Russian Economic Development Over Three Centuries: New Data And Inferences 9811384282, 9789811384288, 9789811384295

Table of contents :
Preface......Page 5
Contents......Page 8
List of Contributors......Page 12
Abbreviations......Page 13
List of Figures......Page 15
List of Tables......Page 26
1.1 Purpose of the Book......Page 29
1.2 Territorial Transformation......Page 31
1.3 Structure of the Book......Page 39
1.4 Analytical Examples Using the Results of the Book and Related Data......Page 45
1.5 Remaining Tasks......Page 66
References......Page 67
2.1 Introduction......Page 70
2.2 State Statistics in the Russian Empire......Page 71
2.3 State Statistics in the Soviet Union......Page 74
2.3.1 Early Period of the Soviet Union (1917 to the 1920s)......Page 75
2.3.2 Stalin Period (the 1930s to the First Half of the 1950s)......Page 76
2.3.3 Late Period of the Soviet Union (the Second Half of the 1950s to 1991)......Page 78
2.4 State Statistics in the Russian Federation......Page 80
References......Page 83
3.1 Introduction......Page 86
3.2.1 Population Research on the Imperial and Soviet Eras......Page 88
3.2.2 Recent Research Trends......Page 91
3.3.1 Household Censuses (Reviziia) in Imperial Russia......Page 94
3.3.2 Compilation of Population Statistics by the Central Statistical Committee of the Ministry of the Interior......Page 95
3.3.3 Statistical Organization and Population Statistics in Soviet and Post-Soviet Russia......Page 98
3.4.1 Population Statistics from Imperial Russia......Page 101
3.4.2 Population Statistics in Soviet and Post-Soviet Russia and Problems Relating to Them......Page 105
3.5 Results......Page 107
3.6 Challenges Remaining......Page 121
3.6.1 Reliability of Imperial-Era Data and Estimates for Non-European Regions of Russia......Page 122
3.6.3 Surveys of Statistics for During and Immediately After World War II......Page 123
Appendix: Time Series of Alternative Estimates of the Total Population of the Territory Covered by the Present Russian Federation in the Imperial Era......Page 125
References......Page 127
4.1 Introduction......Page 131
4.2 Historical Development of Labor Statistics......Page 135
4.3 Basic Concepts in Labor Statistics......Page 137
4.3.1 Soviet Methodology of Labor Statistics......Page 138
4.3.2 Labor Resource Fund and Economically Active Population......Page 140
4.3.3 Employed and Unemployed in the New-Russian Labor Statistics......Page 143
4.4 Long-Term Series of Labor Statistics......Page 145
4.4.1 Economically Active Population and Employed......Page 146
4.4.3 Employed Persons by Industrial Sector......Page 148
4.4.4 Trends in the Labor Force After World War II......Page 155
References......Page 157
5.1 Introduction......Page 159
5.2 Agricultural Statistics in Imperial Russia......Page 160
5.3 Agriculture for the Soviet Union and the Russian Republic......Page 178
5.4.1 Production Statistics......Page 186
5.4.2 Issues with Production Statistics......Page 191
5.4.3 Kolkhoz and Sovkhoz Statistics......Page 196
5.4.4 Labor Statistics......Page 200
5.5 Agriculture and Agricultural Statistics in the Russian Federation......Page 201
References......Page 206
6.1 Introduction......Page 208
6.2 Industrial Statistics in the Russian Empire......Page 209
6.3 Industrial Statistics in Soviet Russia......Page 221
6.4 Industrial Statistics in the Russian Federation......Page 236
References......Page 243
7.1 Introduction......Page 246
7.2.1 Monetary and Financial System in the Imperial Period......Page 250
7.2.2 Monetary and Financial Statistics in the Imperial Period......Page 255
7.3.1 Monetary and Financial System in the Soviet Period......Page 258
7.3.2 Monetary and Financial Statistics in the Soviet Period......Page 266
7.4.1 Monetary and Financial System in the New Russia Period......Page 268
7.4.2 Monetary and Financial Statistics in the New Russia Period......Page 270
References......Page 272
8.1 Introduction......Page 275
8.2.1 Outline and Sources of the Budget Statistics......Page 277
8.2.2 Revenues of the State Budget......Page 279
8.2.3 Expenditures of the State Budget......Page 283
8.2.4 Emergent Revenues of the State Budget (Financing of Budget Deficits)......Page 285
8.3.1 Outline and Problems of Budget Statistics......Page 286
8.3.2 Data Sources......Page 289
8.4.1 Outline and Problems of Budget Statistics......Page 292
8.4.3 Result of the Estimation and Remaining Problems......Page 295
8.5.1 Data......Page 297
8.5.2 Budget Deficits and Their Financing......Page 298
8.5.3 Direct Taxes and Economic Development......Page 303
8.5.4 Defense Expenditures......Page 305
8.5.5 Indirect Taxes......Page 306
8.5.6 Socio-cultural Expenditures......Page 309
8.5.7 Changes in the 2000s and Customs Duties......Page 310
Appendix......Page 311
References......Page 312
9.2 Materials......Page 314
9.3 Previous Research......Page 315
9.4 Trade of Imperial Russia......Page 316
9.5.1 Imports and Exports by Product......Page 318
“Residual” Trade Items......Page 319
Exchange Rate......Page 321
Trade During World War II and Lend-Lease......Page 322
9.5.2 Imports and Exports by Region......Page 323
9.5.3 The Long Trend of Soviet Trade (1918–1991)......Page 328
9.6 Trade in the Russian Federation, 1992–2010......Page 333
Appendix......Page 336
References......Page 337
10.1 Introduction......Page 339
10.2 Origin of Soviet Formula for Foreign Trade Earnings......Page 341
10.3 Estimation of Foreign Trade Earnings in the Soviet National Accounting......Page 344
10.4 Concluding Remarks......Page 353
References......Page 354
11.1.1 Historical Background......Page 356
11.1.2 The Estimation Method......Page 358
11.1.3 Results......Page 361
11.1.4 Checking Estimation Biases......Page 364
11.1.5 International Comparisons......Page 365
11.1.6 Outlook: Growth and Volatility......Page 370
11.2.2 Outline of the Estimation Method......Page 375
11.2.3 Conversion from MPS to SNA......Page 377
11.2.4 Estimation of Nominal Value Added and GDP......Page 378
11.2.5 Sectoral Growth Rates......Page 386
11.2.6 GDP Growth Rates of the Russian Republic......Page 392
11.2.7 International Comparison......Page 397
11.2.8 Economic Background of the Soviet Collapse......Page 399
11.2.9 Comparison of the Growth Paths of Japan and Russia......Page 403
11.3.1 Informal Economy in the Soviet System......Page 406
11.3.2 Compiling the Household Expenditures Dataset......Page 408
11.3.3 Estimating Nominal GDP Including Informal Economy......Page 417
11.3.4 Estimating Real GDP......Page 421
11.3.5 Remarks on the Informal Economy......Page 423
11.4.1 Transition to SNA......Page 426
11.4.2 Notes to Data......Page 427
Appendix......Page 434
References......Page 436
12.1 Introduction......Page 441
12.2.1 Methodology......Page 442
12.2.2 Data for the Soviet Union, Then......Page 443
12.2.3 Data for Russia, Now......Page 446
12.3.1 Results for the Soviet Union, Then......Page 447
12.3.2 Results for Russia, Now......Page 448
12.4 Observations Across the Soviet Union, Then, and Russia, Now......Page 450
12.5 Concluding Remarks......Page 456
References......Page 457
Index......Page 459

Citation preview

Russian Economic Development over Three Centuries New Data and Inferences Edited by Masaaki Kuboniwa Yasushi Nakamura · Kazuhiro Kumo Yoshisada Shida

Russian Economic Development over Three Centuries “This collection and discussion of Russian economic statistics from the 1860s to the 2010s will be extremely useful to students of Russia’s long-run economic development and of comparative economic history. It is the result of an enormous effort to cover the whole of the economy, assess the meaning of the data, utilise the most accurate published and archival sources, adjust the data so that it covers the territory of modern Russia, and to use standard international statistical concepts and procedures.” —Michael Ellman, Professor Emeritus, University of Amsterdam “This book is an invaluable tool for any economist, historian or political scientist interested in Russia and the Soviet Union. It provides geographically-adjusted data on economic and demographic trends from the mid-19th century to current times, and detailed information on production, finance, international trade, etc. Moreover, the Editors have provided thoughtful analyses of the long-term development of Russia over the past 300 years. The contributors to the volume are all experts in the analysis of Russian data and their work is strengthened by the recent opening of Russian archives.” —Josef C. Brada, Professor Emeritus, Arizona State University, and President, Society for the Study of Emerging Markets “This volume presents Russia’s long-run gross domestic products (GDP) and its components, consisted from population and employment, goods-and-services production, foreign trade, government finance, rare monetary series, internationally-­compared, standardized GDP and its per-capita, and personal consumption for the planned period. Adding to thorough examinations of past researches, the authors have made intensive surveys for more than two decades of documents preserved and newly released in the official Russian archives. Truly indispensable and highly recommended for studies in comparative economic history.” —Konosuke Odaka, Professor Emeritus, Hitotsubashi University

Masaaki Kuboniwa Yasushi Nakamura Kazuhiro Kumo  •  Yoshisada Shida Editors

Russian Economic Development over Three Centuries New Data and Inferences

Editors Masaaki Kuboniwa Institute of Economic Research Hitotsubashi University Kunitachi, Tokyo, Japan Kazuhiro Kumo Institute of Economic Research Hitotsubashi University Kunitachi, Tokyo, Japan

Yasushi Nakamura Graduate School of International Social Sciences Yokohama National University Yokohama, Japan Yoshisada Shida Research Division The Economic Research Institute for Northeast Asia Niigata, Japan

ISBN 978-981-13-8428-8    ISBN 978-981-13-8429-5 (eBook) https://doi.org/10.1007/978-981-13-8429-5 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Nature Singapore Pte Ltd. 2019 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: © Library Book Collection / Alamy Stock Photo This Palgrave Macmillan imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-­01/04 Gateway East, Singapore 189721, Singapore

Preface

Our project on the Russian long-term economic statistics started in 1995 as a part of the Asian Historical Statistics Project, including Russia as a special volume in addition to 11 Asian countries and regions (Taiwan, Vietnam, China, South Korea, Thailand, India, Philippines, Indonesia, Turkey and Egypt, Japan, and the Central Asian region) that Institute of Economic Research of Hitotsubashi University organized. It took over a quarter of a century to publish this book. After the collapse of the Soviet Union, access to Russian archival materials had been getting increasingly easier. This influenced heavily our courses of research. The Russian archives are undoubtedly huge sources of Russian historical statistics; we, however, learned it is not easy to find relevant materials and information from the vast ocean of archive materials. This book is intended to provide the first comprehensive volume of Russian long-term statistical time series in the literature which cover dynamics of population, employment, agricultural and industrial outputs, gross domestic products (GDP), state finance, monetary system, and foreign trade over the last three centuries. We recognize there are many insufficiencies and unclear points in the long-term statistics we compiled. Nevertheless, we hope this book serves as the foundation and the starting point for future researchers on Russian economic history and statistics. In addition to the tables and figures in this book, a comprehensive data set on Russian historical statistics is available  at a website of the Institute of Economic Research, Hitotsubashi University: www.ier.hit-u.ac.jp/ histatdb/projects/view/2. Each chapter of the book explains in detail the part of the data set relevant to the chapter. v

vi 

PREFACE

The book concerns a unique country, Russia, which experienced two revolutions and two world wars with territorial transformations; however, all of us have been always looking at the economic development in Russia on the one hand and that in Japan on the other hand. As Alexander Gerschenkron classified Japan and Russia in “the late comers” to capitalism, Japan and Russia started their modernization and industrialization around the same time. Russia started it after her defeat in the Crimean War in 1856; Japan started it after the military power show of the American black fleet came to Japan in 1853–1854. As the book discusses later, the economic development in Japan and Russia was not very different in terms of macroeconomic indicators until World War II. Then, the two economies followed the growth paths almost in a mirror image. To what extent were Japan and Russia different in their economic development? What accounts for the difference, the global factors or the factors specific to each economy, the policy factors or the social, historical, and geographical factors difficult to be changed? This book little discusses these questions, although we always have been asking ourselves about these questions. We, therefore, hope that future researchers in the areas of comparative economics, Russian and Japanese economic histories, and economic development and growth would tackle those questions being based on this book. During the long gestation period of this book, we have been continuing to work on the issues relating to the topics assigned to each of the authors. The following is a short list of the books we published during the period: Kuboniwa, M. and Gavrilenkov, E., Development of Capitalism in Russia: The Second Challenge, Maruzen, 1997; Kuboniwa, M., Structure and Growth of the Russian Economy, Iwanami, 2011, in Japanese; Kumo, K., Migration and Regional Development in the Soviet Union and Russia: A Geographical Approach, Beck Publishers, 2003; Kumo, K., ed., Demography of Russia: From the Past to the Present, Palgrave Macmillan, 2016; Nakamura, Y., Monetary Policy in the Soviet Union, Palgrave Macmillan, 2017; Suhara, M., Studies on the Soviet Industry, Ochaynomizu, 2015, in Japanese; Tabata, S., ed., Eurasia’s Regional Powers Compared China, India, Russia, Routledge, 2015; Tabata, S., ed., Dependent on Oil and Gas: Russia’s Integration into the World Economy, Hokkaido University, 2006; and Uegaki, A., Russia under the Economic Globalization, Nihon Hyoron, 2005, in Japanese. We appreciate the continuous supports and the comments and criticisms from the project leaders of Asian Historical Statistics, Kyoji Fukao, Konosuke Odaka, and Osamu Saito. We also thank Prabir Bhattacharya,

 PREFACE 

vii

Micael Ellman, Phillip Hanson, Paul Hare, Tsuyoshi Ishikawa, Iouri Ivanov, Tatiana Khomenko, Byung-Yeon Kim, Iikka Korhonen, Irina Masakova, Sadayoshi Ohtsu, Alexsei Ponomarenko, Aleksi Popov, Vladimir Treml, Natalia Ustinova, Ilya Voskoboinikov, Stephen Wheatcroft, and Andrei Yakovlev for taking part in various workshops and conferences we organized and giving their comments. We also appreciate the generous copyright arrangements by Toyo Keizai Shinposya for the Japanese edition of the book and Palgrave Macmillan for the English edition of the book. This work was financially supported by the Japan Society for the Promotion of Science (JSPS) Grants-in-Aid for Scientific Research (KAKENHI), Grant Numbers 07CE1001, JP15H01959, JP26245034, and JP23330089. Tokyo, Yokohama Niigata, Japan   March 21, 2019 

Masaaki Kuboniwa Yasushi Nakamura Kazuhiro Kumo Yoshisada Shida

Contents

1 Introduction  1 Masaaki Kuboniwa and Kazuhiro Kumo 1.1 Purpose of the Book  1 1.2 Territorial Transformation  3 1.3 Structure of the Book 11 1.4 Analytical Examples Using the Results of the Book and Related Data 17 1.5 Remaining Tasks 38 References 39 2 Characteristics and Development of State Statistics 43 Shinichiro Tabata 2.1 Introduction 43 2.2 State Statistics in the Russian Empire 44 2.3 State Statistics in the Soviet Union 47 2.4 State Statistics in the Russian Federation 53 References 56 3 Population 59 Kazuhiro Kumo 3.1 Introduction 59 3.2 Previous Research on Long-Term Russian Population Dynamics and Statistics 61 ix

x 

CONTENTS

3.3 Russian Population Statistics 67 3.4 Processing of Russian Population Statistics 74 3.5 Results 80 3.6 Challenges Remaining 94 Appendix: Time Series of Alternative Estimates of the Total Population of the Territory Covered by the Present Russian Federation in the Imperial Era 98 References100 4 Labor105 Yoshisada Shida, Kazuhiro Kumo, and Yasushi Nakamura 4.1 Introduction105 4.2 Historical Development of Labor Statistics109 4.3 Basic Concepts in Labor Statistics111 4.4 Long-Term Series of Labor Statistics119 Appendix131 References131 5 Agriculture133 Manabu Suhara 5.1 Introduction133 5.2 Agricultural Statistics in Imperial Russia134 5.3 Agriculture for the Soviet Union and the Russian Republic152 5.4 Agricultural Statistics of the Russian Republic160 5.5 Agriculture and Agricultural Statistics in the Russian Federation175 Appendix180 References180 6 Industry183 Manabu Suhara 6.1 Introduction183 6.2 Industrial Statistics in the Russian Empire184 6.3 Industrial Statistics in Soviet Russia196 6.4 Industrial Statistics in the Russian Federation211 Appendix218 References218

 CONTENTS 

xi

7 Money and Finance221 Yasushi Nakamura 7.1 Introduction221 7.2 Russian Empire225 7.3 Soviet Union233 7.4 New Russia243 Appendix247 References247 8 State Budget251 Shinichiro Tabata and Tomoko Tabata 8.1 Introduction251 8.2 Budget Statistics in the Russian Empire (1803–1914)253 8.3 Budget Statistics in the Soviet Union (1918–1990)262 8.4 Budget Statistics of the Russian Federation (1992–2015)268 8.5 Preliminary Analyses273 Appendix287 References288 9 Foreign Trade291 Akira Uegaki 9.1 Introduction291 9.2 Materials291 9.3 Previous Research292 9.4 Trade of Imperial Russia293 9.5 Trade in the Soviet Period295 9.6 Trade in the Russian Federation, 1992–2010310 9.7 Conclusion313 Appendix313 References314 10 Supplement: Soviet Foreign Trade Earnings Revisited317 Masaaki Kuboniwa, Shinichiro Tabata, and Yasushi Nakamura 10.1 Introduction317 10.2 Origin of Soviet Formula for Foreign Trade Earnings319 10.3 Estimation of Foreign Trade Earnings in the Soviet National Accounting322

xii 

CONTENTS

10.4 Concluding Remarks331 References332 11 Gross Domestic Products335 Masaaki Kuboniwa, Yoshisada Shida, and Shinichiro Tabata 11.1 GDP Growth in Imperial Russia335 11.2 GDP Growth of the Russian Republic in the Soviet Period354 11.3 Russia’s Informal Economic Growth, 1960–1990385 11.4 National Income Statistics of the Russian Federation405 Appendix413 References415 12 Estimating GDP and Foreign Rents of the Oil and Gas Sector in the Soviet Union and Present-Day Russia421 Masaaki Kuboniwa 12.1 Introduction421 12.2 Methodology and Data422 12.3 Results of Estimations427 12.4 Observations Across the Soviet Union, Then, and Russia, Now430 12.5 Concluding Remarks436 References437 Index439

List of Contributors

Masaaki  Kuboniwa Institute of Economic Research, Hitotsubashi University, Kunitachi, Tokyo, Japan Kazuhiro  Kumo Institute of Economic University, Kunitachi, Tokyo, Japan

Research,

Hitotsubashi

Yasushi  Nakamura  Graduate School of International Social Sciences, Yokohama National University, Yokohama, Japan Yoshisada  Shida  Research Division, The Economic Research Institute for Northeast Asia, Niigata, Japan Manabu Suhara  College of Economics, Nihon University, Tokyo, Japan Shinichiro  Tabata  Slavic-Eurasian University, Sapporo, Japan

Research

Center,

Hokkaido

Tomoko Tabata  Slavic-Eurasian Research Center, Hokkaido University, Sapporo, Japan Akira  Uegaki Department of Economics, Seinan Gakuin University, Fukuoka, Japan

xiii

Abbreviations

ACE CBR CES CIA CMEA CPE CTN EAP FYP GARF GDP GK GNP GOF Gosbank Goskomstat Gosplan GSP GTK ICP IMF ISIC JEC MPS MTS MVD MVES

Administrative Command Economy Central Bank of the Russian Federation Constant Elasticity of Substitution Central Intelligence Agency Council for Mutual Economic Assistance Centrally Planned Economy CMEA Trade Nomenclature Economically Active Population Five-Year Plan State Archive of the Russian Federation Gross Domestic Product Geary-Khamis international dollar Gross National Product Gross Output of Foreign Trade State Bank State Statistical Committee State Planning Committee Gross Social Products State Custom Committee International Comparison Program International Monetary Fund International Standard Industry Classification Joint Economic Committee, Congress of the United States Material Product System Machine and Tractor Station Ministry of Internal Affairs Ministry of Foreign Economic Relations xv

xvi 

Abbreviations

MVT NEP NKVT NMP NNP OECD OKONKh OKVED PNI PPP RGAE ROSSTAT RSFSR SITC SNA SSSR TsSU TsUNKhU USSR

Ministry of Foreign Trade New Economic Policy People’s Commissariat for Foreign Trade Net Material Products Net National Products Organisation for Economic Co-operation and Development All Russian Classification of Branch of National Economy Russian Classification of Economic Activities Produced National Income Purchasing Power Parity Russian State Archive of Economy Federal State Statistics Service Russian Soviet Federative Socialist Republic Standard International Trade Classification System of National Accounts Soyuz Sovetskikh Sotsialisticheskikh Respublik. See USSR. Central Statistical Administration Central Administration of National Economic Accounting Union of Soviet Social Republics. See SSSR

List of Figures

Fig. 1.1

Fig. 1.2 Fig. 1.3 Fig. 1.4

Fig. 1.5

Territories: Russian Empire, Soviet Union, and present Russia. Notes: Russian Empire  =  Soviet Union  +  Poland  +  Finland (note the year of belonging of Baltic three countries and Kaliningrad to the Soviet Union). Soviet Union  =  Russian Republic (present Russia) + other republics (note the year of Russia’s absorption of Crimea and Sevastopol). Source: Prepared by the author 3 Russian Empire (1914). Note: The gray zones indicate the territory as of each period. Source: Prepared by Kazuhiro Kumo and Yukiko Hama 4 Soviet Union (1991). Note: The gray zones indicate the territory as of each period. Source: Prepared by Kazuhiro Kumo and Yukiko Hama 8 Changes in western borders of the Soviet Union, 1922 and 1946. Notes: The gray zones indicate the territory of the Soviet Union at the time indicated. (P): Poland during the interwar period; (G): Germany during the interwar period; (F): Finland during the interwar period; (C): Czechoslovakia during the interwar period; (R): Romania during the interwar period. Estonia, Latvia, and Lithuania were independent states during the interwar period. Source: Prepared by Kazuhiro Kumo and Eriko Yoshida 9 RSFSR (1991)/Russian Federation (2013, before occupation of Crimea). Note: The gray zones indicate the territory as of each period. Source: Prepared by Kazuhiro Kumo and Yukiko Hama10

xvii

xviii 

List of Figures

Fig. 1.6

Fig. 1.7

Fig. 1.8 Fig. 1.9

Fig. 1.10

Fig. 1.11

Fig. 1.12

Dynamics of Russian population by territory, 1860–2017. Notes: All data show mid-year population. Population of present Russia from 2015 onward includes the population of Crimea and Sevastopol. Sources: Estimated by the author using the following data. Russian Empire (population of 1913 territory excluding Finland): Khromov (1950). Soviet Union (population of 1990 territory): 1913–1938: data in Lorimer (1946)  ×  0.118 (territory adjustment coefficient); 1939– 1949: Maddison (1995); 1950–1990: Soviet Population Yearbook for 1987 and Soviet Statistical Yearbook for 1990. Present Russia: 1860–1866: The author’s estimates by regression; 1867–2002 (population of 2000 territory): estimates in Chapter 3 of the book; 2003–2017: Rosstat website (www.gks.ru. Accessed May 2018) 17 Long-term GDP of Russia in the present Russian territory, 1860–2017. Sources: Chapters 11.1 and 11.2 and Rosstat website. Exchange rate in 2011 is 29.38234 rubles/US$ according to the International Monetary Fund (IMF) website 20 Annual growth rates of Russia, 1861–2017. Source: Fig. 1.7 21 Dependence on foreign trade of the Russian Empire, Soviet Union, and present Russia, 1885–2017. Sources: Foreign trade: Khromov 1950 (Table 16, Table 17), Chapter 9 of the book. Nominal GDP: 1913: Chapter 11.1. 1885 and 1900: nominal net national product (NNP) in Gregory (1982, Table  3.2)  ×  1.04342 (estimated nominal GDP/Gregory’s NNP in 1913); 1937 and 1944: Bergson and Heymann (1954, Table  5). 1960 and 1980: CIA (1983, Table  17). 1987: Soviet Statistical Yearbook for 1990, p.  9. 1995–2017: Rosstat website (www.gks.ru. Accessed May 2018) 22 State finance of the Russian Empire, Soviet Union, and present Russia (in per cent of GDP), 1885–2017. Sources: State finance: Chapter 8 of the book. Nominal GDP: See sources in Fig. 1.924 Money supply of the Russian Empire, Soviet Union, and present Russia (in per cent of GDP), 1885–2017. Note: M2 of the Soviet Union is the sum of external debit, debit to government, circulated cash, and household deposits in the Gosbank’s balance sheet. Sources: Money supply: Chapter 7 of the book, Bank of Russia website (www.cbr.ru. Accessed May 2018). Nominal GDP: See sources in Fig. 1.9 25 Dynamics of general price level in the Russian Empire, Russian Republic, and present Russia. Sources: Russian Empire:

