Judith Thornton

Structural Change in the Russian Far East: Yhe Implications for Trade and Factor Markets

This study compares actual directions of structural adjustment in the Russian Far East since the collapse of the former Soviet Union with estimated directions of adjustment that would be predicted to follow an opening of the region to the world market. How would moving to world prices affect the competitiveness of individual sectors of the Russian Far East? This author estimates the impact of changing terms of trade by revaluing a 1987 input-output table for the Russian Far East by price relatives between internal Soviet prices and world prices estimated by David Tarr [1992]. These estimates measure apparent competitiveness of each sector at world prices and identify four sectors of the Russian Far East—food processing, forest products, light industry, and the chemical industry—as negative value added sectors at world prices. However, actual short-run directions of adjustment in 1992–94 are only partly consistent with the directions predicted in the model. Measured gains from trade are strong on the import side but not on the export side.

The Index Number Problem in the Measurement of Soviet National Income

Abram Bergsons recently published The Real National Income of Soviet Russia Since I928 1 is the most keenly anticipated book to come out of the field of Soviet economics. The result of more than a decade of research on the measurement of Soviet national income and its growth, Bergsons study is the definitive work in an area which has been the subject of several other highly competent studies. Bergsons findings are in no way startling. They serve to corroborate the general picture of Soviet performance which has been built up by Western scholars, Bergson among them, during the last several years. While his results provide scant support for official Soviet growth claims, they provide equally scant comfort to Western scholars who have hoped that the apparently high rate of Soviet growth might prove a statistical illusion. Bergson concludes that the real national income of Soviet Russia since i928 has increased at an average annual rate of 4.7 or 6.7 per cent when valued by alternative measures. This amounts to an average of 3.8 or 5.7 per cent per capita. This rate of growth exceeds contemporary U. S. growth, and either matches or surpasses U. S. growth for periods during which the national incomes of the two countries were at comparable levels. If the results seem familiar, the underlying theory and methodology raise interesting problems. The two main theoretical issues involved in Bergsons computations are his use of factor cost weights and the effects of index number relativity on his final results. While Bergsons use of factor cost weights to reflect marginal rates of transformation has already been the subject of detailed discussion, the index number problems which play a major role in his results deserve further attention. This review is primarily concerned with the methodological and practical issues raised by Bergsons use of index numbers. It examines the relationship of Bergsons formal discussion of index number theory to his empirical treatment of it. Bergson relies mainly on two measures of Soviet growth, one which values output using weights of a fixed base year, 1937, and one called the composite index, which values output using weights of the given year. His composite index results in estimates of average annual growth which are consistently about 2 per cent higher than base-year estimates. Although a 2 per cent difference is sizableindeed, rival estimates of Soviet national income have contested far smaller divergences-such variation is not uncommon between measures which use different weights. Still, the divergence becomes more surprising when the series are