Soviet Union-ECONOMY

Salient Features: Centrally planned socialist economy. Government owned and operated all industries: banking, transportation, and communications systems; trade and public services; and most of agricultural sector. CPSU, guided by principles of Marxism-Leninism, controlled planning and decisionmaking processes; central planners determined investment, prices, distribution of goods and services, and allocation of material and human resources according to CPSU priorities. Defense and heavy industries emphasized over consumer and agricultural sectors. Availability and quality of food, clothing, housing, and services often inadequate for average citizen. Economy planned as being largely self-sufficient. Economic development and population centers primarily west of Ural Mountains, but many raw material and energy resources in eastern areas, making access difficult and both exploration and transportation costly. Declining economic growth since mid-1970s caused in part by overly centralized planning, excessive bureaucratic administration, resistance to innovation, shortages of skilled workers, worker alienation, and low productivity. Beginning in 1985, regime attempted to implement economic reform.

Gross National Product (GNP): Estimated at US$2.4 trillion in 1986; US$8,375 per capita in 1986; real growth rate in 1988 about 1.5 percent, continuing deceleration begun in mid-1970s.

Industry: Diversified industrial base directed by complicated, centralized bureaucratic system. Highest priorities given to machine-building and metal-working industries and to military matériel manufacturing; consumer industries not allocated comparable human, financial, or material resources. Technological advances applied primarily to defense industries. Major industrial branches: manufacturing (including defense), chemicals, metallurgy, textiles, food processing, and construction. Employment in industry and construction 38 percent in 1988.

Energy: Self-sufficient in energy and a major energy exporter. World's largest producer of oil and natural gas and second largest coal producer. Enormous energy resources in Siberia, but cost of extraction and transportation over great distances to western industrial areas high. Main generators of electric power: thermoelectric (coal, oil, natural gas, and peat), nuclear power plants, and hydroelectric stations.

Agriculture: Collective farms and state farms supplied bulk of agricultural needs. Wheat and other grains, potatoes, sugar beets, cotton, sunflower seeds, and flax main crops. Private plots- -small percentage of sown area--produced substantial quantities of meat, milk, eggs, and vegetables. Large amounts of grain and meat imported. Despite high investment, serious problems in agriculture persisted: insufficient fertilizer; inadequate refrigeration, storage, and transportation; wasteful processing; and unrealistic planning and management. More fundamental problems: only 1.1 percent of arable land receives optimal precipitation; widely fluctuating crop yields; and many fertile areas have insufficient growing seasons because of northern latitudes or moisture deficiency.

Fishing: World's largest oceangoing fishing fleet, accompanied by large, modern, fish-processing ships, operated in Atlantic and Pacific ocean systems. Inland seas and rivers accounted for less than 10 percent of catch.

Forestry: With a third of world's forested areas, country's production of logs and sawn timber exceeded that of all other countries, despite inefficient and wasteful processing. Inadequate processing capacity made production of pulp, paper cardboard, plywood, and other wood products low.

Foreign Trade: Government policies of self-sufficiency and strict control maintained trade in minor economic role. In 1985 exports and imports totaled US$185.9 billion, but each accounted for only 4 percent of GNP. Major trade partners included other communist countries, particularly those of Eastern Europe, which accounted for 67 percent of trade. Industrialized countries accounted for 22 percent and Third World countries for 11 percent. Major exports petroleum and petroleum products, natural gas, metals, wood, agricultural products, and manufactured goods, primarily machinery, arms, and military equipment. Major imports grain and other agricultural products, machinery and industrial equipment, steel products (especially large-diameter pipe), and consumer goods. Balance of trade favorable in mid-1980s. Trade with socialist countries conducted on bilateral basis with imports balancing exports. Value of exports to Third World countries, including arms and military equipment, exceeded hard-currency deficit caused by unfavorable trade balance with West. Merchant fleet consisted of about 2,500 oceangoing ships.

Exchange Rate: Officially, 0.61 ruble per US$1 (1988 average), but rubles had no official value outside of Soviet Union. Soviet authorities set exchange rates based on policy rather than market factors. Unofficial (black market) exchange rates offered considerably more rubles per United States dollar.

Fiscal Year: Calendar year.

Data as of May 1989