  List of Figures 

Fig. 1.13

Fig. 1.14

Fig. 1.15

Fig. 3.1

Fig. 3.2

Nominal GDP and real GDP estimated in the book. Russian Republic: Official series are derived from nominal and real NMP provided by Interstate Statistical Committee of the CIS (1998). Estimated series are derived from nominal and real GDP (average of series Estimates A and B in Chapter 11). Present Russia: Rosstat website Monthly average nominal wages in the Russian Empire, Russian Republic, and present Russia, 1900–2017. Sources: Russian Empire: Mironov (2010). Exchange rates are from http:// www.historicalstatistics.org/Currencyconverter.htm. Russian Republic: New official retrospective series below is employed. Bank of Russia website (www.cbr.ru) and IMF website. http:// www.gks.r u/fr ee_doc/new_site/population/tr ud/ sr-zarplata/t7.doc. Present Russia: Rosstat website Labor distribution share in Soviet Union and present Russia, 1975–2017. Sources: Soviet Union: MINECON (1994). ­ Labor share includes social insurance and wages of the public service sector. Present Russia: Rosstat website. Labor share includes hidden wages derived from household survey Investment Ratio in the Russian Empire, Russian Republic, and present Russia, 1885–2017. Sources: Russian Empire: Nominal GDP estimated in the book and net investment and NNP data in Gregory (1982). Russian Republic: Kuboniwa and Ponomarenko (2000) and estimates in the book. Present Russia: Rosstat website Total population. Notes: The figures for the period during World War II are just rough estimates because data was lacking for numerous regions. In addition, the figures for 1928–1938 (extrapolated from the population in 1927) and 1945–1949 (extrapolated from the population in 1950) were calculated using the difference between the number of births and deaths and, therefore, do not reflect changes caused by social factors such as migration. Source: Table 3.1 Crude birth rate and crude death rate. Notes: Rates for 1867– 1890 are for the European part of imperial Russia; rates for 1891–1917 are for the territory of European Russia within the present Russian Federation; rates for 1918–2002 are for the entire territory of the present Russian Federation. Rates for the 1927–1938 and 1942 periods are just rough estimates because data was lacking for an extremely large number of regions. Figures for 1924–1925 were only calculated for European Russia. Source: Table 3.1

xix

33

34

36

38

80

81

xx 

List of Figures

Fig. 3.3

Fig. 3.4 Fig. 4.1

Fig. 4.2

Fig. 4.3

(a) Infant mortality (including archive data for the period of World War II). (b) Infant mortality (excluding archive data for the period of World War II). Note: Notes are the same as those for Fig. 3.2. Source: Table 3.1 82 Comparison of substitute time series of estimates of the total population of the territory covered by modern Russia 100 Employment structure in 1897 and 1926. Notes: (1) 1897: Based on the first population census of imperial Russia, which was performed in 1897. Poland is not included, but Russians in Finland, Bukhara, and Khiva are included (40,600 people). Mining and manufacturing include gas, water, electricity, and cleaning in addition to ore extraction, but do not include coal and gold mining. Services refer to services provided by companies and organizations, including communication and military service, and include bankers, soldiers, clergymen, and day laborers. Trade and finance include breweries and distilleries. Most people working for family businesses, particularly the approximately 71 million people working on family farms, are not included. (2) 1926: Based on the 1926 population census of the Soviet Union. Unemployed persons, the approximately 1.13  million child laborers younger than 10  years old, and the approximately 800,000 workers for whom the employer was unknown are not included. Agriculture includes handicraft workers, and mining and manufacturing include construction-­ related handicraft workers. Sources: Bairoch (1968, pp.  119, 211–219) and Troitskii (1906, pp. vii–xx) 107 Conceptual framework of labor resources balance. Notes: (1) Economically active population. (2) Economically inactive population. (3) The working age is usually 15–65  years; it, however, can vary country to country. It may be illegal that a person younger than the young-age limitation works. (4) In the Soviet period, the item of unemployed did not exist. (5) A person in the working age who is unemployed and not willing to work is included here. In the Soviet period, soldiers were also included here. Sources: Goskomstat Rossii (1996b), ILO (1990)115 Economically active population and employed persons in Russia, ­1980–2015 (1000 persons). Notes and Sources: (1) Employed_web: The latest figures from the Rosstat website (updated on April 4, 2017); EAP_CISstat and Employed_ CISstat: CISstat (2015); EAP_latest and Employed_latest: the

  List of Figures 

Fig. 4.4

Fig. 4.5

Fig. 4.6

Fig. 5.1

Fig. 5.2 Fig. 5.3 Fig. 6.1 Fig. 6.2

xxi

latest ­figures obtained from RSY (2000, 2001, 2006, 2011, 2013, 2016, 2017); Employed_RSY (1997, 1999) and EAP_ RSY (1997, 1999): RSY (1997, 1999); Employed_Adjusted: The figures are derived from adjusting CISstat data for 1 ­ 980– 1991. (2) The figures for 1994–2006 do not include the Chechen Republic. The number of employed persons in Crimea is also not included in the entire period 121 Composition of employed persons by economic activity in 2000 (%). Note: Agr.: Agriculture, hunting, forestry, and fishing; Min&Man: Mining and manufacturing; Cons.: Construction; T&C: Transport and communication; Trade: Trade, restaurants, and hotels; Bus. serv.: Finance, real estate, and business services; Public: Public administration; Education: Education; Health: Health, sports, and social security; Others: the residuals. See the text for the sector classification. Sources: CISstat: CISstat (2015); RSY (old series): RSY (2007–2013); RSY (2016, 2017) 124 Employed persons and enrolled workforce, 1929–2015 (1000 persons, %). Note: Some missing figures of employed persons (B) after 1950 have been estimated by interpolation. Sources: Appendix Tables 4.1, 4.4–4.6 127 Employed persons by sector in Russia, 1940–2015 (1000 persons). Note: Agriculture includes hunting, forestry, and fishing; Industry includes mining, electricity, gas, water supply; Trade includes repair, hotels, and restaurants; Transport includes storage and communication; Education includes sciences, culture, health, and social security. Source: Appendix Table 4.6130 Net production ratio for wheat (1885–1913, %). Note: The years 1886, 1889, 1891, 1897, 1901, 1906, and 1911 are thought to have been a year of poor harvest. Source: Gregory (1982, p. 232) 146 Production indices for Russian agriculture: 1860–1913 (index for 1864 = 100). Source: Table 5.3 152 Production indices for Soviet agriculture: 1913–1990 (index for 1913 = 100). Source: Appendix Table 5.4 153 Estimations of the industrial production index for Imperial Russia (1887 index = 100). Source: Appendix Table 6.3 193 Ratio of the size of production for the Soviet industry to that of the US industry (%): 1913–2005. Note: The ratio of the size of production for the Soviet industry in 1913 is assumed to be 15% of that for the US industry. Source: Suhara (2013, p. 544)216

xxii 

List of Figures

Fig. 7.1

Interest rates in the three periods (annual, %). Notes: The vertical axis shows the annual rates in the log-scale. Discount rate: daily plots of the imperial Gosbank’s discount rate for bills the due dates of those are within 6 months before 1893, and within 3 months after 1893. Because the discount rates differed from region to region from 1893 to 1895, the rate in St. Petersburg was plotted; Policy rate: the refinance rate of the Central Bank of the Russian Federation (CBR) until the end of 2015. After 2016, the key rate is applied uniformly to more than one instrument. The rates at the end of quarter were plotted from 1992 to 2002, and the rates at the end of month, after 2002; Lending rate A: annual plot of lending rate of short-term loan to state-owned enterprises at the end of year during the Soviet time. When there were different lending rates for different loan items, their simple means were plotted. For 1922 to 1924, the lending rates of loans in Chervonets; Lending rate B: rending rate of short-term ruble loans to legal entities. For 1992–1994, the simple mean of lending rates of banks in the Moscow region. The timing of plot is the same as that of the policy rate. Deposit rate A: annual plot of household demand deposit rate of the state saving bureau at the end of year; Deposit rate B: household deposit rate of commercial banks. Until the end of 1994, the mean of deposit rates of banks in the Moscow region. From 1995 to 1996, the deposit rate for household time deposits of less than 300,000 rubles with monthly interest payment. From 1997, the weighted mean of interest rates for household deposits of the maturity of less than one year at all banks. The timing of plot is the same as that of the policy rate. Sources: The imperial period: Khromov (1950, pp.  541–544); the Soviet period: Homer and Sylla (2005, pp. 598–612); the Russian Federation period: International Monetary Funds (IMF), International Financial Statistics; The Central Bank of the Russian Federation, Banking Sector, Interest Rates and Structure of Loans and Deposits by Maturity, http://www.cbr.ru/statistics/Default. aspx?PrtId=int_rat; The Central Bank of the Russian Federation, Monetary Policy, Monetary Policy Instruments and Other Operations, http://www.cbr.ru/DKP/ instruments_dkp/interest_rates/and Nakamura (1999, pp. 110–111). The latest possible data are used in the present Russian period, as the data are revised often 223

  List of Figures 

Fig. 7.2

Fig. 7.3

Fig. 7.4

Fig. 7.5

Fig. 7.6

Fig. 8.1

Fig. 8.2

xxiii

Financial institutions in Imperial Russia (million current ruble). Notes: (1) The sum of deposits and current accounts’ totals. The stock in million current rubles. (2) The “joint stock banks” and “burse banks” in the figure roughly correspond to the “joint stock and limited liability banks” in the text. It is unclear to what extend the “mutual credit associations” in the figure cover the “collective financial institutions” in the text. Source: Gindin (1948), pp. 410–411 228 Money supply in Imperial Russia (at the end of year, million current ruble). Notes: BN+CA: the sum of the stocks of banknotes and current account balances; BN: the stock of banknotes; Drummond: money supply adjusted by Drummond (1976). CA includes the balances of the accounts those the treasury held and the current accounts at Sberkassa. Drummond includes metallic coins in addition to banknotes and current accounts balances. Source: Appendix Table 7.1 232 State budget and bank loans in the Soviet Union. Notes: TTL: Gosbank’s balance sheet total; NPNI: nominal PNI (produced national income); CE: Gosbank’s credits to the economy; SBE: state budget expenditure on the economy; CC: cash in circulation. The top panel shows the rations in percentage of nominal PNI; the bottom panel shows the annual growth rates in percentage. Source: Appendix Table 7.2 234 Money supply in the Soviet Union (at the end of the year, million current ruble). Notes: (1) 1921–1922, 1924–1925, and 1929–1930 indicate the economic year (see the note of Appendix Table 7.2). (2) Household deposits are deposits at Sberkassa. Cash indicates the banknotes only. (3) The currency re-­denomination accounts for most of the decrease in 1961; the measurement unit is current ruble. Source: Appendix Table 7.2239 Money supply in the Russian Federation (at the end of year, million current ruble). Note: “Reserve money” and “Monetary base” slightly differ from each other by definitions. Sources: IMF (2005, pp. 501–503) and IMF (2015, pp. 678–683) 246 General government and state budgets of the Russian Federation, in percent of GDP, 1992–2015. Sources: Compiled from total revenue and expenditure in Appendix Tables 8.7 and 8.8 272 Structure of general government budget revenue of the Russian Federation, in percent, 1992–2015. Source: Compiled from Appendix Table 8.7 273

xxiv 

List of Figures

Fig. 8.3 Fig. 8.4

Fig. 8.5

Fig. 8.6

Fig. 9.1 Fig. 9.2 Fig. 9.3

Fig. 9.4 Fig. 9.5

Fig. 9.6 Fig. 10.1 Fig. 10.2 Fig. 10.3

Structure of general government budget expenditure of the Russian Federation, in percent, 1992–2015. Source: Compiled from Appendix Table 8.8 274 Ratio of revenue to expenditures of the state budget in the Russian Empire, USSR, and Russian Federation, in percent. Sources: Compiled from total revenue and expenditure in Appendix Tables 8.1, 8.2, 8.3, 8.4, 8.6, 8.7, and 8.8 275 Structure of state budget revenue in the Russian Empire, USSR, and Russian Federation, in percent. Sources: Compiled from Appendix Tables 8.1, 8.2, 8.4 and 8.7, and Note 3  in Appendix276 Structure of state budget expenditure in the Russian Empire, USSR, and Russian Federation, in percent. Sources: Compiled from Appendix Tables 8.3, 8.6 and 8.8, and Note 3  in Appendix277 “Residual” items in the Soviet export = (B–A)/B (%). Note: A =  Total by Author’s calculation, B  =  Official total. Source: Same as Table 9.3 297 Trade structure of the Soviet Union during World War II according to the archive document. Source: Made by the author based on the data of MVT UEO (1946) 302 Trade value by region, export of the Soviet Union (in millions of  ruble). Sources: MVT GTU (1960), MVT PEU (1967), MVT (1957–1988), MVES (1989–1991), and SKSNG (1992)302 Trade value by region, import of the Soviet Union (in millions of ruble). Source: Same as Fig. 9.3 303 Trade value by region, export of the Russian Federation (in millions of US$). Note: Taxonomy of the regions is same as Table 9.5, though Estonia, Latvia, and Lithuania are included in “Western Europe and North America”. Sources: Goskomstat Rossii (1993, 1994), and GTK (1995–2011) 312 Trade value by region, import of the Russian Federation (in millions of US$). Note: Same as Fig.  9.5. Source: Same as Fig. 9.5312 Soviet foreign trade balances and revenues in current prices. Source: Table 10.1 shown in this chapter 323 Share of net imports at domestic prices ( M d − Ed ) in SFE. Source: Table 10.1 shown in this chapter 325 Soviet implicit tax rates for overall exports, imports and oil and gas exports. Source: Table 10.1 shown in this chapter 326

  List of Figures 

Fig. 10.4

xxv

GDP shares of Soviet foreign trade balances and revenues in current prices. Note: GDP is estimated by an exploration using CIA’s GNP estimates and Soviet official NMP in current prices for 1980 and 1982. Sources: Table 10.1 shown in this chapter along with authors’ estimates 327 Fig. 10.5 Sectoral sources of export taxes and import duties in 1982. Source: Table 10.2 shown in this chapter 329 Fig. 10.6 Sectoral rates of export taxes and import duties in 1982. Source: Table 10.2 shown in this chapter 330 Fig. 11.1 Real GDP of the Russian Empire, 1860–1913 (1913 = 100). Source: Appendix table 11.1.1 341 Fig. 11.2 Real GDP per capita in the Russian Empire, 1860–1913 (1913  =  100). Sources: Appendix table 11.1.3. Gregory (1982)342 Fig. 11.3 Volatility in GDP growth rates of the Russian Empire, 1861– 1913. Source: Appendix table 11.1.2 349 Fig. 11.4 Volatility and growth rates, 1860–1913. Source: Table 11.9 351 Fig. 11.5 Growth in Russian industry, 1960–1990 (1960 = 100). Sources: Suhara (Chap. 6) for Estimation A . Kuboniwa and Ponomarenko (2000) for Estimation B . The Interstate Statistical Committee of the CIS (1998) for Official data. JEC (1990) for CIA (Soviet Union)366 Fig. 11.6 Official construction work volume and national income, 1928–1990 (1960  =  100). Sources: Appendix table 11.2.5 and the Interstate Statistical Committee of the CIS (1998) 367 Fig. 11.7 Transportation volume and national income, 1950–1990 (1960  =  100). Sources: Appendix table 11.2.5 and the Interstate Statistical Committee of the CIS (1998) 369 Fig. 11.8 Retail sales volume and national income, 1928–1990 (1960  =  100). Sources: Appendix table 11.2.5, and the Interstate Statistical Committee of the CIS (1998) 370 Fig. 11.9 Growth in service GDP, 1950–1990 (1950 = 100). Sources: Appendix table 11.2.5 and JEC (1990) 371 Fig. 11.10 Russian GDP growth, 1913–1990 (1913  =  100). Sources: Appendix tables 11.2.1 and 11.2.2, Maddison (2010) 374 Fig. 11.11 Russian GDP growth before and after World War II. Sources: Appendix tables 11.2.1, 11.2.2, 11.2.3 for estimations A , B , and C , and the Interstate Statistical Committee of the CIS (1998) for official figures. Markevich and Harrison (2011) for MH (Soviet Union)375 Fig. 11.12 Estimation of the trend in Russian economic growth. Note: See the estimation equation in the text. The left axis is

xxvi 

List of Figures

Fig. 11.13 Fig. 11.14

Fig. 11.15 Fig. 11.16 Fig. 11.17

Fig. 11.18

Fig. 11.19

residuals, and the right axis is log (GDP index). GDP in 1950 is set to 100. Source: Estimation B in Appendix tables 11.2.1 and 11.2.2 380 National income, capital, and labor growth in the Soviet Union, 1970–1987 (1975 = 100). Sources: See the text 381 Long-term economic growth of Japan and Russia, 1860–2017 (1913 = 100). Notes and Sources: the Russian GDP for 1860– 1990 are calculated by linking the estimates in Sects. 11.1 and 11.2. Interstate Committee of the CIS (1996, Part 1, p. 12) for Russia from 1990 to 1995. Rosstat (www.gks.ru, last accessed on January 1, 2019) for Russia from 1995 to 2017. Maddison (2010) for Japan from 1870 to 1970. UN (https:// unstats.un.org/unsd/snaama/dnllist.asp, last accessed on 30 March 2017) for Japan from 1970 to 2014. Cabinet Office (www.esri.cao.go.jp, last accessed on March 1, 2019) for Japan from 2014 to 2017 383 Classification of household expenditure items. Source: compiled by the author 391 Dynamics of informal GDP: its share in the integrated GDP (%). Source: Compiled by the author based on Appendix table 11.3.9398 Russia’s growth index of official and informal integrated GDP (1961 = 100). Note: A is based on official deflators; B is based on chain volume indices and updated industrial output index; C is based on chain volume indices and official industrial output index; and D is based on fixed weight volume indices and official industrial output index. Source: compiled by the author based on Appendix table 11.3.10 (Panel B) and Kuboniwa and Ponomarenko (2000) 402 Russia’s growth rates of official and informal integrated GDP (%). Note: A is based on official deflators; B is based on chain volume indices and updated industrial output index; C is based on chain volume indices and official industrial output index; and D is based on fixed weight volume indices and official industrial output index. Source: compiled by the author based on Appendix table 11.3.11 (Panel B) and Kuboniwa and Ponomarenko (2000) 403 GDP by industry in Russia, 1989–2016, in percent. Note: Since in the years 1989–2001, official GDP data by industry include FISIM. I excluded them when calculating these percentages. Sources: See Appendix table 11.4.3 410

  List of Figures 

Fig. 12.1 Fig. 12.2 Fig. 12.3 Fig. 12.4 Fig. 12.5

Fig. 12.6

xxvii

Estimates of Soviet oil and gas GDP in per cent of overall GDP. Source: Table 12.1 displayed in this chapter 428 Estimates of Soviet oil and gas GDP in current US$. Source: Table 12.1 displayed in this chapter 429 Estimates of Russia’s oil and gas GDP in per cent of overall GDP. Source: Table 12.3 shown in this chapter 430 Estimates of Russia’s oil and gas GDP in current US$. Source: Table 12.3 shown in this chapter 431 Annual average shares of the estimated GDP and rents of the oil and gas sector in overall GDP in the Union of Soviet Social Republics (USSR), then and Russia, now. Source: The author’s estimate433 Annual average amounts of the estimated GDP and rents of the oil and gas sector in US$ 2015  in the USSR, then and Russia, now. Source: The author’s estimate 434

List of Tables

Table 1.1 Table 1.2 Table 1.3 Table 1.4 Table 3.1 Table 4.1 Table 4.2 Table 5.1 Table 5.2 Table 5.3 Table 5.4 Table 5.5 Table 5.6 Table 5.7 Table 6.1 Table 6.2 Table 6.3

An international comparison of annual average population growth rates, 1860–2016 19 Industrial structure of Russia at market (producer) prices, 1913–201527 Industrial structure of Russia at factor costs or basic prices, 1937–201529 Conversion of exports and value added of Russia’s oil and gas, 2011 31 Results 83 Employment by economic activity (1000 persons, %) 125 Employment by sector in the Soviet period (1000 persons, %) 128 Prices of agricultural produce (ruble/ton) and net production rates (%) in Russia in 1913 139 Gross and net production index for Imperial Russian crop farming140 Agricultural output indices for Imperial Russia (Index for 50 European Russia provinces) 150 Checking official agricultural output indices (1965 prices) 167 Biological grain yield quantities (centner/hectare) 168 Average annual production growth rate (%) 170 Agricultural production in Russia per form of management (%) 173 Estimated wholesale prices of industrial products in select years (rubles) 189 Estimations of industrial production index for Imperial Russia190 Comparison of production indices (average annual growth rates, %) 191 xxix

xxx 

List of Tables

Table 6.4 Table 6.5 Table 6.6 Table 7.1 Table 7.2 Table 8.1 Table 8.2 Table 8.3 Table 8.4 Table 8.5 Table 8.6 Table 8.7 Table 8.8 Table 9.1 Table 9.2 Table 9.3 Table 9.4 Table 9.5 Table 9.6 Table 9.7 Table 10.1 Table 10.2 Table 11.1 Table 11.2 Table 11.3 Table 11.4

Shares of produced value added by industrial branch (%): 1913–1985204 Gross value of industrial output: 1980–1990 (billion rubles, 1982 prices) 205 Three series of the average annual number of PPP in the USSR and RSFSR: 1928–1965 (thousands) 209 Historical developments of monetary and financial system 226 Share of Soviet Gosbank in all bank loans (%) 237 Classification of state budget revenue and compensation for deficit of the Russian Empire (old classification: 1805–1900) 257 Classification of state budget revenue and compensation for deficit of the Russian Empire (new classification: 1884– 1914)258 Classification of state budget expenditure of the Russian Empire (1803–1914) 260 Classification of state budget revenue and compensation for deficit of the Soviet Union (1918–1990) 264 Classification of state budget expenditure of the Soviet Union (1918–1990) 266 Classification of the general government budget revenue of the Russian Federation (1992–2015) 269 Classification of the general government budget expenditure of the Russian Federation (1992–2015) 270 Turnover tax revenues by branch, in percent 284 Trade value by commodity group, Imperial Russia, 1897– 1917294 Trade value by area, Imperial Russia, 1897–1917 295 Exchange rate of ruble against US dollar (official rate) 299 Soviet import through Lend-Lease and other programmes 301 Countries in the six regional categories 304 Commodity composition of Soviet export (SITC Rev.1) 1918–1991 (%) 306 Commodity composition of Soviet import (SITC Rev.1) 1918–1991 (%) 308 Soviet foreign trade and foreign trade earnings, 1966–1990 (current million rubles) 324 Soviet foreign trade by sector: 1982 (current million rubles) 328 GDP in the Russian Empire estimated by the author, 1860– 1913341 GDP sizes in the Russian Empire, the Soviet Union, and the Russian Federation 342 Estimated economic growth rates of the Russian Empire 343 Checking estimation biases 344

