the 30 year interval 1950-80 th e
average age increases by 4 .39 years, or by .I46 of a year per calenda r
year . A decline of .4 of a percentage point in TPP is indicated b y
that degree of aging if we suppose that the entire increase in TP P
during 1950-60, 2 .9 percent annually was of an embodied sort tha t
occurs simply with the introduction of successive new vintage s
(i .e .,
28As
.4 = .146 x 2 .9) .
readily seen, it would vanish if the growth of employmen t
due to educational advance should continue at the 1960-75 rate, an d

should the Solow model of the cost of mineral resource exhaustio n
apply, with mineral output rising from 9 .3 to 15 percent of the GNP .
Also the real cost of mineral extraction, which I assumed previousl y
to increase by 1 .5 percent yearly is now supposed to increase by 3, 0
percent yearly .
I have been referring to factor productivity as initially compute d
for material sectors . For comparative data on such productivity an d
productively for the whole economy, see Table 4 .
..
56a
29 Consumption standards depend in part on government policy o n

resource allocation, particularly the division of national income betwee n
consumption, investment and defense . In a sense, then, the variation i n
standards might be viewed as one more aspect of the changing workin g
arrangements that I discussed above . That mighs be the more in order ,
since the governmen t ' s policy in the sphere in question did in fact underg o
a significant change in the period studied (Bergson, 1978-A) . But consumption trends are evidently determined by much more than policy, s o
their classification with changing working arrangements could b e
confusing .
30
I refer to material sectors and, to allow for weather fluctuations ,
again cite the 1968-78 tempo .
57 .
31
rates of growsh o f
Here are the annual percentage/ " science " and new fixe d
investment : 1950-60, 10 .5 and 11 .5 ; 1960-70, 7 .7 and 6 .5, and 1970-75, 6 . 1

and 4 .8 . See Greenslade (1976, pp . 275, 297) .
32 Among existing socialist economies,
only one, that o f
Yugoslavia, can be taken to exemplefy market socialism, but the Yugosla v

performance in respect of TPP and TPE has yet to be systematically studied .
The Yugoslav experience is in any event made rather special by th e
prevalent system of " labor self-management . "
Of more interest as a possible prototype for a reformed Soviet plannin g
system is the New Economics Mechanism which the Hungarians have bee n
operating since 1968 . Although legacies of the previous system o f
centralist planning seem too numerous for the NEM fully to qualify as
form of market socialism, the , system represents a substantial shift i n

that direction . Here too the impact on TPP and TPE remains to be studied ,
but Hungarian economists themselves do not appear to claim any majo r
gains in respect to such macroeconomics aspects . Rather the contention i s
that there have been improvements in quality, assortment and availability .
For a survey of the Hungarian experience with NEM, see Portes (I977) .
58 .
Appendi x
Sources and Methods for Table 1
1.
Gross product .
On the growth of the GNP, see Greenslade (I976 ,
p . 273) . For material sectors, gross product is obtained by deductin g

from GNP she output of services, as given in ibid ., p . 27I . Greenslade ' s
index numbers for GNP and sectoral outputs are converted to ruble figure s
by reference to ibid ., p . 284 .
2. Labor :
(a) Employment .
this i s
For all sectors,/civilian employment plus th e
armed forces, as given in Feshbach and Rapawy (1976, pp . 132, 135) an d

Feshbach (1978) . For material sectors, I deduct the armed forces, an d
also employment in services, as given in Feshbach and Rapawy (1976, p . I35) ,
but then restore employment in trade, public dining, and material technica l
supply, sales and procurement, in Rapawy (1976, pp . 28-29) .
In the foregoing, I refer to data outside parentheses . As to parentheti c
figures, reference is to totals inclusive of an allowance for penal labo r
amounting in 1950 to 3 .5 millions, in 1960 to 1 .5 millions, and in 197 0
and I975 to 1 .0 million . On these magnitudes, see Bergson (196I, pp . 443ff) .
(b) Hours .
For material sectors average annual hours per worke r
are obtained from civilian employment as above in (a) and correspondin g

data on such employment in man-hours in Feshbach and Rapawy (1976, p . 138) .
hours o f
For all sectors . I also allow for hours of military personnel averagin g
1780 a year, or the same as that indicated for civilian workers
in 1970 .
For both all and material sectors, I assume hours in 1975 averaged th e
same as in I974 . For all sectors, I also adjust the resulting variatio n
to allow for the fact that in the case of services changes in hours ten d
to have no effect on calculated output .
59 .
Data in parentheses are intended to allow for changes in the qualit y

of hours associated with a change in their length . For the decade in question ,
I assume that with 1970 as base the variation in hours, after allowance fo r
such qualitative changes, is simply one-half that without such allowance .
For the decade 1950-60, when hours change most, the result seems to com e
to much the same thing as might be indicated by more elaborate compulation s
such as Denison ' s .
3. Capital .
For all sectors, reference is to fixed capital a s
represented by Soviet official end-of-the year data on
osnovnye fondy i n
TSU (1961, p . 85), TSU (1971, p . 60), TSU (1973, p . 60), TSU (1978, p . 41) .
The Soviet data refer to fixed capisal gross of depreciation and cover ,
among other things, draft and productive livestock . For material sectors ,
reference is to fixed capital as represented by corresponding officia l
dasa for " productive " sectors .
is
4. Farm land. This/ sown area as given in TSU (1961, p . 387), TSU (1966 ,
p . 284), TSU (I978, p . 224) .
5. Factor share weights . The underlying absolute data, which ar e
follow
intended to refer to 1970,/ (billions of rubles) :
Al l
sectors
Materia l
sector s
Labor
202 .1
161 . 2
Capital
I05 .2
84 . 1
16 .1
16 .1
Farm land
For all sectors, the labor share is obtained as the income of households ,
currently earned, less imputed net rents, plus social security charges, a s
given in CIA (Nov . 1975, pp . 3, I0) . For capital, I allow a 12 percen t
return on net fixed capital, as given in ibid ., p . 80 . I allow only 6

