Regional Economic Development in the Soviet Union, Two Case Studies: the Baltic and Central Asia.

This is a study to evaluate two issues regarding regional development in the Soviet Union. The first issue is to identify the principal contributors to regional economic growth. The second is to analyze the impact of selected Soviet policies on regional development. The growth records of the Baltic and Central Asia are examined both in terms of factor input growth, and in terms of productivity growth. The two aspects of Soviet policy analyzed are the regional impact of non-regional policies (e.g., maintaining high rates of growth and a powerful military) and the impact of policies that are basically regional in nature (e.g., equalizing living st and ards across geographic regions). The method of study is to formulate and estimate a linear simultaneous model for a Soviet economic region. The data consist of pooled cross-sectional time-series information covering the republics of the two regions (excluding Turkmenia) from 1960 to 1977. The data set is included in an appendix. The causes of growth in the nonagricultural sectors are analyzed by applying the methods of Edward F. Denison to the estimation results from the model's production functions. The same basic approach is attempted for agriculture, but poor estimation results limit success. Issues bearing on changes in the primary factors (capital and labor) are evaluated in the framework of the model. The regional influences of Soviet economic policy are evaluated principally through the equations describing regional investment and consumption. The regional significance of Soviet defense policy is assessed in the investment equations of the model. The relationship between regional factor productivity, the growth objective, and investment are indirectly evaluated. The investment equations are also the vehicle to test the proposition that the Soviet authorities direct significant amounts of investment toward the objective of reducing the inequality in regional per capita net value of output. The model's consumption equations are used to test the proposition that the authorities direct resources to partially equalize regional per capita consumption levels. The results indicate that the principal difference in the causes of non-agricultural sector growth between the Baltic and Central Asia is the substantially (30 per cent) higher returns to scale in the Baltic, due almost entirely to a much higher elasticity of output with respect to capital than in Central Asia. Consequently, in the Baltic productivity increases explain about 35 per cent of total growth of net material product in the non-agricultural sectors, while in Central Asia the corresponding figure is only 18 per cent. There are some indications that higher productivity in the Baltic is accompanied by higher investment levels, given the sectoral composition of total national investment. There is also evidence that increases in Soviet military spending during the study period displaced more investment both in the Baltic and in Central Asia than was the general Soviet case. There is no statistical evidence that investment in the non-agricultural sectors is directed toward objectives of reducing regional differences in per capita output. However, there is evidence to suggest that poorer regions received more favorable treatment in terms of agricultural investment. There is also evidence to support the contention that Soviet policy acts to reduce regional inequality in consumption.PhDEconomicsUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/158354/1/8116342.pd