  List of Tables 

Table 11.5 Table 11.6 Table 11.7 Table 11.8 Table 11.9 Table 11.10 Table 11.11 Table 11.12 Table 11.13 Table 11.14 Table 11.15 Table 11.16 Table 11.17 Table 11.18 Table 11.19 Table 11.20 Table 11.21 Table 11.22 Table 11.23 Table 11.24 Table 11.25 Table 11.26 Table 11.27 Table 11.28 Table 12.1 Table 12.2 Table 12.3 Table 12.4

xxxi

International comparison of GDP at 1913 US dollars 345 GDP of the Russian Empire in international comparison (Maddison and the World Bank methods) 346 International comparison of Russian economic growth rates 348 International comparison of GDP per capita using the new estimates for Japan 349 International comparison of GDP volatility 350 Volatility by sector in the Russian Empire and Japan 351 Another international comparison of GDP volatility of the Russian Empire 353 Nominal GDP of the Russian Republic, 1961–1990 361 Net taxes on industrial products in the Russian Republic 363 GDP structure at market prices adjusted to the sectors receiving the subsidies 364 Estimates of GDP growth rate in the Russian Republic, 1913–1990372 International comparison of the GDP growth rates, 1913– 1990 (%) 377 Estimated growth rates of GDP per capita in the Russian Republic, 1913–1990 378 International comparison of the growth rates of GDP per capita, 1913–1990 378 International comparison of Russian growth volatility: 1913–1990379 International comparison of the GDP volatility of present Russia, 1990–2016 384 Reliability of household budget surveys 395 Russia’s integrated nominal GDP/GNP: estimates 399 Russia’s economic growth: period average (%) 403 Published data of national accounts in Russia 407 All Russian classification of kinds of economic activities (new classification, OKVED) 408 All Russian classification of branch of national economy (old classification, OKONKh) 409 Estimates of the shadow economy by Rosstat in 2015, in percent of value-added of each sector 413 Estimates of the shadow economy by Rosstat, in percent of GDP414 Estimates of the Soviet oil and gas GDP and rents 425 Soviet exports of oil and gas in domestic prices for 1987– 1989426 Estimates of Russian oil and gas GDP and rents 432 Oil and gas GVA at factor costs or basic prices (% GDP) 435

CHAPTER 1

Introduction Masaaki Kuboniwa and Kazuhiro Kumo

1.1   Purpose of the Book The purpose of this book is to provide long-term Russian economic statistics from 1860 to around 2015, which serve as basic material for analyzing economic development, in accordance with the framework of the System of National Accounts (SNA). The research target, “Russia,” involves three geographically and periodically different countries or territories: the Russian Empire, the Soviet Union, and modern Russia (the Russian Federation). The Russian Empire or Imperial Russia was an empire that existed across Europe, Asia, and North America from 1721 until 1917. In this book, we explore the economic growth of the Russian Empire between 1860, just before the liberation of the serfs, and 1913, leading into World War I. The Russian Empire was replaced by the Union of Soviet Socialist Republics or the Soviet Union that existed as a socialist state until 1991. Its largest republic was the Russian Soviet Federative Socialist Republic (RSFSR) or, simply, the Russian Republic. Today’s Russia or the Russian Federation, with the territory of the Russian Republic, assumed all of the external assets (credits and debits) of the Soviet Union. M. Kuboniwa (*) • K. Kumo Institute of Economic Research, Hitotsubashi University, Kunitachi, Tokyo, Japan e-mail: [email protected]; [email protected] © The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5_1

1

2 

M. KUBONIWA AND K. KUMO

This book is concerned with Russia, which has a unique history, with two revolutions in 1917 and 1991. Follow-up of the statistical development of Russia, which was exposed to two world wars and two revolutions with system transformations and transition recessions, also suffers from unique difficulties. Furthermore, there were large territorial changes that did not occur in Japan or other countries. A simplified diagram of Russia’s territorial changes over time or in a period is shown in Fig. 1.1 (detailed description and illustration of territorial changes are described in the next section). In terms of geographical scope, the Soviet Union includes present-­day Russia as its subset, while the Russian Empire encompasses the Soviet Union. The territory of present-day Russia or the Russian Republic has formed the core region of the Russian Empire and the Soviet Union. In this book’s statistics series on Imperial Russia, Finland is excluded, whereas Poland is included. The main theme of our work is intended to focus on present-day Russian territory that has formed the basis of Russia over time and to develop its long-term economic statistics over 150 years. However, in this book, only for population demographics, we are purely implementing this research policy. It is primarily necessary to grasp institutions—fiscal, financial, and trade movements—that are meaningful within the frame of one independent country; therefore, we are concentrating on that task in this book. Regarding production statistics and gross domestic product (GDP) by industry of the Russian Empire period, we focused on the statistical development and estimation of the entire Imperial Russia due to data constraints. The GDP of present-day Russia’s territory during the Imperial period was estimated by dividing the GDP of the Russian Empire according to the proportion of the population. In addition, it is assumed that the GDP growth rate of present-day Russia’s territory during the period of the Russian Empire is the same as the growth rate of the entire Russian Empire. In this case, since the population growth rate is different for each territory, per capita GDP growth rates differ by territory. It is also possible to adjust the real GDP level in present-day Russia’s territory according to the population ratio of ­present-­day Russia to the entire Russian Empire over time. In this case, GDP growth rates in present-day Russia’s territory and the territory of the entire Russian Empire will differ according to differences in their respective population growth rates. In this case, the per capita GDP growth rates will be the same in both territories. Since production and GDP in the Soviet era were estimated in the territory of the Russian Republic, estimated results are well linked with those of present-day Russia.

1 INTRODUCTION 

Russian Empire 1712−1917

Soviet Union 1917（1922）− 1991

3

Present Russia (Russian Federation） 1991−

Synchronic display

Present Russia

Soviet Union Russian Empire

Fig. 1.1  Territories: Russian Empire, Soviet Union, and present Russia. Notes: Russian Empire = Soviet Union + Poland + Finland (note the year of belonging of Baltic three countries and Kaliningrad to the Soviet Union). Soviet Union = Russian Republic (present Russia) + other republics (note the year of Russia’s absorption of Crimea and Sevastopol). Source: Prepared by the author

1.2   Territorial Transformation Changes in the territory of Russia that is the subject of this book are traced below. We will start with the territory of 1914, prior to World War I, when the Russian Empire was in its last period of stability. This is shown in Fig. 1.2. After that, the territory changed as described below. During World War I, the frontline on the eastern front between the Russian and German empires advanced deeply into the Russian territory, with a vast area including Poland and the Baltics coming under German occupation. Furthermore, the outbreak of the Russian revolution in October 1917 and the ensuring chaos strengthened the movements toward independence in Finland, Estonia, and Latvia, which had been

4 

M. KUBONIWA AND K. KUMO

along the eastern front. Amid the chaos of the revolution, the Ukrainian People’s Republic, which had parted ways with the Bolsheviks, made peace with the German empire and advanced further militarily, putting the Bolsheviks in a tough predicament. In March 1918, the Brest-Litovsk treaty concluded between the German, Austro-Hungarian, and Ottoman empires led to peace in which the Bolsheviks conceded substantially to Germany. As a result, some of the territory of the Soviet Russian Republic (known by this name from November 1917 to July 1918), formed as successor to the bulk of the territory of the Russian Empire in the October revolution, was split off (together with a part of imperial German territory) to form the Republic of Poland. This resulted in the separation from Russia of the Kingdom of Poland, a part of the Russian Empire of which the Czar was recognized as monarch. Similarly, the Grand Duchy of Finland, which also had recognized the Czar as its monarch, gained independence as a result of the Paris peace talks. Regions on the Baltic coast that also were within the territory of imperial Russia—Estrane and Livland (Livonia), Kurland, and the provinces of Vilna and Kowno—also gained independence, as Estonia (the former Estrane and northern Livland), Latvia (the former Kurland and southern Livland), and Lithuania (the former provinces of Vilna and

Fig. 1.2  Russian Empire (1914). Note: The gray zones indicate the territory as of each period. Source: Prepared by Kazuhiro Kumo and Yukiko Hama

1 INTRODUCTION 

5

Kowno). Various nationalities in the Russian Empire that had seen rising ethnic consciousness from the late nineteenth through the early twentieth century declared their independence in 1918 and later known as the Belarusian People’s Republic, the Ukrainian People’s Republic, the Azerbaijan Democratic Republic, the Democratic Republic of Armenia, and the Democratic Republic of Georgia. However, the Bolsheviks, who had waged a civil war in Russia since the revolution, continually strengthened their attacks on these regions through 1920, and their control over all of these was secured by 1921. Government in this series of republics was replaced by Soviet administrators controlled by the Bolsheviks, leading to the formation of the Soviet Union.1 Here, we will touch on the complex issue of changes in the country name. In July 1918, the Soviet Russian Republic was renamed the Russian Socialist Federative Soviet Republic (RSFSR, July 1918–1936). This Soviet Russian Republic or RSFSR corresponded largely to the territory of the Russian Empire minus the newly independent states of the Baltics, Poland, and Finland along with the Ukraine, Belarus, and Caucasus regions. At the end of December 1922, the Russian Socialist Federative Soviet Republic (RSFSR), together with the Transcaucasian Socialist Federative Soviet Republic (formed in early December 1922 by the Soviet administrations in Azerbaijan, Armenia, and Georgia), Ukrainian Soviet Socialist Republic, and Byelorussian Soviet Socialist Republic, formed the Soviet Union. In 1936, under the Soviet Constitution of that year, the RSFSR was renamed again as the Russian Soviet Federative Socialist Republic (December 1936 until the collapse of the Soviet Union). The map of this Russian Soviet Federative Socialist Republic (RSFSR; although the abbreviation is the same as in July 1918–1936, it should be noted that the order

1  “Soviet” is a common noun in Russian meaning “meeting” or “conference,” but a literal translation as “a republic with a parliamentary system” would be inappropriate. A “Soviet” was not merely a legislative body but also had administrative functions. Accordingly, the name needs to be understood as referring to a “Soviet republic.” While the origin of the Soviet is in the Workers’ Soviet led by the Mensheviks in the first Russian revolution (1905), it was reestablished in the February Revolution (1917), with membership consisting of workers and military troops. The Bolsheviks’ leader Lenin, aiming to capture power from the provisional government formed during the February Revolution, called for giving all power to the Soviet, and this was realized in the October Revolution. Following the collapse of the Soviet Union, Duma, which has only legislative authority, was established in various national and regional institutions, and the Soviets disappeared.

6 

M. KUBONIWA AND K. KUMO

of the words in the name has changed) in 1936 largely coincides with that of the contemporary Russian Federation. In World War II, which began with the German invasion of Poland on September 1, 1939, the territory of the Soviet Union would change dramatically. Less than three weeks after Germany invaded Poland under the German–Soviet Nonaggression Pact, Soviet forces moved in to occupy Poland from the east. Furthermore, after demanding the establishment of pro-Soviet regimes in the three Baltic states and Finland as well as leaseholds on territory and stationing of troops, the Soviets invaded the Baltics in 1940, pressuring their parliaments to merge the three countries as a constituent state of the Soviet Union. They also fought with Finland, splintering off from that country the territories of the Karelian Isthmus, Salla, and Petsamo in 1940–1944 through the Winter War and the Continuation War. Among the occupied eastern territories of Poland, Lviv and others were added to the Ukraine, Hrodna and others to Belarus, and Vilnius and others to Lithuania (1940). The Soviets also captured some of the territories of Czechoslovakia (1945) and Romania (1940), merging them with the Ukraine. Bessarabia, which had been joined with Romania, was made a constituent state of the Soviet Union as the Moldavian Soviet Socialist Republic (1940). As a result, the borders of the Soviet Union extended more toward Europe, and the front line between Germany and the Union of Soviet Social Republics (USSR) shifted several hundred kilometers from its initial position toward the west. In the war that began between the USSR and Germany in June 1941, Germany advanced initially at a rapid pace, laying siege to Leningrad (now St. Petersburg) by September and reaching within 30 km of Moscow in November. While the frontline then remained unchanged for a while, in 1942, Germany advanced toward the southern Soviet Union and the Caucasus in pursuit of oil. However, after suffering a massive defeat in January 1943 in the Stalingrad offensive, the German forces were unable to achieve any major successes on the eastern front, and they gradually began to lose. In 1944, Soviet forces recaptured the entirety of the Ukraine, and this was followed by advances into Poland, the Baltics, and other regions. In 1945, they began an attack on Germany itself. In April, they captured the German territory of Konigsberg, and then with the fall of Berlin in May, the war between the Soviets and Germany came to an end. Also in connection with World War II, the Soviet Union absorbed the Japanese territories of the entire Kuril Islands, the four northern islands, and the southern half of Sakhalin. It also should be noted that the puppet

1 INTRODUCTION 

7

state of the Tuvin People’s Republic (recognized only by the Soviet Union and Mongolia) adjacent to the People’s Republic of Mongolia was incorporated into the Russian Soviet Federative Socialist Republic in 1944. Furthermore, the northern part of the German territory of East Prussia, which included Konigsberg, was absorbed as a part of the Soviet Union under the Potsdam Accord after the end of World War II, as the detached Russian Soviet Federative Socialist Republic province of Kaliningrad. This represented the finalization of the borders of the Soviet Union. The resulting map of the Soviet Union is shown in Fig. 1.3. Comparison with Fig. 1.2 (the end of the Czarist era) shows that the Poland was lost, with the exception of a part of its eastern territory, as was most of Finland, with the exception of the Karelian Isthmus. In exchange, Kaliningrad was added at the northwestern extreme. It also can be seen that the former Bessarabia had been added, as well as former Austro-Hungarian territories that had been parts of Czechoslovakia and Poland in World War II on the winter front. Figure  1.4 (A) and (B) are close-ups of the changes in European regions to show the changes that occurred from the establishment of the Soviet Union in 1922–1947, after the end of World War II. Other changes took place in connection with the final territory of the Russian Soviet Federative Socialist Republic after the establishment of the Soviet Union. The best known of these was the transfer of the Autonomous State of Crimea to the Ukrainian Soviet Socialist Republic in 1954. In addition, the territories of the Soviet republics of central Asia originally were included in the Soviet Russian Republic formed by the October revolution, and when adjusting the map to the current Russian Federation, we need to remove some data in consideration with this fact. That is, (1) today’s Kazakhstan and Kyrgyzstan had, from the 1917 formation of the Soviet Russian Republic to 1936, been a part of the Russian Socialist Federative Soviet Republic as the Kazakh Autonomous Republic and the Kyrgyz Autonomous State or the Kyrgyz Autonomous Republic; and (2) today’s Uzbekistan, Tajikistan, Turkmenistan, and part of Kazakhstan had been included in the Russian Socialist Federative Soviet Republic from after the revolution until 1924, as the Turkestan Autonomous Republic. However, at these two points, collections of economic statistics from the 1920s clearly indicate figures for these regions as numbers included in figures for the Soviet Russian Republic, so that except in a few cases, it is relatively easy to remove the data. Also, from the establishment of the Soviet Russian Republic until 1924, Orenburg Oblast, now a part of the current Russian Federation, had been included in the Kazakh Autonomous

8 

M. KUBONIWA AND K. KUMO

Fig. 1.3  Soviet Union (1991). Note: The gray zones indicate the territory as of each period. Source: Prepared by Kazuhiro Kumo and Yukiko Hama

Republic mentioned above. For this period, there is a need to take this into account when adjusting data to fit the territory of the current Russian Federation. It also should be noted that similar treatment would be needed in consideration of the fact that in 1924, the province of Vitebsk, now included in the territory of Belarus, and in 1924–1926, the province of Gomel, also now a part of Belarus, were transferred from the Russian Socialist Federative Soviet Republic to the Byelorussian Soviet Socialist Republic. Since the limits of practical adjustments differ by industry, type of statistic, and other considerations, the actual adjustments to territories vary from one chapter to another in this volume. After the Cold War and the rise of General Secretary Gorbachev, the policies of Perestroika (reform/rebuilding) and Glasnost (openness) were implemented. While these were intended to improve the economic and political systems of the Soviet Union, increased freedom of speech and openness led to rising ethnic nationalism and intensification of political conflict, ultimately weakening the central control. March through May 1990, the three Baltic states declared their independence, although the Soviet Union immediately ruled these declarations invalid. Under the leadership of Boris Yeltsin (later the first President of the Russian Federation), Russia (RSFSR) changed its name in June 1990 to the

(A) As of the end of 1922 (Just after the establishment of the USSR). Holland

Norway Denmark Sweden

Germany

(G)

Cze cho slov akia

Finland (G) (G)

Poland

Lithuania

Latvia Estonia

(F)

(F)

(P) (C)

(P)

Belorus

Romania

Russia Ukraine

(R) (R)

(B) As of the beginning of 1947 (after the World War II) Holland

Norway Denmark

Germany

Cze cho slov akia

Sweden

Poland Finland Poland Russia

Poland

Lithuania Ukr aine

Latvia Estonia

Russia

Russia

Belorus Ukraine Belorus

Romania

Moldova Ukraine

Russia Ukraine

Fig. 1.4  Changes in western borders of the Soviet Union, 1922 and 1946. Notes: The gray zones indicate the territory of the Soviet Union at the time indicated. (P): Poland during the interwar period; (G): Germany during the interwar period; (F): Finland during the interwar period; (C): Czechoslovakia during the interwar period; (R): Romania during the interwar period. Estonia, Latvia, and Lithuania were independent states during the interwar period. Source: Prepared by Kazuhiro Kumo and Eriko Yoshida

10 

M. KUBONIWA AND K. KUMO

Fig. 1.5  RSFSR (1991)/Russian Federation (2013, before occupation of Crimea). Note: The gray zones indicate the territory as of each period. Source: Prepared by Kazuhiro Kumo and Yukiko Hama

Russian Republic.2 A coup d’état staged in August 1991 by a conservative faction in response to the rapid rise of reforms confined Gorbachev to house arrest and attempted to seize power, but it ended in failure due to the strong resistance of the reformers and its failure to earn the support of the military and the public. In September 1991, the Soviet Union acknowledged the independence of the three Baltic states. While the Russian Republic, Belarus, and five central Asian states agreed to reorganize the Soviet Union to form the Union of Sovereign States, the Ukraine, through a national plebiscite, chose independence. When Yeltsin’s Russia agreed to this, hopes dimmed for the Union of Sovereign States. On December 9 of that year, Russia, the Ukraine, and Belarus agreed to form the Commonwealth of Independent States (CIS), and all former Soviet republics other than the Baltics and Georgia agreed to join. This marked the end of the Soviet Union, and Russia renamed itself the Russian Federation. The change from the Soviet Union to the Russian Federation was a simple one. As noted above, in September 1991, the Baltics gained inde2

 Although the Soviet Union did not recognize this.

1 INTRODUCTION 

11

pendence. The Soviet Union was split up, and in December 1991, the five central Asian states, the tree Caucasus states, and the Ukraine, Belarus, and Moldovia gained independence, as noted above. Basically, the Russian Federation occupies the same territory as that of the Russian Soviet Federative Socialist Republic in the closing days of the Soviet Union. This is shown in Fig. 1.5. The only changes were the transfer of some territory to China when an agreement was reached with China on the territorial dispute over Damansky Island and the 2014 “merger” with the Crimea. The former concerns a very small amount of territory that cannot even be identified on a map of this scale, while the latter, it should be noted, is not shown on this map.

1.3   Structure of the Book The book presents a comprehensive statistical picture of the Russian economic development for the past three centuries; the book, however, does not include some important topics such as prices, income, expenditure side GDP, and living standards in the form of an independent chapter mostly because it is still too difficult to compile long-term time series of those indicators covering the Imperial, Soviet, and present Russia. However, this introductory chapter and the following chapters include information and data on topics such as prices and income that are not presented in the form of an independent chapter. Brief summaries of the chapters are as follows: In Chap. 2, the Russian national statistical system is studied in detail by dividing it into three periods, namely the Russian Empire (early nineteenth century to 1917), the Soviet Union (1917–1991), and the Russian Federation (1991–present), each of which is completely different. Furthermore, regarding the Soviet period, there are large differences in the early period (1917–1920s) immediately after the new statistical system was introduced, the Stalin period (the 1930s to the early 1950s), and the period from the latter half of the 1950s through 1991. In this chapter, despite these differences, we confirmed three common features in the statistical system of Russia. First, during most of the periods, censuses and statistical surveys were carried out in the framework of the so-called central statistical system. Second, during most of the periods, except the most recent, Russian Federation, reporting statistics were created based on information collected from periodic reports of enterprises (the sample survey was used for reporting statistics only in modern Russia). Third, statisti-

12 

M. KUBONIWA AND K. KUMO

cal resources compiled by government agencies were rather rich and well documented in all periods. In addition, there are other features of statistical systems and methods common to both Russia and the Soviet Union, including rather poor service statistics and Soviet closed statistics. It can be pointed out that there are large biases in the statistics of outputs and prices due to authorities’ exaggeration of outcomes and enterprises’ over-­ reporting of production. Confidential statistics of the Soviet Union were appropriately preserved in the archive, while many came to be disclosed after the collapse of the Soviet Union. Data analysis of the Soviet-era statistics in this book was performed by fully utilizing this newly disclosed data. In Chap. 3, the author of this chapter demonstrates the construction of estimates of the Russian population within present-day Russian territory for 1867–2002 through a reappraisal of archival data. This may constitute an epoch-making academic contribution to the historical population statistics. In Chap. 4, long-term labor statistics for the Soviet Union and present-­ day Russia are collected and displayed as time series. In Chap. 5, two time series of agricultural output growth are presented. One is growth data of the agricultural output, including both crops and livestock, of the Russian Empire. Relying on detailed physical output data, the author of this chapter provides a complete data series for 1860–1913 beyond that of Goldsmith (1961). The other is growth data of the agricultural output for the Russian Republic in the Soviet era, also based on physical outputs. The last section of this chapter presents an outline of changes in Russian agriculture and agricultural statistics since the collapse of the Soviet Union. In Chap. 6, along with agricultural growth as discussed in the previous chapter, two estimates of industrial output growth are constructed. One is a complete growth data set of the industrial output of the Russian Empire based on physical outputs. The other is growth data of the industrial output for the Russian Republic, relying on physical outputs. The last section of this chapter shows an outline of changes in the industry and industrial statistics in present-day Russia. In Chap. 7, macroeconomic financial and monetary data for the Russian Empire, Soviet Union, and present-day Russia is collected. Slow development relative to that in Western Europe and the strong governmental influence characterized the financial system of the Russian Empire. The modern financial system began to develop only after the Imperial State Bank started operating as the central bank in 1894 and the gold standard

1 INTRODUCTION 

13

was introduced in 1897. Monetary and financial data became available around 1890, while even data on the balance sheet totals of the State Bank were not available. The results derived from balances of deposits and current accounts and money supply are presented. In the Soviet financial system, only the State Bank played both roles, of a central bank and commercial banks. The state budget financed demands for most short-­ term funds and all long-term funds in the enterprise sector. Bank loans were used to finance unforeseeable and temporal short-term demands for funds. The share of the State Bank in the total loan supply and trends in supplies of bank loans and state budget funds are demonstrated. Monetary and financial statistics are virtually unavailable from the Soviet period. Data on the State Bank’s balance sheets became available just recently. The collapse of the Soviet Union prompted a return to the standard financial system for a market economy, although a sound financial system has not yet developed. New Russia started to publish standard monetary survey data in the mid-1990s; the financial survey and banking survey followed in the mid-2000s. Since 2012, financial accounts, including nine institutional sectors and eight financial instruments, have been published regularly in the national accounts. All of these financial and monetary data are available online. The standard macroeconomic financial and monetary statistics, including flow of funds tables, are presently available. In Chap. 8, the state financial statistics for the Russian Empire, Soviet Union, and present-day Russia are presented. Data for the Soviet Union in all periods, including the 1920s and 1940s, are shown, using archival data. This chapter concludes with a study of the characteristics of Russian state finance over the past two centuries. A common feature of Russian state finance was that authorities concealed continuous budget deficits, which were induced by increases in defense expenditures and national economic expenditures for catch-up development. In Chap. 9, a set of time series of foreign trade data is constructed for the Russian Empire, the Soviet Union, and present-day Russia from 1897 through 2010. The author of this chapter compiles time series of Soviet and Russian exports and imports in accordance with one-digit and two-­ digit codes of Standard International Trades Classification rev. 1 of every year from 1918 through 2010. Employing a consistent method, he discovered a large cache of “residuals (hidden) not elsewhere classified” of exports and imports for the Soviet Union and the Russian Federation. As for trading partner countries, the author finds that the “socialist countries”—which includes countries that were not socialist during the exam-