percent, however, on the net fixed capital in housing, and no return o n
net fixed capital in services . The data on fixed capital in the cite d
source are in 1955 rubles . In the light of conflicting official an d
a
Western (e .g ., Becker, 1974) data, I rather arbitrarily allow for a 15 percen t
increase in prices of capital goods from 1955 to 1970 .
Interest at 12 percent on inventories is given in ibid ., p . 80 .
also allow this rate on livestock for fattening and young livestock, a s
given in ibid .,
pp . 59, 80, 81, 83 .
The factor share for capital is intended to be gross of depreciation .

on the basis of Moorsteen and Powell (1966, pp . 11-12), I allow fo r
depreciation at the rate of 3 .5 percent on the gross stock of fixed capital .
The latter is given in CIA (Nov.1975, p . 80), though again an upwar d
revaluation of 15 percent seems indicated .
As for farm land, with U .S . experience as a benchmark, I take agricultura l
rent so be 30 percent of farm labor earnings as indicated in CIA (Nov . 1975 ,
pp . 3, I0) .
For material sectors, for labor I deduct from labo r ' s share for al l
sectors, military pay and subsistence, social security on such earnings ,
and service wages and other service earnings and corresponding socia l
security in CIA (Nov . 1975, pp . 3, 10, 76) .
I allow for a 12 percent return on the net fixed capital stock an d
inventories in all sectors, less the corresponding amounts in housing an d
services as indicated in CIA (Nov . 1975, pp . 80, 83) . In the case of fixe d
capital I revalue capital as was done above . Depreciation is again take n
to be 3 .5 percent of the gross fixed stock . The laster is calculated i n
the same way as the net stock from ibid ., p . 80 .
Reference s
Abbreviation s
CIA : Central Intelligence Agenc y
JEC : Joint Economic Committee, United States Congres s
OECD : Organization for Economic Cooperation and Developmen s
TSU : Tsentral'noe statisticheskoe upravlenie
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FINAL REPORT T O

The Soviet Economy to th e

The President and Fellows of Harvard Colleg e

COUNCIL CONTRACT NUMBER :

this report was supported in whole or i n

THE SOVIET ECONOMY TO THE YEAR 200 0

"Soviet Industrial Production "

Gertrude E . Schroeder "Consumption "

"Energy in the USSR to 2000 "

"Planning and Management "

"Soviet Technological Progress :

"Politics and Priorities in th e

"Agricultural Production "

"Regional Economic Development "

"Population and Labor Force "

Daniel L . Bond and

"The Soviet Economy to th e

Soviet Technological Progress :

The paper distinguishes between two concepts of technological progress :

coefficient has come to be called . For purposes of quantitative appraisal ,

for the impact of causal aspects other than the introductio n

and spread of new technologies, I also derived measures of TPP .

60,2 .88 ;1960-70 .98 ; 1970-75, .16 .

limitations of the computations, TPP probably has slowed to a relativel y

Soviet Technological Progress :

The paper distinguishes between two concepts of technological progress :

coefficient has come to be called . For purposes of quantitative appraisal ,

for the impact of causal aspects other than the introductio n

and spread of new technologies, I also derived measures of TPP .

tations in both underlying data and methodology, while further adjustment s

60,2 .88 ;1960-70 .98 ; 1970-75, .16 .

limitations of the computations, TPP probably has slowed to a relativel y

In respect of TPP, the Soviet performance appears to have bee n

" catch up " opportunities, technological transfers, and so on .

We can only speculate as to the sum of these forces in future . A distinc t

Although TPE was derived primarily as an element in the computatio n

Note that TPE was obtained in turn by deducting from facto r

an allowance for labor qualit y

improvement due to educational advance .

I also added to factor pro-

ductivity as initially calculated an allowance for natural resourc e

In future, the educational quality of the labo r

In considering the sources of past productivity growth I made n o

Even a very provisional appraisal ,

however, may facilitate juxtaposition of my results with related finding s

Some Methodological Issues

Productivity Growth and Technological Progress

Technological Progress Proper

Conditioning Factors : R and D versu s

Conditioning Factors : The Innovation Process

Soviet Technological Progress :

The aim of this volume is to appraise the future course of th e

a basis for concluding speculation about futur e

prospects as to Soviet technological advance .

As between these two concepts of technological progress, the secon d

embraces also other causes of output expansion at given resource cost, a s

Technological progress from its very nature is manifest in productivit y

comparative growth of output and factor inputs . Such calculations hav e

in earlier intervals is in question . Fo r

Factor inputs, total

But the Greenslade serie s

Inquires into the sources of Soviet post-war growth very ofte n

' Even though I mus t