14 

M. KUBONIWA AND K. KUMO

ined period but would become members of the socialist camp after World War II—occupied only an insignificant position in Soviet trade until the end of World War II, with the exception of trade with China and Mongolia in the late 1930s. As for the composition of trade commodities, he finds that the export of “inedible crude materials excluding fuels”—the main item being lumber—greatly increased in the period of “establishment of the Stalin regime” and “from the German-Soviet pact to World War II.” This finding suggests the importance of forced labor in Soviet industrialization. In Chap. 10, we witness that Soviet statistics authorities attempted to incorporate foreign trade earnings into the national income, based on a unique formula. First, we show that they must have applied one of the well-known formulas for trading gains arising from changes in terms of trade to their specific accounting context. Then we prove that this Soviet practice should have been corrected. Second, we revealed our estimate of Soviet foreign trade earnings, calculated using Soviet official data on foreign trade and input-output tables, and then explored the implications of our estimate. We further look at how contemporary Russia has followed the Soviet statistical and institutional legacy of reporting foreign trade earnings in the national accounts. In Chap. 11, estimates of GDP growth for the Russian Empire and Russian Republic for 1860–1990 (Sects. 11.1 and 11.2), an estimate of informal economy for the Russian Republic for 1960–1990 (Sect. 11.3), and a reappraisal of GDP data by industry for present-day Russia for 1989–2015 (Sect. 11.4) are demonstrated. In Sect. 11.1, a new series of real GDP growth rates for 1860–1913 is presented. The nominal value added structure for the base-reference year 1913 is determined using own estimate of the nominal value added of the (non-material) service sector in addition to Falkus (1968). Regarding real growth of agriculture and industry, the results in Chaps. 5 and 6 are directly applied. We estimate real growth rates for the trade and service sectors. Estimated growth rates for the Russian Empire are quite close to those in earlier research. The new estimation shows that real GDP grew at an annual average rate of 2.5% for the period 1860–1913, which led GDP per capita to grow at an annual average rate of 0.9%. GDP per capita grew at −0.2% annually for 1860–1885, and at 1.9% annually for 1885–1913. GDP for the Russian Empire is used to estimate GDP in the territory of present-day Russia and the Soviet territory according to population pro-

1 INTRODUCTION 

15

portions in 1913. Growth rates in both territories are assumed to be equal. We examine the possibility of estimate biases owing to long retrospective extensions using a fixed 1913 structure. Some international comparisons are made using 1913 exchange rates (gold standard) against the US dollar or international dollars, such as Maddison’s 1990 Geary-Khamis international dollars or the World Bank’s 2011 international dollars. These comparisons demonstrate the backward development level of Russia’s capitalism along with Japan’s. The volatility of growth rates is also statistically examined in a comparative view. The volatility in growth during the Russian Empire was an economic factor contributing to the first revolution in 1917. In Sect. 11.2, real GDP growth rates in the Russian Republic for 1913–1990 are estimated to correct for the major drawback of official statistics—the overestimation of growth rates. For this, nominal value added structures for 1961–1990 are estimated through the conversion of Soviet-­type Material Product System to SNA. Using our own sectoral estimates of real GDP growth and nominal value added structures, we estimate real GDP growth rates in the Russian Republic for 1913–1990. GDP growth rates for 1913–1961 are estimated using retrospective extensions based on the fixed value added structure in 1961 and real sectoral growth rates for 1913–1961. GDP growth rates for 1961–1990 are estimated based on a chain method by using nominal value added structures in 1961, 1965, 1970, 1975, 1980, and 1985, with real sectoral growth rates for 1961–1990. Our new estimates of real GDP average annual growth rate are 3.6% for 1913–1990 and 4.1% for 1917–1990, representing half the Soviet official figure of 7.0% for 1917–1990 but a higher rate than Maddison’s estimate of 2.8% for 1913–1990 for the Soviet Union. Regarding postwar growth, real GDP average annual growth rates are estimated at 4.2% for 1950–1990 and 3.2% for 1960–1990, which are much lower than the Soviet official figures of 5.9% for 1950–1990 and 4.8% for 1960–1990 but larger than CIA’s estimates of 3.5% for 1950–1990 and 2.9% for 1960–1990 for the Soviet Union. International comparisons of our estimates are made, along with volatility. Volatility in growth was lower for the Soviet era, while a slowing in Soviet growth with negative Total Factor Productivity and worsening GDP quality after the 1970s led to the breakup of the Soviet Union in 1991. We also compared long-term growth trends for Russia and Japan for 1860–2017. Russia is unlikely to catch up with Japan in the foreseeable future.

16 

M. KUBONIWA AND K. KUMO

In Sect. 11.3, nominal and informal real GDP data for the Russian Republic are estimated. The primary findings in this section are as follows: previous estimates of Russia’s nominal GDP were underestimated by about 12.6% points, on average, due to a lack of informal GDP; and economic growth, including informal GDP, was overestimated by 15–39 points, which corresponds to an annual growth rate in the range of 0.24%– 0.38% points. In Sect. 11.4, the transition of Russian national accounts to the international standard of 2008 SNA is traced with the author’s own estimation of sectoral value added according to an international standard (Nomenclature statistique des activités économiques dans la Communauté européenne; Statistical classification of economic activities in the European Community, rev. 1.1). Confirming that presentday Russian national accounting rightly corresponds to 2008 SNA, the author of this section points to three specific characteristics of Russian national accounts, namely the late introduction of internationally standardized industrial classification, recording the value added of oil and gas as their distribution margins, and official GDP with the large weight of the unobserved economy. In Chap. 12, the key question is “How large is the GDP of the oil and gas sector in the USSR and in Russia today?” We estimate these figures, including rents from exports: the estimation of the GDP of the Soviet oil and gas sector may be the first attempt in the literature. We also update our estimate of the present-day Russian oil and gas GDP, focusing on exports. We demonstrate that in the USSR and in Russia today, estimated measures of oil and gas GDP are much larger than the official measures. This result is intuitive. However, it may not be intuitive that the share of oil and gas GDP in the USSR’s total GDP was much smaller than it is in Russia today. This may be partly due to an overvaluation of the total GDP through application of the single official exchange rate to tradable and non-tradable goods in a non-hard currency world. To correct this unintuitive outcome, we present the Soviet oil and gas GDP in 2015 US dollars for comparison. Needless to say, resolving these issues will require further investigation.

1 INTRODUCTION 

17

1.4   Analytical Examples Using the Results of the Book and Related Data Using estimated time series and related data, we demonstrate some analytical examples. The following analytical examples are included in this chapter: In Fig. 1.6, Russia’s population dynamics by territory are demonstrated for 1860–2017. Russia’s population of 146.8 million in 2017 was 3.2 times million persons 300 250 200 150 100 50 0

Russian Empire

Soviet Union

Present Russia

Fig. 1.6  Dynamics of Russian population by territory, 1860–2017. Notes: All data show mid-year population. Population of present Russia from 2015 onward includes the population of Crimea and Sevastopol. Sources: Estimated by the author using the following data. Russian Empire (population of 1913 territory excluding Finland): Khromov (1950). Soviet Union (population of 1990 territory): 1913–1938: data in Lorimer (1946) × 0.118 (territory adjustment coefficient); 1939–1949: Maddison (1995); 1950–1990: Soviet Population Yearbook for 1987 and Soviet Statistical Yearbook for 1990. Present Russia: 1860–1866: The author’s estimates by regression; 1867–2002 (population of 2000 territory): estimates in Chapter 3 of the book; 2003–2017: Rosstat website (www.gks.ru. Accessed May 2018)

18 

M. KUBONIWA AND K. KUMO

the population of 45.9 million in 1867. This figure also shows the population of the territory of the Russian Empire excluding Finland. Its population in 1913 was 173 million. Excluding early population losses of Poland (12.1 million) and others, the Soviet population in 1922 was 140 million (Markevich and Harrison 2011). In the figure, the Soviet population was adjusted based on its territory in 1940. The Soviet population in 1913 amounted to 157.7 million. The 1913 population in present-day Russian territory is estimated to have been 95.3 million. As is shown in Table 1.1, the average annual population growth rates in both the territory of the Russian Empire and present-day Russia for 1860– 1913 were 1.6%. In the first half of this period (1860–1885), the population growth rate of the Russian Empire was 0.2 percentage points higher than that of present-day Russia, while in the latter half (1885–1913), with rapid industrialization, the population growth rate of present-day Russia was 0.2 percentage points higher than that of the Russian Empire. From the late Empire era to the Soviet era, from 1913 to 1990, the population growth rate of the Soviet territory (0.8%) was higher than that of present-­ day Russia (0.6%) by 0.2 percentage points. This may be due to the rather high population growth in Central Asia and the Caucasus of the Soviet Union. The population growth of present-day Russia for 1990–2016 was negative. This implies that its drastic fall in population for the transition recession period has not yet been fully restored by its rehabilitation in the 2000s. Table 1.1 also compares the population growth of Russia with that of Japan, the USA, and Europe. Concerning the Empire era, population growth rates in the Russian Empire and present-day Russia were much higher than those in Japan and Europe. It is suggested that the GDP growth of the Russian Empire was brought about by population growth rather than productivity growth. For 1913–1990, population growth rates in the USA and Japan were higher than those in the Soviet territory, present-­day Russian territory, and Europe, including Germany and France. For 1928–1950, populations in the Soviet Union and the Russian Republic contracted by 0.8%, which was much worse than that in Japan, the USA, and Europe. Many people died due to political purges or starvation. In addition, since the number of soldiers who returned from World War II was small, no “baby boom” appeared in the Soviet Union. Regarding the period of 1950–1990, since the rehabilitation of the Soviet population was remarkable, its growth rate caught up with that of the USA, which was much higher than those of Japan and Europe. From 1990 onward, the

1 INTRODUCTION 

19

Table 1.1  An international comparison of annual average population growth rates, 1860–2016 (%) Russian Empire 1860–1913 1913–1990 1990–2016 1860–1885 1885–1913 1913–1928 1928–1940 1913–1940 1940–1950 1950–1990 1990–2000 2000–2016

Soviet Union

1.6 0.8 1.6 1.6 0.8 −0.8 0.8 −0.8 1.2

Present USA Japan Germany France Russia 1.6 0.6 −0.03 1.4 1.8 0.5 −0.8 0.5 −0.8 0.9 −0.1 0.003

2.1 1.2 0.9 2.3 1.9 1.4 0.8 1.1 1.4 1.2 1.1 0.8

0.8 1.1 0.1 0.6 1.1 1.3 1.3 1.3 1.4 1.0 0.2 0.01

1.1 0.2 0.1 0.9 1.3 −0.1 0.7 0.3 −0.2 0.3 0.3 0.05

0.2 0.4 0.5 0.3 0.2 −0.1 −0.01 −0.04 0.4 0.8 0.5 0.5

West 12 countries 0.8 0.4 0.4 0.7 0.8 0.2 0.5 0.3 0.3 0.5 0.3 0.4

Sources: Russia: Fig. 1.6. USA, Japan, Germany, France, and west 12 countries: 1860–1970: Maddison (1995, 2010). 1970–2016: the United Nations population data, 2018 edition, at https://unstats.un. org/unsd/snaama/dnllist.asp Notes: Twelve West European countries are the United Kingdom, Germany, France, Italy, Austria, Belgium, Denmark, Finland, the Netherlands, Norway, Sweden, and Switzerland

population contraction of present-day Russia was greater than that of Japan and Europe, with declining birth rates. Figure 1.7 shows the author’s estimates of Russian real GDP and per capita GDP (the average of estimates A and B in Chap. 11) in terms of constant 2011 US$. Both GDP and per capita GDP are in present-day Russian territory. Russian GDP (per capita GDP) in 2011 was US$2.517 trillion ($14,351). Due to recent growth retardation, real GDP (per capita GDP) in 2017 accounted for only US$2.544 trillion ($14,671). The size of today’s Russian GDP is much smaller than that of the USA, China, Japan, and Germany. Nevertheless, the GDP (per capita GDP) level in 2017 was 75 times (24 times) the level of US$28.4 billion ($826) in 1867, a recession year. The Russian GDP in the Empire era started at US$31.6 billion ($767) and reached its peak, US$118.3 billion ($1241), in 1913. From the end of the Russian Empire to the early Soviet Union, GDP markedly contracted due to World War I and revolution. After 1923, during the New

20 

M. KUBONIWA AND K. KUMO

Economic Policy, with the reintroduction of a market mechanism, GDP was restored. Then, in the Stalin era, GDP showed marked growth. Real GDP amounted to US$295.3 billion ($2675) in 1940. After the interwar recession, the Russian GDP rapidly recovered in the 1950s. The oil shocks in the 1970s were also a positive factor for Soviet Russian growth. The Russian GDP reached its peak of US$1.8477 trillion ($12,540) in 1989 during the Soviet era. Russian growth in the Soviet era began to slow down in the mid-1960s. Even oil windfalls could not check further retardation during the Soviet era. After the second revolution in 1991, the Russian GDP was drastically reduced due to the transition recession. In 1998, Russia experienced a financial crisis. Although it showed rapid growth, thanks to continuous increases in international oil prices from 1999 to mid-2008, it showed a sharp decline of 8% in 2009, due to the collapse of the oil bubble and the Lehman shock. Since then, Russia has fallen into growth retardation despite some restoration of oil prices. It

(in constant 2011 million US$) 2,500

(in constant 2011 US$) 16,000 14,000

2,000

12,000 10,000

1,500

8,000 1,000

6,000 4,000

500

2,000 0

0 real GDP

per capita Real GDP (right)

Fig. 1.7  Long-term GDP of Russia in the present Russian territory, 1860–2017. Sources: Chapters 11.1 and 11.2 and Rosstat website. Exchange rate in 2011 is 29.38234 rubles/US$ according to the International Monetary Fund (IMF) website

1 INTRODUCTION 

21

should be noted that the present-day Russian economy has largely been exposed to changes in oil prices (Kuboniwa 2012, 2014). Figure 1.8 displays the annual growth rates of GDP in present-day Russian territory for more than 150 years. First, visually, the high volatility of Russian growth, in particular during its Empire period, can be seen. A high growth rate of positive 20% or more and a growth rate of negative 20% or less also frequently appeared. However, continuous growth declines for more than two years were not seen except at the end of the Empire period and the early Soviet era. The lowest rate of growth recorded was −30.3%, in 1918, immediately after the first revolution. Compared to the Empire period, the amplitudes of changes in the growth rates of the Soviet Union were remarkably small, except for the initial period. The amplitudes of both Soviet-era and post-Soviet growth rates were too small in comparison with those in the Empire period, excluding the early transition stage (−14.5% in 1992), the intra-war period of World War II (−15.4% in 1941), and the world recession period (−7.8% in 2009). The volatility of the growth rate is described in detail in Chap. 11, together with an international comparison. The volatility of Russia was 2.5 times higher than that of Japan and the USA and 3.5 times that of the European average. A comparison by industry with Japan suggests (%) 40.0 30.0 20.0 10.0 0.0 -10.0 -20.0 -30.0 -40.0

Fig. 1.8  Annual growth rates of Russia, 1861–2017. Source: Fig. 1.7

22 

M. KUBONIWA AND K. KUMO

that the high volatility of Russia during the Empire period was mainly due to the large volatility of the agricultural sector. The Soviet Union was not influenced by the 1929 Great Depression in the USA and Japan or the oil shocks in the 1970s. This resulted in the reduced volatility of the Soviet era. The volatility in Russia from 1913 to 1990 was 1.2 times that of Europe and the USA, while it was 0.8 times that of Japan (Japan’s volatility was larger than Russia’s because of devastating production destruction caused by US military attacks in 1945). However, in Russia, there has been a declining growth trend since the 1970s. Moreover, the poor quality of GDP contents, including consumer goods, had become clearer. From 1990 onward, Russia’s volatility was observed to be about four times larger than that of Japan, the USA, and Europe, including the transition recession and the 2009 world crisis. Focusing on the external aspects of economic growth, Fig. 1.9 shows trade dependence (share of total trade turnover in GDP) with export dependence (share of exports in GDP) and import dependence (share of (%) 70 60 50 40 30 20 10

Exports to GDP

10 20 17

05

00

95

20

87

80

19 37 19 44 19 60

05 19 13

19 00

18

85

0

Imports to GDP

Fig. 1.9  Dependence on foreign trade of the Russian Empire, Soviet Union, and present Russia, 1885–2017. Sources: Foreign trade: Khromov 1950 (Table  16, Table 17), Chapter 9 of the book. Nominal GDP: 1913: Chapter 11.1. 1885 and 1900: nominal net national product (NNP) in Gregory (1982, Table 3.2) × 1.04342 (estimated nominal GDP/Gregory’s NNP in 1913); 1937 and 1944: Bergson and Heymann (1954, Table  5). 1960 and 1980: CIA (1983, Table  17). 1987: Soviet Statistical Yearbook for 1990, p. 9. 1995–2017: Rosstat website (www.gks.ru. Accessed May 2018)

1 INTRODUCTION 

23

imports in GDP). Trade dependence was 11.8% in 1885, 13.1% in 1905, and 13.7% in 1913. Even at the time of rapid industrialization in the Empire period, the dependence on trade grew steadily. From 1885–1913, the trade balance was a surplus, except for 1899. The average surplus was less than 2% of the GDP in the Empire period. Trade declined sharply in the Soviet Union. In 1937, during Stalin’s industrialization of the Soviet Union, trade dependence was only 0.2%. Before World War II, the Soviet Union was an almost self-sufficient autarky. During the war, a change was seen. The dependence on trade in 1944 increased rapidly to 0.8%. This is because military assistance from the USA was included in imports, as pointed out in Chap. 9. After the war, as a result of the establishment of a socialist world economy, there were increases in dependence on trade, increasing to 5.5% in 1960. This situation continued in the 1950s and 1960s during the Cold War. A drastic change occurred after 1973, when oil prices jumped higher. Trade dependence in the 1980s was within the range of 15–18%. Nonetheless, the degree of the Soviet Union’s dependence on trade was rather low from an international perspective. More drastically, after the collapse of the Soviet Union, due to the liberalization of foreign trade and currencies, Russia’s dependence on foreign trade skyrocketed. In 1995, after hyperinflation settled down and the customs clearance system was introduced, Russia’s trade dependence jumped to 55.2% because the trade volume expanded, and the GDP scale of non-tradable goods shrank due to the liberalization of the trade and exchange rates. In 2000, export dependence sharply increased to 44.1% due to the surge in oil prices. This resulted in trade dependence of 68.1%. Afterward, trade dependence gradually declined, settling at 46.7% in 2017. Present-day Russia’s trade dependence seems to be significantly higher than that of China. This level of economic openness was not brought about through the normal development of international vertical specialization. Figure 1.10 presents Russia’s dependence on state finance. The Russian Empire showed normal movement from 1885 to 1913, while the state financial balance was positive only for several years during 1860–1913. The Soviet dependence on a state budget showed marked increases. The Soviet Union experienced budget deficits for 1918–1957, while it had budget surpluses for 1958–1984. After 1985, the budget deficits continued and increased. After the collapse of the Soviet Union, budget deficits continued. In 2000, Putin’s Russia showed a favorable budget surplus, thanks to windfalls from increases in oil prices. This situation continued

24 

M. KUBONIWA AND K. KUMO

(%) 60

50

40

30

20

10

0 Revenue to GDP

Expenditure to GDP

Fig. 1.10  State finance of the Russian Empire, Soviet Union, and present Russia (in per cent of GDP), 1885–2017. Sources: State finance: Chapter 8 of the book. Nominal GDP: See sources in Fig. 1.9

until 2008. Due to deteriorations of oil prices, present-day Russia continues to have budget deficits with a relatively large government. Figure 1.11 illustrates Marshal’s k for 1885–2017. In the Russian Empire, M0 to GDP decreased from 14% in 1885 to 11% in 1913, while M2 to GDP doubled from 17% in 1885 to 35% in 1913. This can be ­considered a monetary deepening. In the Soviet Union, M0 to GDP decreased until 1960 and then increased to 10% in 1987, whereas M2 showed rapid increases from 19% in 1937 to 32% in 1960, 62% in 1980, and 79% in 1987. This phenomenon, which occurred in the economy without convertible currency, cannot be considered a monetary deepening. In present-­day Russia, M0 to GDP has stayed around 9%, while M2 to GDP showed large increases to 46% in 2017. This may imply that the Russian economy has been normalized. Table 1.2 illustrates changes in Russian nominal industrial structures at market prices for 1913–2015, while Table 1.3 shows those at basic prices or factor costs. It can be seen that, for an economy with growing agricul-

1 INTRODUCTION 

25

(%) 80 70 60 50 40 30 20 10 0

M0 to GDP

M2 to GDP

Fig. 1.11  Money supply of the Russian Empire, Soviet Union, and present Russia (in per cent of GDP), 1885–2017. Note: M2 of the Soviet Union is the sum of external debit, debit to government, circulated cash, and household deposits in the Gosbank’s balance sheet. Sources: Money supply: Chapter 7 of the book, Bank of Russia website (www.cbr.ru. Accessed May 2018). Nominal GDP: See sources in Fig. 1.9

tural subsidies, whether we employ market prices or basic prices is decisively important to understanding its industrial structure. Regarding the Russian Empire, only the industrial structure at market prices in 1913 is available. It is derived by adding an estimate of the (non-material) service sector’s gross value added to Falkus’s gross value added by sector. The official Soviet industrial structure is derived by adding sectoral capital depreciation and services value added to the Soviet national income (net material product [NMP]), with some sectoral corrections. The Soviet national income by sector is evaluated at Soviet market prices, which Bergson and the CIA called “establishment prices.” In Soviet national accounting, agricultural subsidies were recorded as subsidies to the food industry. To correct this, in Table 1.2, agricultural subsidies are subtracted from agricultural value added. Soviet foreign trade revenues, which were absorbed into the Soviet state budget, are counted as part of trade. In the

26 

M. KUBONIWA AND K. KUMO

present GDP statistics, sectoral value added is at basic prices, while in Table  1.2, sectoral value added is estimated as sectoral GDP at market prices (producer prices). Exports in trade are export trade margins as shown in the input-output data. Looking at Table 1.2 in market prices, the agricultural weight in the industrial structure decreased from 50% during the Russian Empire to 21% in 1937, 10.3% in 1982, and 11.3% in 1990. In the postwar Soviet period, no marked changes occurred. In present-day Russia, after the breakup of the Soviet Union, agricultural weight further decreased to 6% in 2000 and less than 5% from 2005 onward. In contrast, the industrial weight increased from 22% in 1913 to higher than 30% in 1937 and higher than 45% after 1972. The industrial weight in present-day Russia was higher than 40% in 2005, while it remained at 35% in 2011 and 33% in 2015. Due to manufacturing disruptions, the industrial weight in present-­ day Russia is significantly lower than that in the Soviet Union. The trade sector increased its weight to 13% in 1937 in the Soviet Union, which it did not reach in 1982. It showed a high level of 28% in 2000 and then declined. In 2015, it was around 15%. Trade enlargement is due to the expansion of retail trade margins of imported goods and the increase of export trade margins. Export trade margins, unlike those in the Soviet Union, should be referred to as the operating surplus of the exporting company. In particular, the export distribution margins of oil and gas should be recorded as part of the value added by the oil and gas industry. The service sector increased from 9% in the Russian Empire to 10–18% in the Soviet Union. It increased further in present-day Russia and reached 34% in 2015. The development of the service economy in present-day Russia is largely due to the rise of banking finance, insurance, real estate, and the leasing-rental business. The service sector, in a broad sense, including transportation, communication, and trade, now occupies more than half of the GDP. Judging only from this, Russia’s industrial structure is on par with those of developed countries. Under the market price system, the share of the manufacturing industry is not much different between Japan (with the hollowing out of manufacturing) and present-­ day Russia (with its very weak competitive power of manufacturing). The statistical estimation of the Russian industrial structure cannot be completed only by understanding it at market prices, as usual. In the Soviet Union, price depended on state finances, and the existence of an indirect tax or a net product tax (turnover taxes and subsidies in the Soviet Union) distorted the price system; as a result, the industrial structure was

5.7 13.1

17.7 100.0

8.9 100.0

42.4

21.2

6.1 7.8

50.3 21.6 5.4

Bergson

1937

9.1 13.0 5.3 7.7 0.5 11.3 100.0

1.1 10.7 100.0

10.3 47.5 8.3

1982

13.0 8.3 5.1 3.1

12.2 45.9 8.9

1972

Soviet Union

1.2 14.7 100.0

10.7 11.0 5.4 5.5

11.3 47.1 10.8

1990

22.8 100.0

6.3

13.3 17.6 100.0

9.2 17.7

4.4 40.9 5.1

2005

9.9 20.4

7.0 39.2 5.9

2000

Present Russia

31.6 100.0

3.0

6.8 16.1

3.5 35.3 6.7

2011

33.9 100.0

2.9

7.4 15.2

4.2 33.4 5.8

2015

(nominal, %)

Sources: Russian Empire: Chapter 11. Soviet Union: 1937: Bergson (1953, Table 9). 1972–1990: MINECON (1994) and data on foreign trade revenues provided by Interstate Statistical Committee of the CIS (1998). Total GDP is taken from CIA estimates. Present Russia: Chapter 11 of the book. Rosstat website (GDP at basic prices and input-output tables). For 2005, Rosstat (2010) and 2005 Russian Input-Output System for BRICs Input-Output Table

Transport and communication Trade Domestic Foreign Exports Other sector Services GDP at market prices

Agriculture Industry Construction

1913

Russian Empire

Table 1.2  Industrial structure of Russia at market (producer) prices, 1913–2015

1 INTRODUCTION 

27

28 

M. KUBONIWA AND K. KUMO

also distorted. Bergson (1953, 1954, etc.) emphasized this point a long time ago, and his claim was completed as the CIA’s Soviet GDP estimate (1950–1987) (JEC 1990). Table 1.3 shows the result of estimating the industrial structure at factor costs or basic prices, which is the market price (producer price) minus the net product tax (factor costs and basic prices are synonymous in the Soviet Union). Regarding the industrial structure of the Russian Empire, the industrial structure at basic prices was not estimated due to the lack of consistent data. Looking at the Soviet Union, due to the addition of agricultural subsidies, the agricultural weight rose higher than that with a market price system and, on the contrary, the industrial weight fell sharply due to the deduction of net taxes on products. This also holds for the Russian Republic’s industrial structure. In the table, only 1937 and 1982 are presented for the Soviet Union. The benchmark year of the CIA estimate is 1982. The estimation based on our official statistics in 1982 is different from the CIA estimate due to our use of confidential official data that the CIA could not access. More importantly, in addition to simple conversion to factor costs, the CIA estimated sectoral profits according to sectoral fixed capital. This is an estimate at “adjusted factor costs.” Since we make much of the redistribution of profits by Soviet authorities, we did not adjust the sectoral profits. Bergson’s idea is that, in terms of pure theory, the price should be von Neumann price (price  =  cost  +  equal profit ratio × capital). This is effective for investigating the distortion of the price system and the industrial structure. However, since von Neumann price is associated with von Neumann balanced growth path, it is not necessarily appropriate for estimating a distorted, unbalanced growth path under a distorted price system. In this book, we tried to estimate the Russian Republic’s GDP growth rate using industrial structure data at basic prices or market prices without relying on adjusted factor costs. The results are detailed in Sect. 11.2 of Chap. 11. As shown in Table  1.3, the Russian Republic’s agricultural weight declined from 14% in 1961 to less than 10% in the early 1980s and then increased to 17% in 1990 due to increases in agricultural subsidies. The industrial weight rose from 30% in 1961 to 37% in 1970 and remained at that level. Transportation, communication, and trade have increased slightly since 1961, while the weight of services has shown a downward trend. The net taxes on products showed a decline for its normal part, other than for foreign trade. This is because the increase in subsidies was

26.6

22.8

0.2 20.0 90.6 9.4

0.5 11.3 90.2 17.5 9.8 7.7 100.0

8.3 4.7

13.9 29.9 7.8 8.2 5.0

14.3 37.1 8.4 9.0 5.6

9.2 36.6 8.9 9.2 5.2

9.7 38.0 8.6

1982

9.9 5.4

16.7 38.0 10.7

1990

9.7 20.3 13.3

6.8 28.4 4.7

2000

8.8 17.5 6.3

4.3 28.0 4.6

2005

6.6 15.8 3.0

3.4 22.7 6.6

2011

7.2 15.0 2.9

4.1 24.1 5.7

2015

1.3 0.8 0.7 0.6 1.2 14.7 13.5 10.7 10.1 8.9 18.7 22.5 31.4 33.7 80.6 87.2 80.7 81.4 90.9 88.6 85.7 86.4 89.8 19.4 12.8 19.3 18.6 9.1 11.4 14.3 13.6 10.2 16.7 10.0 12.1 10.8 1.8 7.5 7.8 7.2 6.5 2.7 2.8 7.1 7.8 7.3 3.9 6.6 6.4 3.6 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

9.4 5.9

18.7 29.3 7.1

9.1 5.3

13.7 34.3 8.3

1980

Present Russia

(nominal, %)

Sources: Soviet Union: see sources in Table 1.2. CIA’s data in 1982 is at adjusted factor costs in JEC, 1990. Since Bergson and CIA did not provide own total GDP at market prices, data on GDP at established prices are taken as total GDP at market prices. Present Russia: See sources in Table 1.2. Chapter 11.4 of the book. Taxes on foreign trade cover only taxes on exports

Transport and communication 5.9 Trade 3.6 Exports Other sector Services 17.4 GDP at market prices 76.3 Net taxes on products 23.7 Other than foreign trade Foreign trade GDP at market prices 100.0

Agriculture Industry Construction

Bergson Official CIA

1970

1961

1982

1937

1982

Russian Republic

Soviet Union

Table 1.3  Industrial structure of Russia at factor costs or basic prices, 1937–2015

1 INTRODUCTION 

29

30 

M. KUBONIWA AND K. KUMO

greater than that in turnover taxes. Trade taxes increased sharply from around 1980 and then remained at a level of 7%–8%. Agriculture in present-day Russia at basic prices showed a trend similar to the case at market prices due to the disappearance of agricultural subsidies. As for industry, since not only taxes on mining, including crude oil and gas, but also taxes on manufacturing products are large, its weight at basic prices may be drastically reduced as compared to the case at market prices. Trade and services at basic prices are not much different from the case at market prices. In the table, unlike in the case of Russia during the Soviet era, trade taxes only reflect export taxes in present-day Russia. Export taxes, which constitute a major part of federal government revenue, rose to 7% in the 2000s, but shrank to less than 4% in 2015. It should be noted that Bergson and the CIA, as well as this book, estimate the growth rate of GDP at basic prices for the Soviet Union or the Russian Republic without directly estimating the original GDP at market prices. This implies that the growth rate of net taxes on products is the same as that of the GDP at basic prices. However, as the official growth rate statistics of present-day Russia show, such an assumption is not valid. The estimation of the growth rate of net taxes on products is possible with selected additional data. However, since there is no such data for the Soviet period, we also make an assumption that the growth rate of net taxes on products is identical with that of the GDP at basic prices. In analyzing the modern Russian economy, we would like to mention about capturing the GDP of oil (crude oil and refined oil) and natural gas. Table 1.4 uses 2011 as an example and shows our latest updated estimates of the oil and gas exports and GDP. First, by conversion from the base price to the producer price system, the export tax is added to exports, and the net product tax is added to the added value. Because taxes on petroleum products are collected even on domestic goods, the total net product tax is larger than the export tax. Furthermore, we argue that the export trade margin of oil and gas exports and the export transport margin should also be added. The federal government and oil and gas companies share the difference between the purchaser price (international price) and the basic price (domestic price) of exports, but the additional gain of enterprises is recorded as the export distribution margin. Similar measures should be taken for other industries. Therefore, in the producer price system here, the product is exported to the published input-output table (purchaser price) and, in the sectoral GDP, the export distribution margin is added to

1 INTRODUCTION 

31

Table 1.4  Conversion of exports and value added of Russia’s oil and gas, 2011 (nominal billion US$) Exports

Crude oil Natural gas Refined oil Total exports Value added Crude oil Natural gas Refined oil Total value added

At basic prices Taxes on (domestic exports prices) 91.2 10.0 62.6 163.8 At basic prices 158.1 22.7 43.7 224.5

83.2 13.1 32.7 129.0

Trade margins

2.2 41.3 5.0 48.5

Net taxes Trade on products margins 83.2 13.1 47.2 143.5

2.2 41.3 5.0 48.5

Transportation At purchaser margins prices (international prices) 2.2 – 0.8 2.9 Transportation margins 2.2 – 0.8 2.9

178.8 64.4 101.0 344.2 Estimate at market prices 245.7 77.1 96.7 419.5 (in % of GDP)

Exports

Crude oil Natural gas Refined oil Total exports Value added Crude oil Natural gas Refined oil Total value added

At basic prices Taxes on (domestic exports prices) 4.4 0.5 3.0 8.0

4.1 0.6 1.6 6.3

Trade margins

0.1 2.0 0.2 2.4

At basic prices Net taxes Trade on products margins 7.7 1.1 2.1 10.9

4.1 0.6 2.3 7.0

0.1 2.0 0.2 2.4

Transportation margins

0.1 – 0.0 0.1 Transportation margins 0.1 – 0.0 0.1

At purchaser prices (international prices) 8.7 3.1 4.9 16.8 Estimate at market prices 12.0 3.8 4.7 20.4

Notes and sources: The author’s estimate using 2011 input-output data on Rosstat website (www.gks.ru. Accessed September 2018). Exchange rate is 29.38234 rubles/US$ from the IMF website

32 

M. KUBONIWA AND K. KUMO

the net product tax. Added distribution margins are deducted from the exports and GDP of the trade and transport sectors. Therefore, the official total exports and GDP are preserved as they are. The estimated oil and gas GDP ratio, which is twice the official value-added ratio, is 20%, which correctly reflects Russia’s dependence on oil and gas. Such views are widely accepted, not only by the Russian Ministry of Economic Development but also internationally. It should be noted that, although the discussion above is in the context of converting from the basic price to the producer price, we must consider the export tax as a corporate tax, according to oil-­ producing countries such as Norway, and the export distribution margin as one of the operating surpluses. It can be said that our transformation is a necessary remedial measure, even within the basic price system. We also believe that the characteristics of modern Russian official statistics in the handling of oil and gas are the legitimacy from the Soviet Union. Finally, we would like to briefly outline important items on the income side and expenditure side of GDP, such as the general price level, wages, labor distribution ratio, and investment ratio, which we have not had the opportunity to discuss in detail in the following chapters of this book. The general price level over time derived from the GDP deflator is indicated in Fig. 1.12. As can be seen, the fluctuation of the general price level during the Imperial period was small. The general price level decreased at an annual average rate of 0.1% for 28 years from 1885 to 1913. Our estimate of nominal capital depreciation or replacement investment for ­1885–1913 may be slightly underestimated. Using NNP data in Gregory 1982, the general price and consumer price increased at an annual average rate of about 0.8% for 1885–1913. The estimation of this book requires further examination, although the price fluctuation in the Empire from 1885 to 1913 was minor. According to our estimate of the Russian Republic of the Soviet Union, the average inflation rate for 1961–1990 was 2.4%. On the other hand, when official national income (NMP) statistics are used, the general price increase rate for the same period averages 0.8% per year. The difference between the estimated value of 2.4% and the official value of 0.8% suggests that there must have been 1.6% “hidden inflation.” Official statistics of the Soviet Union are characterized by an overvaluation of the overall GDP growth rate and an underestimation of the inflation rate. Liberalization of prices, excluding crude oil, gas, and electricity, at the beginning of 1992, immediately after the collapse of the Soviet Union and trade and exchange liberalization in July of the same year, eliminated the framework of administrative planning management

1 INTRODUCTION 

33

700.0 600.0

present Russia 2000=100

500.0 400.0 300.0 200.0

Russian Empire 1885=100

Russian Republic 1961=100

100.0 0.0

Estimated series

Official series

Fig. 1.12  Dynamics of general price level in the Russian Empire, Russian Republic, and present Russia. Sources: Russian Empire: Nominal GDP and real GDP estimated in the book. Russian Republic: Official series are derived from nominal and real NMP provided by Interstate Statistical Committee of the CIS (1998). Estimated series are derived from nominal and real GDP (average of series Estimates A and B in Chapter 11). Present Russia: Rosstat website

and price control. Hyperinflation (an inflation rate of about 1500% in 1992) was induced in the early transition. The annual average inflation rate for 2000–2008 reached 16.5% due to continuous rises in international and domestic oil and gas prices. The pressure to raise the domestic prices of oil and gas continued under the goal of balancing domestic prices with international prices. The annual average inflation rate for 2010–2017 was still a high level of 8%. The major current inflation factor in Russia is the domestic price of oil and gas, which was placed outside the price liberalization policy. Next, let’s look at the monthly average wage and salary of workers and staff. Figure 1.13 shows the index or ruble or US$ of the nominal monthly average wage over time. Data from the Imperial period show the trend of monthly average nominal wages of workers and staff of industrial enterprises with more than 50 employees, as listed in Mironov (2010). They

34 

M. KUBONIWA AND K. KUMO

current US$

Ruble base index 2,000

1,000 present Russia

1,800 1,600

current US$

900 800

1,400

700

1,200

600

1,000 800 600 400 200 0

500

Russian Republic ruble base 2000=100

Russian Empire ruble base 1900=100

current US$

400 300 200

ruble base 1961=100

100 0

Fig. 1.13  Monthly average nominal wages in the Russian Empire, Russian Republic, and present Russia, 1900–2017. Sources: Russian Empire: Mironov (2010). Exchange rates are from http://www.historicalstatistics.org/ Currencyconverter.htm. Russian Republic: New official retrospective series below is employed. Bank of Russia website (www.cbr.ru) and IMF website. http://www. gks.ru/free_doc/new_site/population/trud/sr-zarplata/t7.doc. Present Russia: Rosstat website

were 17.3 rubles ($8.7) in 1900 and 22 rubles ($11.2) in 1913. It is estimated that nominal wages and real wages during these years increased by 23% and 15%, respectively. Mironov (2010) also showed trends in agricultural workers’ average wages, which were 13.8 rubles in 1891–1900 and 23 rubles in 1911–1914. For the period, agricultural wages increased by 67% on a nominal basis and by 28% on a real basis. Therefore, the nominal base growth of monthly wages of all workers might have been more than shown in the figure. However, this needs further research. In the Soviet Union, planning authorities centrally allocated wages from the planned annual wage fund. Under a given job category and salary schedule, wages were to be allocated to each worker according to the quality and quantity of labor expended (“distribution according to labor”). The main concerns of the planning authorities were consistency (balance) with the wage plan, priority investment projects, cash distribution volume,

1 INTRODUCTION 

35

and consumption forecasts. The maximization of wages and consumption was not necessarily planned. Under socialism’s advocating for full employment and equality, the major measure of the realization of equality and full employment was, first of all, the reduction of general wages to the lowest level. Compulsory wage restraint was a straightforward solution by the state power for solving employment and wage problems that puzzled ­neoclassical and Keynesian economists during the Great Depression of the 1930s (see Ellman 1979). It is also well known that companies facing labor shortages have tried to hire excess personnel as much as possible to avoid risks. Therefore, even considering employment and wages, we should pay attention to the possibility of inflated reports. The data of the Russian Republic during the Soviet Union shows new retrospective official statistics from the statistical bureau on the monthly average wages of all workers and staff (including the service industry). In 1940, the average wage was 24 rubles ($26); in 1950, it was 51 rubles ($56); in 1961, 77 rubles ($86); in 1980, 174 rubles ($267); in 1990, 303 rubles ($518); the ruble-based average wage increased steadily—12.8 times (5.2% annually). After the collapse of the Soviet Union, wages fluctuated greatly, as if on a roller coaster, in response to hyperinflation. Considering a denomination (1/1000) in 1998, the monthly average wage rose 6 rubles ($27), more than ten times from 1991 to 1992, followed by a steep rise. Wages were recorded as being 2223 rubles ($79) in 2000, 20,952 rubles ($943) in 2010, and 39,167 rubles ($849) in 2017. The ruble-based nominal wage increased at an average annual rate of 50% or more between 1991 and 2017. Since the annual average inflation rate during this period was also nearly 50%, the real wage (2000 = 100) showed an average annual increase of 2.6% (180  in 1991, 76  in 1992, 304  in 2010, and 348  in 2017). After the system transition, real wages declined in only six years: −58% in 1992 during price liberalization, −7% in 1995, −40% in the 1998 financial crisis, −0.9% in the 2009 Lehman shock, −2% in 2014, and −7% in 2015. The real wage decline was the largest due to price liberalization and the financial crisis, so that it began to exceed the 1991 level in 2005, when the oil price rose sharply. Domestic currency is considered not reliable because the fluctuation of the ruble is intense. Worker’s guideline is placed on the foreign exchange rate and dollar-based wages. People always look at the exchange rate like day traders to avoid foreign exchange risks and incorporate foreign exchange purchasing and selling into daily life. After the system transition, thousands of foreign currency exchange offices (registered as banks) appeared in Moscow. Their main customers are not

36 

M. KUBONIWA AND K. KUMO

nonresidents, such as tourists, but Russian citizens or residents. Since domestic transactions, consumption settlements, and wage payments must be made in local currency, all people and businesses must always consider their currency portfolios. Dollar-based nominal wages showed a movement similar to ruble-based real wages, since both rates averaged around 3%. Of course, dollar-based nominal wages may show different movements from real wages. In particular, in 2009, during the Lehman shock, the dollar nominal wage decreased by 16%, which was lower than the real wage. The dollar-based monthly nominal wage in Russia (2007–2017) averaged only about $700, which is quite inferior to Hungary’s $1072, the Czech Republic’s $1227, and Poland’s $1130 for the same period (the author’s calculation of this section using data on website of each country’s statistical office). Figure 1.14 shows the movement of labor shares (share of nominal labor income in GDP) in the Soviet Union and present-day Russia. The average labor share in the Soviet Union for 1975–1989 was 38.6%, while that in present-day Russia was 46.4% for 1995–2017. The Soviet labor (%) 60 present Russia 50

40

USSR

30

Fig. 1.14  Labor distribution share in Soviet Union and present Russia, ­1975–2017. Sources: Soviet Union: MINECON (1994). Labor share includes social insurance and wages of the public service sector. Present Russia: Rosstat website. Labor share includes hidden wages derived from household survey

1 INTRODUCTION 

37

share was exceptionally high at 41.7% in 1990. This seems to indicate that, at the end of the Soviet Union, with GDP falling unexpectedly, controlling labor income by political power was not effective. The standard deviation of labor share in the Soviet Union from 1975 to 1989 was 0.796, while that in present-day Russia was 3.121 from 1995 to 2017, which was more variable than that of the Soviet Union. The minimal value of labor share in present-day Russia was recorded as being 40.1% in 1999, followed by 40.2% in 2000. The value of 43.8% in 2011 was due to purely statistical methodological revision (in which Rosstat raised the capital distribution share by increasing capital depreciation). Using the same statistical method as before, the value of labor share in 2011 was 49.6%, which was close to 49.7% in 2010. Since Rosstat does not provide retrospective statistics, for 2011, the distribution share statistics of present-day Russia have lost continuity. In view of Japan’s average labor share of 50.5% for 1995–2017 (Cabinet Office website), Russia’s labor share was lower than Japan’s by 4%, which cannot be claimed as a large problem for Russia. Figure 1.15 shows the movements of investment ratios (ratios of gross capital formation to GDP) in the Russian Empire, Russian Republic, and present-day Russia over time. The Russian Empire’s average investment ratio for 1885–1913 was 12.4%. There was a slight increase from 11.2% in the first half of the period (1885–1900) to 13.8% in the second half (1901–1913). Even though the Russian Empire was in the process of modernization by railway investment, agriculture was still dominant, and the investment ratio only increased to a limited extent. The average investment ratio of the Russian Republic from 1961 to 1990 was 25.8%. The investment ratio has gradually increased over the past 30 years, from 21.3% for 1961–1970 to 26.5% for 1971–1980 and 29.6% for 1981–1990. It is a well-known fact that the expansion of extensive investments during these periods resulted in a slowdown trend in GDP growth. The expansion of investment without technological progress and innovation formed the background of the collapse of the Soviet Union. The average investment ratio for 1995–2017 after the collapse was 21.7%. The investment ratio for 2000–2008, when Russia maintained an average real GDP growth rate of 7%, was only 21.5%. GDP growth for the same period was brought about by rising trading gains due to rising oil prices; thus, the impact of investment was rather weak. Due to falling oil prices and the Lehman shock, the investment ratio in 2009 declined to 18.9%, while the average investment ratio for 2010–2017 was raised to 23.2%. This expansion of the investment ratio has not yet been linked to growth expansion in a well-defined manner, while it might have checked further growth slowdown.

38 

M. KUBONIWA AND K. KUMO

35 Russian Republic

30

present Russia

25 20

Russian Empire

15 10 5 0

Fig. 1.15  Investment Ratio in the Russian Empire, Russian Republic, and present Russia, 1885–2017. Sources: Russian Empire: Nominal GDP estimated in the book and net investment and NNP data in Gregory (1982). Russian Republic: Kuboniwa and Ponomarenko (2000) and estimates in the book. Present Russia: Rosstat website

1.5   Remaining Tasks First, it is important to develop GDP on the expenditure side. A part of expenditure GDP for the Russian Empire has already been developed by Gregory 1982. The expenditure GDP (1961–1990) in the Russian Republic was provided by Kuboniwa and Ponomarenko (2000), while this paper has not provided estimates of real expenditure GDP. Furthermore, the estimation of GDP on the distribution side should be performed in a systematic manner. For economic analysis, it is necessary to synthesize the long-term GDP on the production side, expenditure side, and distribution side. Second, this book lacks systematic drilling work on prices by establishing an independent chapter. This is because the emphasis is placed on estimating the GDP growth rate on the production side using physical quantitative statistics. However, in order to analyze expenditure and distribution aspects, it is also necessary to develop a series of prices, wages, profits, and so on.

1 INTRODUCTION 

39

Third, independent estimates of long-term series for 1860–2015  in present-day Russian territory were provided only for population (during the whole period), industrial and agricultural production, and GDP (after the Soviet era). Fiscal and financial statistics and foreign trade statistics in present-day Russian territory for 1860–2015 should be estimated by means of a systematic method. Fourth, this book is in such a position that it is not necessary to estimate the GDP growth rate for present-day Russia after the collapse of the Soviet Union, and it is only necessary to systematically estimate the value added by sector. Rosstat and the World Bank have already corrected the underestimation of the official growth rate during the early transition (Goskomstat and World Bank 1995), which is similar to our own estimate in Kuboniwa (1997). However, we have not yet explored the problem of real growth rates of the non-observed economy or informal economy in present-day Russia. This is also the case with Rosstat and the previous research. It would be a valuable task to study the real growth rates of the non-observed economy in today’s Russia. Fifth, systematic research on the technical progress or innovation from the Empire period to the present and a systematic study of the stock index (in particular, real asset) are also remaining tasks. Finally, expanding the time span to include quantitative history research of the eighteenth century is also a large remaining problem. As there has already been previous research on prices and incomes, it is a realistic task to expand our system. For this, Japan’s quantitative history research dating back to the Tokugawa era will be useful. From the standpoint of contemporary comparative economics, namely from the viewpoint of the prototype of the Russian economic mode and its transformation, it is necessary to reexamine Muscovy, which existed from the thirteenth century to the sixteenth century, as the predecessor of the Russian Empire.

References Bergson, A. (1953). Soviet National Income and Product in 1937. New  York: Columbia University Press. Bergson, A., & Heymann, H. Jr. ed. (1954). Soviet National Income and Product, 1940–48. New York: Columbia University Press. Castellan, G. (1989). A History of the Romanians. East European Monographs. New York: Columbia University Press. Central Intelligence Agency, Directorate of Intelligence (CIA) (1983). Soviet Gross National Product in Current Prices, 1960–80: A Research Paper. Sov 83–10037.

40 

M. KUBONIWA AND K. KUMO

CIS Statistics Committee (1998). Soviet National Income Data for 1950–1990. Moscow: CIS. Ellman, M. (1979). Socialist Planning. Cambridge: Cambridge University Press. Falkus, M. (1968). Russia’s National Income, 1913: A Reevaluation. Economica, 35(137), 52–73. Goldsmith, R. (1961). The Economic Growth of Tsarist Russia 1860–1913. Economic Development and Cultural Change, 9(3), 441–475. Goskomstat RF & World Bank (1995). Russian Federation: Report on the National Accounts. Moscow and Washington, D.C.: World Bank. Gregory, P.  R. (1982). Russian National Income, 1885–1913. Cambridge: Cambridge University Press. Hagiwara, N., Shiba, N., Naono, A., Minamitsuka, S., Ito, T. eds. (2015). New Edition: Eastern European Dictionary. Tokyo: Heibonsha. (in Japanese) Ito, T., Inouchi, T., Nakai, K. eds. (1998). History of Poland, the Ukraine, and the Baltics. Tokyo: Yamakawa. (In Japanese) Joint Economic Committee, Congress of the United States (JEC), (1990). Measures of Soviet Gross National Product in 1982 Prices, A Study Prepared for the Use of the Joint Economic Committee, Congress of the United States. Washington, D.C.: U.S. Government Printing Office. Kawabata, K., Sato, T., Nakamura, Y., Wada, H., Shiokawa, N., Umehara, M., Numano, M. eds. (2004). New Edition: Russian Dictionary. Tokyo: Heibonsha. (in Japanese) Khromov, P.A. (1950). Ekonomicheskoe razvitie Rossii v XIX-XX vekakh, 1800– 1917. Moscow: Gosudarstvennoe izdatel’stvo politicheskoi literatury. Kirby, D. (2006). A Concise History of Finland. Cambridge University Press. Komatsu, H., Uyama, T., Horikawa, T., Umemura, H., Obiya, C. eds. (2005). Central Eurasian Dictionary. Tokyo: Heibonsha. (in Japanese) Kuboniwa, M. (1997). Economic Growth in Postwar Russia: Estimating GDP. Hitotsubashi Journal of Economics, 38(1), 21–32. Kuboniwa, M. (2012). Diagnosing the ‘Russian Disease’: Growth and Structure of the Russian Economy. Comparative Economic Studies, 54(1). Kuboniwa, M. (2014). A Comparative Analysis of the Impact of Oil Prices on Oil-­ Rich Emerging Economies in the Pacific Rim. Journal of Comparative Economics, 42(2), 328–339 Kuboniwa, M., & Ponomarenko, A. (2000). Revised and Enlarged GDP Estimates for Russia, 1961–1990. In Odaka, K., Kiyokawa, Y., Kuboniwa, M. (Eds.), Constructing a Historical Macroeconomic Database for Trans-Asian Regions (pp.  109–125), Tokyo: Institute of Economic Research, Hitotsubashi University. Lane, T., Pabriks, A., Purs, A., Smith, D. (2002). The Baltic States: Estonia, Latvia and Lithuania. Oxford: Routledge.

1 INTRODUCTION 

41

Lorimer, F. (1946). The Population of the Soviet Union: History and Prospects. Geneva: League of Nations. Maddison, A. (1995). Monitoring the World Economy. Paris: OECD Development Centre. Maddison, A. (2010). Historical Statistics of the World Economy: 1–2008 AD. Groningen University. Available at: http://www.ggdc.net/maddison/ oriindex.htm. Markevich, A., & Harrison, M. (2011). Great War, Civil War, and Recovery: Russia’s National Income, 1913 to 1928. Journal of Economic History, 71(3), 672–703. Mironov, B. (2010). Wages and Prices in Imperial Russia, 1703–1913. The Russian Review, 69(1), 47–72. Russian Ministry of Economy (MINECON) (1994). USSR Input-Output Tables for 1966, 1972 and 1975–1990 and Supplementary Tables for 1987–1989 in Current and Constant Prices. Moscow. Subtelny, O. (1988). Ukraine: A History. Toronto: University of Toronto Press. Vainshtein, S. (1980). Nomads of South Siberia: The Pastoral Economics of Tuva. Cambridge: Cambridge University Press.

CHAPTER 2

Characteristics and Development of State Statistics Shinichiro Tabata

2.1   Introduction In Russia, there are significant differences in the statistical systems of the Russian Empire (early nineteenth century to 1917), the Soviet Union (1917–1991), and the Russian Federation (1991 to the present). Moreover, in the Soviet Union period, we can identify three periods: early period (1917 to the 1920s) when a new statistical system was created; Stalin period (1930s to the first half of the 1950s); and late period of the Soviet Union (second half of the 1950s to 1991). Therefore, I will describe the statistical system of Russia separately in each of these periods.1  Concerning the historical depiction of the Russian statistical system, Goskomstat Rossii (1996b) (which publishes in both Russian and English), Simchera et al. (2001), and Rosstat (2013) are the most relevant literature in recent years. I also referred to Tiurina (1999) and Danilov and Miniuk (1998), written as one of the results of the Asian historical statistics project. I made use of such Japanese literature as Yamaguchi (2003) for the Russian Empire and Soviet Union, and Sasaki (1974) for the Russian Empire. 1

S. Tabata (*) Slavic-Eurasian Research Center, Hokkaido University, Sapporo, Japan e-mail: [email protected] © The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5_2

43

44 

S. TABATA

Despite the differences in these periods, three characteristics of the Russian and Soviet statistical systems are indicated. First, in most of the periods excluding the years 1929–1931 of the Stalin period, a “centralized statistical system” was established in which the central statistical organization conducted censuses and statistical surveys and bore responsibility for statistical surveys in general. This was in contrast to the decentralized system, where it was the obligation of individual ministries and agencies to, by themselves, collate the statistics required for their jobs (Yamaguchi 2003, p. 39). Second, most of the periods excluding contemporary Russia saw the formulation of a system of reporting statistics whereby statistics were compiled based on information collected through regular reports from business entities. This differed from the system based on sampling methods (Yamaguchi 2003, p. 70). Third, even from the Russian Empire and Soviet Union eras, Russia is abundant in well-preserved statistical resources arranged by administrative institutions. We should recall that particularly in the period from the 1900s to the 1940s, Russia and the Soviet Union experienced a series of crises such as revolutions, world wars, civil wars, the Great Purge, and famines.

2.2   State Statistics in the Russian Empire In late imperial Russia, two kinds of statistics coexisted: statistics of the central state and those of the local government bodies, the zemstvos. Zemstvos were established in 1864  in many provinces (gubernias) and districts (uyezds) under provinces in the central part of European Russia. Local administration in Russia after this period was characterized by the coexistence of, and division of labor between, state bureaucracy and zemstvos. Matsuzato (1995, p.  246) argues that, under this dual structure, zemstvos were free from bureaucratic duties, such as policing and legal functions, and were thus able to concentrate on such creative social activities as education, medicine, and agricultural improvements. One of such activities was statistics and the establishment of  statistical bureaus in many zemstvos. According to the present statistical authorities of Russia, the beginning of state statistics was September 8, 1802, when a royal manifesto ordered each minister to submit to His Imperial Majesty a written report concerning the activities of his ministry at the end of the year (Goskomstat Rossii 1996b, p. 17). It should be noted that 1802 was the year when ministries were established in Russia. In November of the same year, there was estab-

2  CHARACTERISTICS AND DEVELOPMENT OF STATE STATISTICS 

45

lished at the Ministry of Interior a committee including ten noblemen engaged in the processing of statistical information. In 1834, provincial statistical committees were established as local statistical organizations. The statistical section at the Ministry of Interior was reorganized into the Statistical Committee in 1852 and into the Central Statistical Committee in 1858. In this way, in the 1850s, the foundations of state statistical organizations and a centralized statistical organization regime were established. On this basis, as explained below, publications of basic statistics began in the 1860s. Statistical information for these publications was collected by provincial statistical committees as local statistical organs of the state. The reliability of these state statistics, however, was not considered to be very high. Danilov and Miniuk (1998, p. 3) state that “due to incompleteness of the methodology of statistical observation, disorderliness of forms of statistical reports and absence of trained staff, the reliability of statistical information collected by organizations of state and departmental statistics was frequently highly questionable.” The Central Statistical Committee was engaged mostly in population and agricultural statistics. As independently prepared departmental statistics, statistics on budget, credit, and foreign trade, which were aggregated and analyzed by the Ministry of Finance, were considered to be more reliable (Danilov and Miniuk 1998, p. 4). There were statistics on military horses compiled by the Military Ministry. Lenin evaluated them as reliable and used them in his own work (Sasaki 1974, pp.  276, 281). This was based on nine censuses (complete survey) conducted since 1875 (Goskomstat Rossii 1996b, p. 51). A population census was conducted in 1897 for the first time in Russia on the initiative of the Central Statistical Committee. Concerning industrial statistics, there existed factory statistics (fabrichno-zavodskaia statistika) in which many deficiencies were pointed out such as the definition of factories and its statistical methods (Arima 1973, Chapter 1; Tomioka 1998, Chapter 4). Under these circumstances, an industrial census (survey of factories) was implemented in 1900 and 1908. In contrast to state statistics, zemstvo statistics were generally considered to be more reliable. It should be noted that, at that time, many talented people were forced to live in local areas as political prisoners and they engaged in this statistical work. Zemstvo statisticians collected data on things that the zemstvos were responsible for, which included the health and welfare of peasants. They placed great emphasis on agricultural surveys. In such surveys, sampling investigation of farm households was widely conducted (Danilov and Miniuk 1998, p. 6). The primary statisti-

46 

S. TABATA

cal sources were prepared by statistical experts of zemstvos. Such data as family composition, family budget, sown area, number of employed workers, number of livestock, and side business were collected. A number of advanced methods were invented and employed in surveys and data analysis in zemstvo statistics, including systematic sampling of farms (Takeuchi 1968, pp.  180–183). According to Matsuzato (1995, p.  256), zemstvo statistics were among the best statistics in the world in the late nineteenth century, comparable to US agricultural statistics and German vocational statistics. It is well known that Lenin used zemstvo statistics when writing The Development of Capitalism in Russia. Lenin (1977, p. 213) wrote in The Agrarian Question and the “Critics of Marx” published in the 1900s: While German government statistics are superior to Russian government statistics, in their fullness and comprehensiveness, in their uniformity and exactness, and in the rapidity of their preparation and publication, our Zemstvo statistics are superior to the European partial inquiries and investigations because of the remarkable fullness and detailed analysis of certain particular data. Russian Zemstvo statistics have for a long time included surveys of individual farms and presented various group tables and the combined tables we have mentioned. A close study of Russian Zemstvo statistics by Europeans would no doubt give a strong impetus to the progress of social statistics generally. (Italics in the original)2

Thus, after the 1860s, as local statistical organizations, provincial statistical committees under the Central Statistical Committee and zemstvo statistical offices coexisted. Yamaguchi (2003, p.  21) argues that the relationship between the center and the regions was decentralized. Although the zemstvo statistics were evaluated much more highly in terms of quality, these statistics only covered certain regions in the central part of European Russia; statistics for the entire territory of Russia were only available from the Central Statistical Committee. The systemic publication of state statistics began with the issue of the Statistical Time-book of the Russian Empire (Statisticheskii vremennik Rossiiskoi imperii) in 1866 (Sasaki 1974, pp.  277–279). This book was published in three series, totaling 51 publications until 1890. Series I consists of a comprehensive statistical book published in 1866. Series II comprises 25 volumes, published from 1871 to 1884, and covers specific fields such as demographic 2

 This evaluation by Lenin was cited in Anon (1993, p. 4).

2  CHARACTERISTICS AND DEVELOPMENT OF STATE STATISTICS 

47

statistics. Series III totals 25 volumes, published from 1884 to 1890, most of which concern specific fields as well. In 1887 and 1888, two statistical series were issued: one was the Time-­ book of the Central Statistical Committee of the Interior Ministry (Vremennik Tsentral’nogo statisticheskogo komiteta Ministerstva vnutrennikh del), renamed from the previous Statistical Time-book, and the other was Statistics of the Russian Empire (Statistika Rossiiskoi imperii). The former includes 52 volumes published in 1888–1903 and the latter, 95 volumes published in 1887–1918. Most of them cover specific fields such as demographic trends and harvests. Comprehensive statistics for the Russian Empire as a whole comprised six volumes, including the Statistical Time-book in 1866, Collection of Information of European Russia for 1882 (Sbornik svedenii po Evropeiskoi Rossii za 1882 god) published in 1884 independently from the rest of the series, the Statistical Time-book of the Central Statistical Committee of the Interior Ministry in 1886, and Statistics of the Russian Empire in 1887, 1890, and 1897 (Simchera et al. 2001, pp. 119–122).3 Finally, in 1905 (1904  in its title), a comprehensive statistical handbook, the Yearbook of Russia (Ezhegodnik Rossii), which combined the Time-book of the Central Statistical Committee of the Interior Ministry and Statistics of the Russian Empire, started to be published every year. In 1912 (1911  in its title), this volume was renamed the Statistical Yearbook of Russia (Statisticheskii ezhegodnik Rossii). This began the regular publication of a statistical yearbook in Russia. This series totaled 13 volumes published until 1918.4

2.3   State Statistics in the Soviet Union In the period from the Russian Revolution in 1917 to the 1920s, a new statistical system was set up that corresponded to the socialist economic system. In the Stalin period, after the years 1929–1931, when the great statistical system of the early 1920s was almost wrecked, a so-called Soviet-­

3  The year mentioned here refers to the year of publication. The whole list of these statistics can be found in Simchera et al. (2001, pp. 267–279). 4  The Statistical Yearbook for 1916 was printed in 1918. Since the Statistical Yearbook for 1918 was published in 1918, we may say that the number of total volumes was 14 although, in 2018, the Russian Empire is no longer in existence (Simchera et al. 2001, p. 280).

48 

S. TABATA

type statistical system and methods were established. After the mid-1950s, the statistical system changed considerably. 2.3.1  Early Period of the Soviet Union (1917 to the 1920s) As demonstrated in the previous section, in the period of the Russian Empire, state and zemstvo statistics coexisted. Lenin sought to combine the traditions and activities of the Central Statistical Committee and the zemstvo in a unified hierarchy of statistical agencies (Wheatcroft and Davies 1994, p.  26). On July 25, 1918, the Central Statistical Agency (Tsentral’noe statisticheskoe upravlenie: TsSU) was established. The TsSU did not belong to any governmental office and was subordinated directly to the Council of People’s Commissars (i.e., Council of Ministers), which meant that it had the same rank as a ministry. On September 3, 1918, provincial statistical committees were abolished and zemstvo and town statistical offices were reorganized into provincial offices as local organizations of the TsSU. In this way, zemstvo statisticians began to work within the framework of the TsSU. Zemstvo statisticians also held all the leadership positions as directors, members of collegia, and heads of sectors within the TsSU. In the period until 1926, statistical activities were vitalized as various censuses were conducted and new experimental statistical methods were employed derived from zemstvo statistical experience. Such censuses as the “All-Russia industrial and occupational census” in 1918, the agricultural censuses in 1919 and 1920, and the population census in 1926 should be mentioned. At that time, a series of censuses was planned to be implemented every five years since 1920 and midterm censuses were also scheduled (Wheatcroft 1990, pp. 155, 169). As an example of new statistics, we should note the balance of the national economy for the economic year 1923/1924, which was based on a Marxian reproduction schema and influenced the input-output tables of Leontief (Ivanov 2006; Iwasaki 2012). While the TsSU initiated these censuses, such governmental statistics as (operational-accounting) business statistics increased in importance. Information concerning industrial enterprises began to be collected by competent ministries as part of their regular accounting procedure. Statistics on public budgets, credit, and foreign and domestic trade were compiled solely by the ministries responsible (Danilov and Miniuk 1998, p. 12). In 1926 and 1927, when the period of the New Economic Policy was turning to the period of the first Five-Year Plan (FYP), methods of

2  CHARACTERISTICS AND DEVELOPMENT OF STATE STATISTICS 

49

compiling industrial statistics shifted toward those based on a reporting system (Yamaguchi 2003, pp. 106–109). Simultaneously, as statistics began to demonstrate plan implementation, statistical figures came to have political implications. These figures were destined to show the success of socialism and were used for socialist propaganda. It was well known that the TsSU was criticized for “underestimation” of stocks of grain by peasants in the second half of the 1920s (Wheatcroft and Davies 1994, pp.  26–27; Danilov and Miniuk 1998, pp.  14–17). Faced with friction against the State Planning Commission (Gosplan) and pressure from persistent government hostility over this and from other politicians, P.  I. Popov, the founding director of the TsSU, resigned in January 1926 and the new director, V. V. Osinsky, was removed from his office in the spring of 1928. The scale of statistical publications was greatly reduced and several prominent statisticians were arrested and tried (Wheatcroft 1990, p. 155). Difficult times for statisticians had come. 2.3.2  Stalin Period (the 1930s to the First Half of the 1950s) In the 1930s, as a Soviet-type socialist economic system was established, and the statistical system was reorganized to correspond to it. This was the period in which Soviet-type or socialist statistical methods were established. We can point out two of the major changes in the statistical system in this period. First, statistical organizations began to play a controlling role of plan implementation (Treml 1988, pp.  72–73; IMF et  al. 1991, pp. 135–136). With the start of the first FYP in 1928, statistical organizations were required to collect information for the compilation of plans and to control the results of their implementation. On January 23, 1930, the TsSU was abolished and transformed into the Section of Economic Accounting in Gosplan. Correspondence between indicators of plan compilation and those of statistics was pursued, and statistical methodologies were worked out by Gosplan. Since statistics were responsible for the control of plan implementation, a reporting system of all enterprises was created. Therefore, complete surveying replaced the sample surveying that was actively attempted in the 1920s. Grossman (1985, p. 15) wrote that “the years 1930 and 1931 witnessed purges of personnel and the merger of statistical and planning staffs on all levels.” But there was a backlash against this, since this was regarded as having gone too far. On December 17, 1931, the Section of Economic Accounting was reorganized as the Central Administration of Economic Accounting

50 

S. TABATA

(Tsentral’noe upravlenie narodnokhoziaistvennogo ucheta, TsUNKhU for short) under Gosplan, and Osinsky was reappointed as director (Wheatcroft 1990, p. 156). There was a revival of publication of several statistical handbooks and compilation of balances of the national economy for the years 1928–1930 that was the first since the economic year 1923/1924 balance (Wheatcroft and Davies 1994, p. 28; 1985). This revival of more objective state statistics, however, did not survive the next few years, except for some demographic and agricultural statistics (Wheatcroft and Davies 1994, p. 29). Afterward, such practices began to prevail in which only statistics favorable to the authorities were published and statistics unfavorable to them were classified. In addition, the volume of open and published statistics decreased considerably (Kazer 1972, pp. 47–50; Danilov and Miniuk 1998, p. 21; Suhara 2013, pp. 10–12).5 Crackdown on statisticians became severe: a number of statisticians, including two heads of the TsSU (V. V. Osinsky and I. A. Kraval’), were executed (Anon 1993, p. 5). As one enterprise belonged to one ministry under the socialist economic system, reports of enterprises flowed through ministries. Because central statistical organizations obtained data from ministries, the statistical system in this period should be regarded as a decentralized one where departmental statistics became overwhelming. Such a vertical administrative system prevented exchange of information between ministries and resulted in low efficiency not only in statistics but also in administration as a whole. Second, a so-called Soviet-type statistical system and methods were established. One of their characteristics was the priority placed on material products. The idea that only the production of goods increases the wealth of a society and that the provision of services is a mere redistribution of the wealth originated in Marxian economics. Note that trade and transportation, which are directly related to the production and distribution of material products, are included in productive activities. Based on this idea, an original system of national economic accounting, called the Material Product System (MPS), was created (see Chap. 11 on national income). 5  See examples of classified data in the period 1942–1963 in Miniuk (2014), which includes a table of contents of the Statistical Bulletin of the TsSU in the period 1948–1963 and other statistical documents in the period 1942–1963, collected by the Russian State Archive of the Economy (RGAE). This book was jointly published by RGAE and the Institute of Economic Research, Hitotsubashi University, in conjunction with the long-term historical statistics project on Asia and with a preface written by Professor Emeritus Yoshiaki Nishimura.

2  CHARACTERISTICS AND DEVELOPMENT OF STATE STATISTICS 

51

In accordance with this, a new industrial classification that distinguished material production branches and non-productive spheres was invented (Becker 1972, pp. 71–73; Nonomura 1958, pp. 48–52).6 Another characteristic of the Soviet-type statistical system and methods was the priority of quantitative indexes over such indicators as money or prices. This corresponded well to the requirements of a socialist economic system (administrative command economic [ACE] system). For example, systemic calculation of wholesale and procurement prices was stopped (Danilov and Miniuk 1998, p.  21; Suhara 2013, pp.  155–156). This might be due to the consideration that it was unnecessary to observe these prices costing time and effort since they were all determined by the state. Such Soviet-type statistical system and methods were introduced in China and the Council for Mutual Economic Assistance countries including Eastern European countries after World War II. 2.3.3  Late Period of the Soviet Union (the Second Half of the 1950s to 1991) There are two important differences in statistics in the Soviet Union before and after the mid-1950s. First, the centralized statistical regime replaced the decentralized one based on departmental statistics (in 1941, the TsUNKhU was renamed the TsSU and, on August 10, 1948, the TsSU was separated from Gosplan and placed under the jurisdiction of the Council of Ministers). There was an influence of the reforms by Khrushchev from 1956 on this change in statistical regime, in which ministerial organization by industrial branch was abolished and a transition to administrative organization by region was attempted (administration by sovnarkhoz). As a result, a new system emerged in 1957 or 1958 where regional offices of state statistics received statistical reports directly from enterprises and sent the information based on them to various organizations (Campbell 1972, pp. 24–26; Danilov and Miniuk 1998, pp. 26–27). After the revival of ministerial organization by the industrial branch in 1965, state and departmental statistics coexisted and reports from enterprises were sent to both organizations. The installation of machine-calculation stations at the

6  Although it is not clear as to exactly when this classification was introduced, it was already being used in the abovementioned balance of the national economy for 1923/1924 (Iwasaki 2012, pp. 257–262).

52 

S. TABATA

TsSU and the concentration of statistical data in them contributed to the emergence of a centralized statistical regime (Yamaguchi 2003, p. 88). Second, regular publications of statistical handbooks began, and the release of statistical information advanced to a certain degree. It should be noted that the annual publication of the Statistical Yearbook of the National Economy (Narodnoe khoziaistvo) began in 1956.7 Not only statistical handbooks for the Soviet Union as a whole, but also those for constituent republics and regions, came to be published. In addition, although their publications were irregular and infrequent, statistical handbooks of specific fields such as industry, agriculture, capital construction and investment, transportation and communications, labor, finance, domestic trade, living standards, and prices were published. Other ministries also launched the publication of statistics (Treml 1988, pp. 73–75; IMF et al. 1991, pp. 134–135, 167). The Ministry of Foreign Trade (Ministry of Foreign Economic Relations since 1988) began to release annual foreign trade handbooks in 1960 (a handbook for 1959).8 The Ministry of Finance has published statistical handbooks of state budgets every five years. On the other hand, there was still a large range of classified data. For example, the State Bank (Gosbank) has never released financial statistics nor has the Ministry of Internal Affairs released criminal statistics. If we look at the released statistics more precisely, there was the problem of concealing information on military production in the industrial statistics. In addition, since around the 1970s, data on export and import of crude oil, petroleum products, natural gas and coal; production, export, and import of grains; average life expectancy; and infant mortality have been classified. There were no substantial changes in one of the features of the Soviet statistics, that is, the basic method was complete surveying, and sample surveying played a limited role. Under the situation where almost all enterprises were state owned in reality, since the statistical reporting sys7  The title of the statistical yearbook published in 1956 did not include the year. From the following year, the title began to include the year to which it referred such as the Statistical Yearbook of the National Economy of the USSR for 1956. Since, as for 1957, 1967, 1977, 1982, and 1987, this yearbook was published as a memorial publication celebrating 40 years from the October Revolution or 60 years of the Founding of the Soviet Union, for example, these yearbooks have different titles. 8  Handbooks published in 1990 and 1991 were co-published by the state statistical organization (Tabata 1994, p. 434).

2  CHARACTERISTICS AND DEVELOPMENT OF STATE STATISTICS 

53

tem was able to cover almost all activities, sample surveying was conducted in only such spheres as households and agriculture.9 It should be noted that, in this period, there was a growing interest in Soviet statistics, especially in the USA, and various estimations were made in order to make up for deficiencies in Soviet statistics. This was promoted by the following factors. First, it was frequently argued that there were upward biases in the growth rates of the Soviet Union published in the official statistics. Therefore, many scholars in Europe and the USA tried to make their own estimates of the growth rate of the Soviet Union. In particular, in the period after the 1960s, the Central Intelligence Agency (CIA) regularly released an estimate whose figures were regarded as more reliable than the official statistics of the Soviet Union.10 Second, since in the Soviet Union a peculiar statistical system and methods were adopted for national income and other statistics, as described above, for the purpose of international comparison, recalculation of statistical data was needed. In this connection, systemic estimation of input-output tables of the Soviet Union was conducted by American scholars, including Vladimir Treml, and, based on this, estimates of the gross domestic product (GDP) were made. As a result of the estimation of input-output tables, calculations of such classified figures as military production, agricultural subsidies, and special foreign trade earnings were conducted (Kuboniwa 1990, pp. 254–257; Mochizuki 1984, pp. 51–121). Third, since one of the distinct features of the Soviet economy was a large size of informal or second economy that was not captured by the official statistics, estimates of them were attempted. One of the reasons for the insufficient coverage of these activities was the reluctance of the TsSU to use sample surveying, as explained above (see Sect. 11.3 of Chap. 11).

2.4   State Statistics in the Russian Federation Although it was at the end of 1991 when the Soviet Union fell apart and Russia declared its independence, already by the perestroika period, that is, in the latter half of the 1980s, some trials were observed for the improvement of the state statistics and the advancement of their openness (glas As for sample surveying in agriculture, see Goskomstat Rossii (2004, pp. 293–306).  With respect to the problem of biases in Soviet growth rates and those in estimates by the CIA pointed out after the collapse of the Soviet Union, see Suhara (2013, pp.  3–79, 440–454). 9

10

54 

S. TABATA

nosti in Russian). By the joint Resolution of the Central Committee of the Communist Party and the Council of Ministers No. 822 of July 17, 1987, entitled “Measures for the radical improvement of statistical work in the country,” the TsSU was ranked as a state committee that is similar to a ministry and named the State Committee of Statistics (abbreviated to Goskomstat) (Anon 1988, p. 188). Further, perestroika concerning statistics was launched by the Resolution of the Council of Ministers: “Perestroika of activities and organizational structure of Goskomstat” dated October 9, 1987 (Anon 1987, p. 3). This was partly influenced by an article entitled “The Cunning Figure” written by an economist, Khanin, and a journalist, Seliunin, in February 1987, criticizing the official statistics (Seliunin and Khanin 1987). Since then, there has been substantial improvement in the opening of statistics, including the release of classified data and the publication of statistical handbooks in specific fields (Treml 1988, pp. 88–89; Heleniak and Motivans 1991, pp. 480–488). In December 1991, just before the collapse of the Soviet Union, by order of the Resolution of the Presidium of the Supreme Soviet dated November 18, 1991, Goskomstat of Russia took over all facilities of the Soviet Union in the territory of Russia. Thereafter, the rank and name of the central statistical organization has been changed several times. In 2004, it was reorganized as a sluzhba (service) that was ranked inferior to a ministry and named the Federal State Statistics Service (Federal’naia sluzhba gosudarstvennoi statistiki, abbreviated to Rosstat). In the period 2008–2012, it was under the jurisdiction of the Ministry of Economic Development, and for 2012–2017, it was directly subordinated to the government. By Presidential Decree No. 141 on April 3, 2017, it was again put under the Ministry of Economic Development. It is regarded that a centralized statistical regime is basically maintained. In the first half of the 1990s, there was chaos in statistics as was the case in politics, economics, and society under systemic transformation in Russia. In particular, concerning foreign trade statistics before customs statistics was introduced in 1994 explained below, data were extremely unreliable in the period 1991–1993 (Tabata 1994). One of the major causes was the dismantlement of the command economic system by the liberalization of trade and the discontinuation of complete surveying by the statistical reporting system. This was also the case for statistics on employment, wages, and prices. There were three fundamental changes in the statistical system after the independence of Russia. First, there was a transition from the Soviet-type

2  CHARACTERISTICS AND DEVELOPMENT OF STATE STATISTICS 

55

statistical system and methods to internationally standard ones (Kuboniwa and Tabata 1999). By Supreme Soviet Resolution No. 3708 of October 23, 1992, the “State Program of the transition of the Russian Federation to the accounting system and statistics adopted in international practice in accordance with the request for development of a market economy” was approved. In this program, transition from MPS to System of National Accounts (SNA) was regarded as one of the most important tasks, and this transition was implemented from around 1995. Balance of payments was compiled and released in accordance with its manual of 1993 (fifth edition) compiled by the International Monetary Fund (IMF). Changes in industrial classification took time, however, and were finally realized in around 2005 (see Sect. 11.4 of Chap. 11). Although SNA is basically adopted now, there remains significant room for improvement, including flow-of-funds tables, capital stock statistics, input-output tables, and regional GDP statistics. This may be due to the lack of an appropriate system of collecting primary information for these statistics, which in turn may be explained by low priority of statistical compilation in Russia. It should be noted as another change in statistical surveying and methods that customs statistics began to be used in foreign trade statistics in 1994 (Tabata 1994) and that budget statistics of general government were introduced in state budget statistics in 2005 (see Chap. 8). Rosstat has published methodological explanations as five volumes since 1996 (Goskomstat Rossii 1996a, 1998, 2000, 2003; Rosstat 2006). Second, sample surveying began to be widely adopted. This was due to the discontinuation of mandatory statistical reports submitted by enterprises to ministries, as privatization was implemented in the 1990s. At present, statistics are compiled in combination with statistical reporting and sample surveying in many fields. For example, with respect to industrial production statistics, frequency of reporting differs between large, small and medium, and individual firms, and sample surveying is used in the period when or the sphere where statistical reports are insufficient. In addition, a number of censuses were carried out including those in agriculture in 2006 and in small and medium firms in 2010. Third, the publication and release of statistical information advanced unprecedentedly. This might be due to the intention of the statistical authorities to raise the level of publication to the international standard. In addition, traditionally in Russia, collection of statistical information has been widely conducted so that there is no shortage of materials for publication and release. In this connection, it should be noted that statistical

56 

S. TABATA

handbooks in specific fields began to be published annually or biennially.11 Since around 2010, all statistical handbooks have been published and downloadable at Rosstat’s website. Statistical publications by other ministries have increased as well. The Central Bank of Russia has released a wide range of data concerning balance of payments and has issued monthly the Bulletin of Banking Statistics (since October 2012, Bank of Russia Statistical Bulletin). The Ministry of Finance and Federal Treasury release detailed public budget statistics at their websites. Thus, with respect to the publication and openness of statistical materials, Russia is by no means inferior to developed countries, although there are some problems such as the absence of statistical handbooks incorporating long-term statistical data and the lack of retroactively revised data when statistical methods or definitions are changed.

References Anon (1987). Uskorit’ perestroiku deiatel’nosti i organizatsionnoi struktury statisticheskikh organov. Vestnik statistiki, (12), 3–6. Anon (1988). O korennoi perestroika upravleniia ekonomikoi: sbornik dokumentov. Moscow: Politizdat. Anon (1993). 150 let rossiiskoi gosudarstvennoi statistike, 75 let gosudarstvennoi statistike Rossiiskoi Federatsii. Vestnik statistiki, (5), 3–21. Arima, T. (1973). Studies on Russian Industrial History: Investigation of Historical Premise of the Emancipation of the Serfs (in Japanese). Tokyo: Tokyo University Press. Becker, A. S. (1972). National Income Accounting in the USSR. In Treml, V. G. and Hardt, J.  P. (Eds.), Soviet Economic Statistics (pp.  69–119) Durham: Duke U. P. Campbell, R. W. (1972). The Changing Role of Statistics in the Soviet Economic System. In Treml, V.  G. and Hardt, J.  P. (Eds.), Soviet Economic Statistics (pp. 21–44) Durham: Duke U. P. Danilov, V. P., and Miniuk, A. I. (1998). Otchet (analiticheskaia zapiska) po teme: ‘Sovetskaia statistika: 1918–1991 gody. mimeo (a Japanese translation is in NIRA Policy Research, 12(7): pp. 8–23, 1999). Goskomstat Rossii (1996a). Metodologicheskie polozhenie po statistike. Moscow: Goskomstat Rossii. Goskomstat Rossii (1996b). Rossiiskaia gosudarstvennaia statistika 1802–1996. Moscow: Goskomstat Rossii. 11  The list of statistical handbooks published after 1985 is available at http://src-h.slav. hokudai.ac.jp/tokeisyu/handbooks-e.html.

2  CHARACTERISTICS AND DEVELOPMENT OF STATE STATISTICS 

57

Goskomstat Rossii (1998). Metodologicheskie polozhenie po statistike. Moscow: Goskomstat Rossii. Goskomstat Rossii (2000). Metodologicheskie polozhenie po statistike. Moscow: Goskomstat Rossii. Goskomstat Rossii (2003). Metodologicheskie polozhenie po statistike. Moscow: Goskomstat Rossii. Goskomstat Rossii (2004). Organizatsiia gosudarstvennoi statistiki v Rossiiskoi Federatsii. Moscow: Goskomstat Rossii. Grossman, G. (1985). Soviet Statistics of Physical Output and Industrial Commodities. Westport: Greenwood Press (Originally published by Princeton U. P., Princeton, 1960). Heleniak, T. and Motivans, A. (1991). A Note on ‘Glasnost’ and the Soviet Statistical System. Soviet Studies, 43(3), 473–490. IMF et al. (1991). Appendix II-2 Statistical Issues. In IMF et al., A Study of the Soviet Economy, Vol. 1 (pp.  133–169), Paris, Washington DC, and London: IMF et al. Ivanov, Iu. N. (2006). K 80-letiiu pervogo balansa narodnogo khoziaistva SSSR. Voprosy statistiki, (4), 43–50. Iwasaki, T. (2012). Statistics for Economic Calculation: Balance Theory and Optimal Plan Theory (in Japanese). Tokyo: Nihon Keizai Hyoronsha. Kazer, M. (1972). The Publication of Soviet Statistics. In Treml, V. G. and Hardt, J. P. (Eds.), Soviet Economic Statistics (pp. 45–65) Durham: Duke U. P. Kuboniwa, M. (1990). Foundations for Analysis of Contemporary Socialist Economy (in Japanese). Tokyo: Iwanami Shoten. Kuboniwa, M. and Tabata, S. (Eds.), (1999). The Russian Economy at a Crossroads: Transition to a Market Economy and Statistical System (In Japanese). Tokyo: Aoki Shoten. Lenin, V. I. (1977). V. I. Lenin: Collected Works, Vol. 5, fifth printing. Moscow: Progress Publications. Matsuzato, K. (1995). The End of Zemstvo: Possibility of Civic Democracy in Russia. In Ieda, O., Matsuzato, K., and Wada, H. (Eds.), History of the Slavic World, The Slavic World, Vol. 3 (pp. 243–269) (in Japanese). Tokyo: Kobundo. Miniuk, A. I. (Ed.), (2014). Sovetskaia gosudarstvennaia statistika: rassekrechennye statisticheskie izdaniia (1948–1963) i svodnye statisticheskie dokumenty (1942– 1963) TsSU SSSR. Moscow: Drevlekhranilishche. Mochizuki, K. (1984). Reproduction Structure of the Soviet Economy: Its Statistical Studies (in Japanese). Tokyo: Taga Shuppan. Nonomura, K. (1958). National Income and Reproduction (in Japanese). Tokyo: Iwanami Shoten. Rosstat (2006). Metodologicheskie polozhenie po statistike. Moscow: Rosstat. Rosstat (2013). Istoriia rossiiskoi gosudarstvennoi statistiki: 1811–2011. Moscow: Statistika Rossii.

58 

S. TABATA

Sasaki, T. (1974). A Note on the Official Statistics of the Russian Empire (in Japanese). Keizai Kenkyu, 25(3), 276–284. Seliunin, V. and Khanin, G. (1987). Lukavaia tsifra. Novyi mir, (2), 181–201. Simchera, V. M., Sokolin, V. A., Mashihin, E. A., and Sheviakov, A. Iu. (2001). Entsiklopediia statisticheskikh publikatsii X-XX vv. Moscow: Finansy i statistika. Suhara, M. (2013). A Study of Soviet Industry: An Attempt to Estimate a Long-term Production Index (in Japanese). Tokyo: Ochanomizu Shobo. Tabata, S. (1994). The Anatomy of Russian Foreign Trade Statistics. Post-Soviet Geography, 35(8), 433–454. Takeuchi, K. (1968). Family Budget Survey in Russia. Shogaku Tokyu, 19(2), 173–188. Tiurina, E. A. (1999). Rossiiskii gosudarstvennyi arkhiv ekonomiki i ego informatsionnye vosmozhnosti v oblasti izucheniia ekonomicheskoi istorii SSSR i Rossii. Discussion Paper/Asian Historical Statistics Project, No. D99-2, 1–40. Tomioka, Sh. (1998). Studies on Russian Economic History: The Latter Half of 19th Century to the Beginning of 20th Century (in Japanese). Tokyo: Yuhikaku. Treml, V. G. (1988). Perestroyka and Soviet Statistics. Soviet Economy, 4(1), 65–94. Wheatcroft, S. G. (1990). Statistical Sources for the Study of Soviet Social History in the Prewar Period. In Fitzpatrick, S. and Viola, L. (Eds.), A Researcher’s Guide to Sources on Soviet Social History in the 1930s (pp. 153–175). Armonk: M.E. Sharpe. Wheatcroft, S. G., and Davies, R. W. (Eds.), (1985). Materials for a Balance of the Soviet National Economy 1928–1930. Cambridge: Cambridge U. P. Wheatcroft, S.  G., and Davies, R.  W. (1994). The Crooked Mirror of Soviet Economic Statistics. In Davies, R.  W., Harrison, M., and Wheatcroft, S.  G. (Eds.), The Economic Transformation of the Soviet Union, 1913–1945 (pp. 24–37). Cambridge: Cambridge U. P. Yamaguchi, A. (2003). Establishment of the State Statistical System of Russia (in Japanese). Chiba: Azusa Shuppan.

CHAPTER 3

Population Kazuhiro Kumo

3.1   Introduction The purpose of this chapter was to gain an overview of the statistical systems and methods of compiling population statistics used in imperial Russia, Soviet Union, and modern Russia; compile population statistics on the territory covered by modern Russia since the collapse of the Soviet Union from primary sources; and identify long-term population dynamics spanning the period from the mid-nineteenth century, including the last days of imperial Russia, to modern Russia. Most population studies that have covered both imperial Russia and Soviet Russia have focused on one period or the other, with the other period handled by reviewing other research (Lorimer 1946; Heer 1968; Shimchera 2006; Vishnevskii 2006). In addition, in most cases, the imperial era is treated as a single period, while the period after the revolution is treated as another one (Vodarskii 1973; Kabuzan 1963; Rashin 1956; Zhiromskaia 2000). Of course, there are good reasons why previous research has dealt with imperial Russia and the post-revolution Soviet Union separately. Given that they used different systems for gathering and compiling statistics and that they covered different territories, it is only K. Kumo (*) Institute of Economic Research, Hitotsubashi University, Kunitachi, Tokyo, Japan e-mail: [email protected] © The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5_3

59

60 

K. KUMO

natural to approach them differently, and this chapter is immune to such limitations, either. However, previous research shows that this situation has clearly been a major obstacle to tracing the economic development of Russia throughout its entire history. It may actually be impossible to examine the modern development of Russia without looking at the imperial era.1 After all, the imperial era paved the way for the industrialization that occurred in the Soviet Union, which suggests that any investigation into the long-term dynamics of Russia needs to begin with the compilation of statistics from primary sources. This chapter represents an attempt, the first of its kind, to compile population statistics on the territory covered by modern Russia that date back as far as the nineteenth century, using as many primary sources from imperial Russia as could be collected. A study like this is probably only possible now that Russia has emerged from the collapse of the Soviet Union in its present form. The author will take this into account given the differences in the territory covered by imperial, Soviet, and post-Soviet Russia as they make their own estimates. The author will also survey population statistics on the territory covered by the present Russian Federation in the early Soviet era, which were extremely difficult to gather. This chapter is organized as follows. After using various previous literature studies to survey the enormity of the gap between previous research that covers the imperial Russian period and that which covers the Soviet and post-Soviet eras and the paucity of previous research based on original materials, the author will first focus on the process through which the system for gathering and compiling population statistics in the Russian Empire was established. Although the first, and last, population census of imperial Russia was conducted in 1897, more than 20 years before Japan performed its first such census, population surveys of various kinds were performed before that. While the precision of such surveys is not generally thought to be high (MVD RI 1858; Rashin 1956),2 they are at least useful for gauging population dynamics. 1  As an example of the modernization that occurred during the imperial era, the volume of domestically produced steel for railways overtook the volume of imports of such steel during the late 1800s. See Falkus (1972). 2  However, some say that 5 per cent or less of the total population was missed (Valentei 1985), and given that they provide an otherwise unavailable insight into the period between

3 POPULATION 

61

This chapter will then look at population statistics from post-revolution Soviet Russia and modern Russia. It would be impossible to list here all the problems involved in compiling statistics from the Soviet era, but chief among them would be the fact that the country was a battlefield during World War I; the civil war and incursions by foreign powers (1918–1922) that followed the Russian revolution of 1917; the frequent changes in administrative regions and the numerous famines between 1920 and 1930; the Great Purge of the Stalin era (1936–1940) and the suppression of statistics that accompanied it; and World War II and its aftermath, during which invasion forces temporarily captured the whole of the Ukraine, advanced as far as the suburbs of Moscow, and surrounded Leningrad (now St. Petersburg). The numerous problems with Soviet statistics are well documented, and these problems also affect the most basic statistics of all: population statistics. The author’s first challenge was to link population statistics from imperial Russia with those from Soviet Russia and then adjust these statistics to make them correspond to the territory covered by modern Russia. Because the borders of administrative divisions in imperial Russia were not the same as those during or after the Soviet era, the author needed to start by solving this problem. In particular, the author needed to take account of differences in the volume of statistics compiled during the imperial era for European Russia, Siberia and the Far East, and the Caucasus. With these problems in mind, this chapter set about compiling the basic population statistics. The primary aims of this chapter were to (1) rely on primary historical materials to gather as many statistics as possible for a 100-year period and (2) attempt to harmonize them with the territory covered by modern Russia to the greatest extent possible. The purpose was to gather the most basic information required to track the development of Russia throughout its history.

3.2   Previous Research on Long-Term Russian Population Dynamics and Statistics 3.2.1  Population Research on the Imperial and Soviet Eras Surprisingly little research has been conducted on the compilation of long-term population statistics in Russia. Obviously, a major factor behind this paucity of research is the fact that the Russian Federation only became from the early eighteenth century to the end of the nineteenth century, they are well worth looking at.

62 

K. KUMO

an independent nation, with its current territory, less than 30 years ago. Even so, it is striking that many studies, even those supposedly attempting to explore the imperial and Soviet eras in an integrated fashion, have ignored the fact that the territory covered by Russia has changed and that so few studies have been based on primary historical materials. Here, this section will give a summary of previous studies one by one. Various studies were made of population dynamics in the imperial era using various population surveys and official statistics. Notable among them are those of Koeppen (1847), Den (1902), and Troinitskii (1861), which were based on household censuses (reviziia), which will be discussed later in this chapter. Although population surveys were conducted several times, each of these studies relied on data from only one survey, so they do not provide any clues to population dynamics.3 In addition, they only cover the population and social structure for males. In recent years too, a lot of research on population history has been conducted. Studies by Rashin (1956), Kabuzan (1963, 1971), and Vodarskii (1973) provide a broad coverage of the imperial era. The study by Vodarskii (1973) covers 400 years from the sixteenth century to the early twentieth century, but basically represents a compilation of secondary sources and previous research. Kabuzan (1963, 1971) bases his research on primary sources, such as household censuses, and explores the dynamics and social organization of the male population from the beginning of the eighteenth century to the middle of the nineteenth century. One useful thing he does is put together tables of data from all the household censuses. However, most worthy of note is the study by Rashin (1956) in which he uses data that was published by the Ministry of the Interior’s Central Statistical Committee (described later) almost without a break from the mid-nineteenth century to compile population statistics on the period from then up until the end of imperial era. Of all the myriad research on population in Russia, Rashin’s 1956 study is frequently referred to for its description of the imperial era.4 3  Koeppen (1847) studied only the 1830s, Den (1902) only the end of the eighteenth century and beginning of the nineteenth century, and Troinitskii (1861) only the mid-nineteenth century. 4  The same can be said of studies by Vodarskii (1973), Vishnevskii (2006), and other researchers. Many studies rely completely on Rashin (1956) for their descriptions of population from the late 1800s to the early 1900s. In author’s view, none of the research on population dynamics in this period has surpassed Rashin’s (1956) approach of constructing almost all of his data from publications from the Imperial Central Statistical Committee.

3 POPULATION 

63

Turning the author’s attention to studies of population dynamics in the Soviet era, it is hardly surprising that the scope of inquiry of the majority of such studies is not the Russian Soviet Socialist Republic, but the Soviet Union as a whole (Podiachikh 1961; Gozulov and Grigoriants 1969, etc.). However, during the Soviet era, it was extremely difficult to conduct research on the most vexing periods of Soviet population history, that is, the chaos just after the revolution, the Great Purge, and World War II, because of the lack of opportunities to examine historical materials. Among historical research conducted in Europe and North America, there is, as might be expected, a huge volume of literature on specific regions in Russia. If our discussion is limited to research covering the late imperial era to the period after the socialist revolution, the studies of Lorimer (1946) and Heer (1968) need to be mentioned. Lorimer’s (1946) work represents the fruition of a painstaking attempt to trace economic development and population dynamics in the Soviet Union as a whole from the end of the imperial era to World War II. Because the study was not made with the aim of compiling statistics, it does not take adequate account of territorial adjustments or extract enough data from primary sources. Meanwhile, Heer (1968) uses secondhand references from various previous studies to compile dynamic statistics on the period from 1861 to 1965. Coale et al. (1979) compare only the dynamic statistics in 1897, 1926, and 1959, years in which a population census was carried out, and base their study on the use of primary statistics. However, they do not attempt to maintain identity between the territory covered by the country in the imperial and Soviet eras. Clem (1986) makes a general discussion of all the censuses conducted between 1897 and 1979 and provides a useful list of almost all official publications relating to population censuses. For the current chapter, Leasure and Lewis’s (1966) study proved extremely useful. Focusing on the population censuses carried out in 1897 and 1926, they estimated population statistics for each region, using the Soviet administrative divisions as of 1961. They present for comparison a map showing the administrative divisions in 1897 with one of the same scale for 1961 and calculate what percentage of each province in the imperial era is included in each of the 1961 administrative divisions.5,6 Although 5  The areas of provinces in the imperial era were calculated using maps produced by organizations such as the Imperial Geographic Society. See MVD RI (1858, 1863). For this chapter, the author attempted, for the early imperial era, to use changes in regional areas to estimate changes in administrative divisions and then use these estimates to investigate the changes in administrative divisions. However, the author abandoned this approach because it could be predicted that the numbers would change due to differences in the precision of the maps. 6  These “administrative divisions” refer to economic regions (ekonomicheskie raioni).

64 

K. KUMO

the use of this method casts doubts over the accuracy of the study’s findings, it is worth mentioning that the difference between the areas of each region estimated using the method and the official areas as of 1961 are within 2 per cent of the areas of each region.7 3.2.2  Recent Research Trends A lot of new research has been conducted since the end of the Soviet era and the birth of the new Russia. This subsection will mention some studies that, like this chapter, have been aimed at grasping long-term dynamics. Since 2000, voluminous works on long-term dynamics have been published. Shimchera (2006) provides a comprehensive treatment of not just demographics but the Russian economy as a whole over the past 100 years. However, while Shimchera’s book features numerous tables of statistics, the views expressed and the data itself basically constitute a review of previous research. In addition, its descriptions of its data sources are extremely vague, which casts significant doubt over the verifiability of the data and makes it extremely difficult to assess or critique it. Vishnevskii (2006) uses dynamic statistics to focus on population changes over a 100-year period. For the imperial era, he uses statistics for the whole of European imperial Russia, while for the Soviet era and beyond, he adjusts statistics to match the territory covered by modern Russia. Like Shimchera (2006), Vishnevskii (2006) relies entirely on previous research for statistics on World War II period, and for the imperial era, he uses data from Rashin (1956) to compare demographic shifts in Russia with those in various other countries. Although these studies do not constitute a systematic survey of population statistics, the insights they afford are valuable. However, the fact that neither study makes use of primary historical materials raises questions. Vishnevskii’s (2006) decision not to be consistent with the territory he uses also needs to be mentioned. Goskomstat Rossii (1998) is a publication that focuses on re-compiling population statistics from the Russian Federation State Statistics Committee (now the Federal State Statistics Service) for the 100-year period from 1897 to 1997 to match the territory covered by modern 7  The biggest differences were with the vast yet sparsely populated West Siberia economic region (4.13 per cent, 1897) and the Southern economic region (3.22 per cent, 1926), which centres on modern Ukraine. The effect of the former difference is likely to be small, and the latter region is not a part of the modern Russian Federation.

3 POPULATION 

65

Russia. Some of its content may therefore overlap with this chapter. However, a close examination of the details reveals that explanations of matters such as the methods of calculation employed and the assumptions upon which the calculations were based are decisively lacking.8 Because it has become much easier to get access to archived historical materials since the collapse of the Soviet Union, a lot of research has been carried out on population dynamics during hitherto inaccessible periods such as the Great Purge and World War II. With focused studies like this, relatively careful attention is paid to making adjustments for differences in territory and investigating the basis for calculations. Studies of this type that are worth mentioning include that of Zhiromskaia (2000), which deals with early Soviet Russia, and that of Poliakov and Zhiromskaia (2000, 2001), which is based on sources such as documents in the national archives. The former, however, limits itself to examining the results of the 8  It gives the total population at the time of the 1917 revolution as 91,000,000. Even ignoring the fact that this figure is too simplistic in comparison with those of other years, it is difficult to believe that it is possible to obtain reliable population statistics for that year. The tsentralnii statisticheskii komitet MVD (1918) describes the 1917 population figure as a “preliminary” figure. In February 2007, when the author checked the 1917 population statistics using archived historical materials from the Russian State Economic Archive RGAE, he found that this population figure was described as the “possible population in 1917” (veroiatnaia chislennost naseleniia) (RGAE, F.1562, O.20, D.1a). Then, on July 31, 2007, when the author interviewed four population statisticians on this matter at the headquarters of Russia’s Federal State Statistics Service (Rosstat), they said that the 1917 figure published in Goskomstat Rossii (1998) was an estimate. However, Goskomstat Rossii (1998) makes no mention of this. There is also no mention of the fact that populations for each region based on the 1937 population census were affected by personnel such as border guards and soldiers being treated differently in the statistics. In addition, the figures for the total populations of the republics in 1937 differ from those disclosed elsewhere. Although it claims that the number of soldiers etc., which were only recorded for the federation as a whole, were not just added to the estimate of the population of the Russian Republic, it does not mention that the estimation method was, obviously, based on estimates. Moreover, it presents figures representing the results of the 1897 population census of imperial Russia that have been converted to match the present territory of Russia. According to these figures, the population of the territory of the present Russian Federation (excluding Kaliningrad, the Kurile Islands, and southern Sakhalin) in 1897 was 67,473,000. Among the historical materials that the author examined at the Russian State Economic Archive was the TsSU SSSR (1941), which calculates the 1897 populations of the administrative divisions as they were in 1941 using detailed area proportions. Using these figures to calculate the total population of the territory of modern Russia gives a figure of 66,314,000, which casts doubt over the accuracy of the figure presented in Goskomstat Rossii (1998), for which the methods of calculation used are not explained at all clearly.

66 

K. KUMO

1926, 1937, and 1939 population censuses.9 Because of limitations on the historical materials used and the years to which they relate, much of the research it contains covers the whole of the Soviet Union. The latter was not conducted for the purposes of obtaining a macroscopic view of population dynamics. Rather, it constitutes a collection of essays on specific topics that could not be studied during the Soviet era because information on them was not made publicly available. The topics covered include the results of the secret census conducted during the Stalin era, the make-up of the labour-camp prisoner population, and population dynamics during World War II. Andreev et al. (1993) studied the Soviet Union as a whole from the period before the war right through to the collapse of the Soviet Union. Their estimates relating to population dynamics in the 1920s, which are based on archive materials, are of particular interest. In addition, in a later study (Andreev et al. 1998), they used archived historical materials to unearth dynamic statistics for the periods 1927–1939 and 1946– 1949, when hardly any official statistics were published, and presented their estimates using multiple time series. They attempted to make territorial adjustments and gave relatively detailed information on their data sources, so their figures cannot be said to be completely unverifiable. The population dynamics during the 1920s and 1930s were discussed by Rosefielde (1983), Wheatcroft (1984, 1990), Anderson and Silver (1985), and many others. However, all in all, Andreev et al. (1998) is the most important of all studies exploring the periods of collectivization, Great Purge, and lead-up and aftermath of World War II.10 This section has mentioned only a very limited number of studies on the demographics of imperial and Soviet Russia, and there are numerous other studies from Europe and North America on Russian demographics. However, accessing original historical materials during the Soviet era presents major problems, and this has probably hindered the compilation of long-term data. In addition, the modern “Russian Federation” has only 9  The results of the 1937 population census have not been officially made public by the statistical authorities. Zhiromskaia (2000) conducted her study using archived historical materials. TsSU SSSR (1937) tells one that not only was a figure for total population calculated but that tables of data showing things like occupations by educational attainment and domicile (i.e. urban or rural) were also produced. 10  Ispov (2001) deals with the 1941–1945 (i.e. World War II) period but does not adjust the territories (or mention this lack of adjustment) of the Crimean Autonomous Republic (then part of Russia, now part of Ukraine) and the Karelo-Finnish Republic (then a Soviet republic separate from Russia, now part of Russia).

3 POPULATION 

67

existed as a single, completely independent nation since the collapse of the Soviet Union at the end of 1991, and so, it cannot really be helped that no systematic study has been made of the population in this “Russian Federation”. Nevertheless, as this section has seen, previous research has failed to make territorial adjustments, even though this would not have been impossible even in the Soviet era, and has not sought to base itself on primary historical materials from the imperial era to the end of the Soviet era.

3.3   Russian Population Statistics 3.3.1  Household Censuses (Reviziia) in Imperial Russia Population surveys have a long history in Russia. It is widely known that household censuses, called reviziia (revisions), of people liable for taxes began with an order (ukaz) issued by Tsar Peter I on November 26, 1718 (Herman 1982; MVD RI 1858).11 Reviziia were conducted on a total of ten occasions, once every 10–15 years, until 1857–1858. However, it is also well documented that they were beset with a wide range of problems, such that their accuracy is strongly doubted (MVD RI 1858; Rashin 1956). Many of these problems lie in the fact that any census that targets people liable for taxes will obviously be prone to inaccuracy. The main objectives of these population surveys were to identify people who should pay taxes and secure personnel for the army. The backdrop to this was the fact that household-based taxation had been replaced with personal taxation (a poll tax), which made it necessary to identify the entire population (Herman 1982; MVD RI 1858, 1863).12 In the beginning, the surveys were conducted under the leadership of the tax authorities (kammer-kollegiia). Anyone identified during the surveys would immediately assume an obligation to pay taxes, which meant that huge numbers of people tried to avoid being registered. Such behaviour was subject to penalties such as penal servitude and fines, but this just encouraged people who had avoided registration to continue to do so. In 1721, an imperial edict was issued whereby people who had hitherto avoided  From here onwards all dates until 1917 use the Russian calendar.  It has been posited that household-based taxation encouraged households to band together to form new households, so as to reduce the tax burden of the individuals they comprised (Kluchevsky 1918). 11 12

68 

K. KUMO

registration would not be subject to punishment if they now agreed to register, and at the same time, the poll tax was reduced. After that, the censuses began to better reflect actual populations (MVD RI 1858, 1863). Only men were liable for taxes, and the surveys only covered individual farmers, merchants, and traders designated as taxpayers. However, there was a plan to include women, who were not liable for taxes, in the statistics, and actually the figures from the household censuses did not only include taxpayers. They also included non-taxpayers such as members of the clergy, stagecoach drivers, and retired soldiers. However, a shortage of personnel to conduct the surveys, financial limitations, and the vastness of the land needing to be covered made it difficult to make the surveys comprehensive. No surveys of Poland, Finland, or the Caucasus were made, and there are hardly any records for members of the aristocracy (dvoriane) or government officials. Women were not recorded in the first, second, and sixth censuses. Only with the ninth household census of 1850–1851 were non-taxpayers such as aristocrats and government officials finally included (MVD RI 1858, 1863; Valentei 1985). 3.3.2  Compilation of Population Statistics by the Central Statistical Committee of the Ministry of the Interior Imperial Russia began putting together a system for gathering and compiling statistics in the first half of the nineteenth century. In 1834, a Statistical Section (statisticheskoe otdelenie) was established within the Council of the Ministry of the Interior (sovet ministerstva vnutrennikh del),13 and surveys and statistics at the city or provincial (province = guberniia) level began to be published. In 1853, the Statistical Section at the Council of the Ministry of the Interior was merged with the tax office’s Interim Lustration Committee to form the Statistical Committee of the Ministry of the Interior (statisticheskii komitet ministerstva vnutrennikh del). Then on March 4, 1858, the Statistical Committee of the Ministry of the Interior was reorganized as the Central Statistical Committee (tsentralnii statisticheskii komitet) to build a systematic foundation for the compilation of statistics.14 Because the gathering of information by the statistical committees established for each province was inadequate, the Central Statistical Committee established two divisions, the Statistical Division and the Regional Division (zemskii otdel). From then on, a system, centring on the  Polnoe sobranie zakonov Rossiiskoi Imperii, sobranie 2, tom 9, otdelenie 2, 7684.  Polnoe sobranie zakonov Rossiiskoi Imperii, sobranie 2, tom 33, otdelenie 1, 32,826.

13 14

3 POPULATION 

69

Central Statistical Committee, was put in place for the compilation of statistical data at the national level15 (MVD RI 1858, 1863; Goskomstat Rossii 1996). The Central Statistical Committee of the Ministry of the Interior did not only use data from the household censuses (reviziia) described in the previous subsection to compile its population statistics. It also had to refer to parish registers to compile statistics on births and deaths, as well as documents from police surveys, which were essential for obtaining figures for followers of each religion. The parish registers (metrichekie knigi) were based on documents recording “confessions” (ispovedanie) to the Russian Orthodox Church. These documents include records of each year’s births, deaths, and marriages.16 Once a year, on February 1, the provincial governor would collect these figures based on the order of the religious affairs division and include them in the population schedule that was attached to a report that was sent to the tsar (MVD RI 1858, 1863).17 In addition, the number of births, deaths, and marriages among followers of other religions or sects, such as Roman Catholics, Protestants, Jews, and Muslims, were supposed to be reported to the local authorities by the heads of each parish (MVD RI 1863).18 However, this does 15  Nevertheless, some writers have pointed out that a fully functioning, centralized statistical system did not really exist (Goskomstat Rossii 1998; Yamaguchi 2003). The predominant view is that the activities that the zemstvo statistical bureaus conducted independently were extremely useful in gathering regional statistics. However, while the zemstvo statistical bureaus achieved a lot of success in compiling statistics on agriculture, its compilation of population statistics probably did not surpass that of the regional statistical bureaus that were under the supervision of the Central Statistical Committee. This is partly because zemstvo statistical bureaus were only established in a limited number of provinces. They were originally only established in 34 provinces, and even at the outbreak of World War I, they only existed in 43 provinces, which covered only around half of the territory of the empire (Goskomstat Rossii 1998). 16  “Confessions” normally refers to admitting and repenting for sins. In this context, however, “confessions” (ispovedanie) appears to have a broader meaning, which includes the act of believers reporting births, deaths, etc. to the church. It is rendered as “confessions” because the term used in Russian is “ispovedanie”. 17  The reports that were sent to the tsar were handwritten. They contained from several dozen to several hundred pages, and schedules of statistics were included at the back of them. These schedules listed the number of births, deaths (for each sex), and marriages in each of the province’s uezds (districts). See, for example, Otchet o sostoianii Iaroslavskoi gubernii za 1864 g. 18  Like those based on the parish registers of the Orthodox Church, statistics based on the parish registers of Protestant churches and the Roman Catholic Church are believed to be fairly accurate. However, it must be noted that it was the date of baptism, not the date of birth, that was recorded, such that infants who died before they were baptized were not

70 

K. KUMO

not allow one to grasp the numbers and demographics of worshippers who were not tied to any specific church, or separatists from the Orthodox Church (the Old Believers).19 The ethnic and religious diversity in Imperial Russia and the presence of a distinctive Russian separatist sect had a major impact, one that was impossible to ignore, on the accuracy of population statistics. Therefore, to supplement this kind of information, things called administrative-­ police surveys (administrativno-politseiskii perepis) were also referred to. Administrative-police surveys were conducted by the police or administrative offices in each district using the list of dwellings from the household census.20 This allowed newly born babies, recently deceased persons, and people who had moved in or out of the area to be added to or deleted from the census records. Because these surveys were not based on religion, it was possible to view figures that could not be obtained from the parish registers. Population statistics were compiled by adjusting the figures from the last household census, which was conducted in 1858, for births, deaths, and movements, figures for which were obtained from the various records described above (MVD RI 1858, 1863; Goskomstat Rossii 1996). This was based on the fact that following the issuance of an imperial order in 1865, the religious affairs division had, as mentioned earlier, provincial statistical committees draw up and submit lists of residents compiled using parish registers.21 This meant that while statistics on population dynamics were recorded from 1867 onwards, the statistics lacked details such as the age distribution of the registered population, and this quickly led to a realization that there was a need to obtain population data through the use of surveys (MVD RI 1890). However, it was not until 1897 that the recorded, and also that it was the date of burial, not the date of death, that was recorded (MVD RI 1866). The reports sent to the tsar by provincial governors recorded the population of the region for the year to which they related. See, for example, Otchet o sostoianii Sankt-peterburkskoi gubernii za 1864 g. 19  The separatists (Old Believers, raskolniki) left the Orthodox Church after opposing the changes in rites that were made by the Church in the 1650s. Some of their sects rejected all contact with other sects and lived in the interior of Russia, making it very difficult to gain information about them. 20  Statistics were not compiled from the surveys. They were merely intended to supplement the household censuses by recording information on things like people who had moved house (MVD RI 1866). 21  Sobranie ukazov, 1866, st. 141.

3 POPULATION 

71

first national population survey since the household censuses that ended in 1858 was carried out. This survey in 1897 was imperial Russia’s first and last population census.22 3.3.3  Statistical Organization and Population Statistics in Soviet and Post-Soviet Russia After the 1917 revolution, the economic system was rapidly reorganized, and the system for compiling statistics was also reformed in various ways. Although the Supreme Council of People’s Economy (Visshii sovet narodnogo khoziaistva), which was formed in December 1917, just after the revolution, had a statistics and population survey department, in July 1918, the Central Statistical Board (TsSU: Tsentralnoe statisticheskoe upravlenie) was established with the aim of centralizing the compilation of statistics.23 This was followed by the establishment of regional branches in September of the same year.24 In addition, companies and organizations were required to submit to the Statistical Board information it deemed necessary and comply with orders it issued. Right from the beginning, however, the priority was not to ensure independence in the process of compiling statistics but rather to facilitate economic planning, and the Statistical Board was therefore put under the control of what was then the People’s Council (Popov 1988; Yamaguchi 2003). Then, in 1923, just after the civil war, the Central Statistical Board was attached to the Soviet Union Council of People’s Commissars.25 However, despite this arrangement, the post-revolution civil war and incursions by foreign powers meant that in the early 1920s, it was impossible to gather business or census statistics for the entire Soviet territory.26 The watershed year for the system for compiling statistics was 1930. In January of that year, the Central Statistical Board became a department of the State Planning Commission (Gosplan) (Goskomstat Rossii 1996). The 22  Obviously, there may have been a large number of problems with the methods used when conducting the fieldwork for this, Russia’s first, population census. Although labelled as a selfadministered survey, Valentei (1985) has pointed out that because of the low level of literacy at the time, the investigators conducting the surveys often filled in the forms themselves. 23  Dekret soveta narodnikh komissarov o gosudarstvennoi statistike ot 25 iulia 1918. 24   ot 3-go sentiabria 1918 g. 25   ot 17-go iulia 1923. 26  For example, the population census carried out in 1920 only managed to cover the European parts of the Soviet Union. Other regions could not be surveyed.

72 

K. KUMO

department’s role was clearly defined on the premise that the system for compiling statistics should contribute to economic planning. In 1931, the name of the Central Statistical Board was changed to the Central Administration of Economic Accounting of Gosplan (TsUNKhU Gosplana: Tsentralnoe upravlenie narodnokhoziaistvennogo ucheta), which from 1941 to 1948 was known as the Central Statistical Board of Gosplan (TsSU Gosplana) following another name change (Goskomstat Rossii 1996). Yamaguchi (2003) pointed out, probably correctly, that these reforms were carried out because during the rapid industrialization that occurred before World War II, particularly during the five-year plan that started in 1928, the existence of an independent statistical organization would have resulted in the emergence of a gap between the producers and users of statistics, and that this would have hindered the successful implementation of the economic plans. Later, in 1948, the Board was separated from Gosplan and became the Central Statistical Board under the Council of Ministries of the Union of Soviet Social Republics, and then in 1978 achieved independence as the Central Statistical Board. The Board has continued to conduct activities ever since, and following several name changes is now, at the time of publishing this volume in 2019, known as the Russian Federal State Statistics Service. The methods used for collecting and producing statistics are basically the same in the modern Russian Federation as they were in the Soviet era. Statistics in the Soviet era were characterized by centralization. Statistics were not produced by individual ministries and agencies. Rather, each ministry and agency provided statistical reports on corporations and organizations to the Central Statistical Board, which then compiled statistics from these reports (Goskomstat Rossii 1996). However, because the country’s transition to a market economy following the collapse of the Soviet Union has resulted in profound changes in the forms of corporations and the structure of industry, the old method of putting together production statistics and other statistics, which centred on reports produced by individual business units, has clearly become less effective (Yamaguchi 2003). This has led to the introduction of something called the Unified State Directory of Enterprises and Organizations (Edinii gosudarstvennii registr predpriiatii i organizatsii) (Goskomstat Rossii 2001; Yamaguchi 2003) as part of a series of systematic reforms aimed at enhancing statistical precision. In 1920, less than three years after the revolution, the Soviet Union carried out its first population census. This census was conducted to provide basic data for the implementation of the State Plan for Electrification of Russia (Gosudarstvennii plan elektrifikatsii Rossii), which was a precursor to the five-year plan. However, with the post-revolution civil war still

3 POPULATION 

73

raging, the census had to be limited to the European parts of the Soviet Union. It was the 1926 census that became the first to cover the entire territory of the Soviet Union. Later, in 1937, the first population census since the launch of the five-year plan was conducted. However, because the results showed the impact of the 1930s collectivization of agriculture and the major famines this led to and the Great Purge, which began around 1935, they were kept on file at the Central Statistical Board and never published. The 1939 census represents the last truly usable census from before World War II.27 The first population census after World War II was conducted in 1959. Censuses were then carried out in 1970, 1979, and 1989, with the first population census of modern Russia after the collapse of the Soviet Union at the end of 1991 taking place in 2002.28 Russian civil law contains provisions concerning the recording of population dynamics in each calendar year, such that citizens are required, and have been since the Soviet era, to notify the Division for Questions of Registration of Vital Statistics, which is known as ZAGS (Otdel zapisi aktov grazhdanskogo sostoianiia), an organization that handles the registration of births, deaths, and marriages, of any such changes.29 The system remained unchanged after the collapse of the Soviet Union, with families obliged to report to ZAGS births within one month, and deaths within three days, of 27  However, only a single volume of tables of data from the 1939 population census was published. It included populations by region and sex, the number of workers by level of educational attainment (i.e., graduation from junior or senior high school) and sex, working populations by region and industry, working populations by sex and region, and population composition by region and ethnic group. See Poletaev and Polskii (1992). 28  See Clem (1986) for more information on population censuses in the Soviet Union. 29  ZAGS is an organization that registers matters such as births, deaths, marriages, and divorces. It retains the same name in modern Russia that it had during the Soviet era and is under the supervision of the Ministry of Justice. See . The decision to establish ZAGS was made between 1917 and 1918, with the organization intended to replace the parish registers that had been used until then. Apparently, however, because of factors such as the turmoil of the civil war, it was not until the end of 1919 that the cities of European Russia introduced the new system, and even in 1923, the system still only covered urban areas, albeit throughout the entire nation (TsSU SSSR 1928a). By 1926 the system seems to have been functioning throughout the whole of the Russian Soviet Socialist Republic, given that the number of infants under one year recorded in the 1926 census nearly matched the number of births minus infant mortalities derived from the ZAGS records. However, it is posited that the ZAGS system remained inadequate in the following regions: Yakutia Autonomous Republic, Bashkortostan Autonomous Republic, Dagestan Autonomous Republic, and Ingush and Chechen autonomous oblasts, and other parts of the North Caucasus, Sakhalin and Kamchatka, and central Asia and the Caucasus (TsSU SSSR 1928b; TsSU RSFSR, 1928).

74 

K. KUMO

the event.30 Residency registration (propiska), including the registration of interregional migration, must be done at local branch offices of the Ministry of Internal Affairs.31 Using the data gathered from this system, population statistics have been produced and published annually since 1956  in The National Economy of the RSFSR (Narodnoe Khoziaistvo RSFSR), a collection of official statistics.32 Of course, it was impossible for residency registration alone to fully capture interregional migration and accurately record regional populations. It also should be mentioned that in the Russian Soviet Socialist Republic during the Soviet era, 0.75 per cent of the population was revised as being unregistered during the period between the 1959 population census and the 1970 census 11 years later (Kumo 2003).

3.4   Processing of Russian Population Statistics 3.4.1  Population Statistics from Imperial Russia As mentioned earlier, no household censuses, which were designed to calculate the population of people liable for taxes, were conducted after 1858. This meant that the task of producing statistics shifted away from agencies under the jurisdiction of the tax authorities, and it is fair to say that a foundation was laid for improving statistical accuracy. In 1858 and 1863, the Central Statistical Committee of the Ministry of the Interior experimented with producing various statistics based on data such as that from the household census. Then, from 1866, it began to compile and publish statistics, initially intermittently but later on a permanent basis. So now let the author survey population statistics from imperial Russia. The statistics this chapter will look at are extracted from the series of official statistics published between 1866 and 1918. 30  Obzor Federalnogo zakona No,143-FZ ot 15. 11. 97 (v redaktsii Federalnikh zakonov ot 25. 10. 2001; N138-F3 ot 29. 04. 2002 N44F3 ot 22. 04. 2003; N46-F3 ot 07. 07. 2003 N120-F3). 31  Residency registration (propiska) is under the purview of the Ministry of Internal Affairs. ust. Postanovleniem SM SSSR ot 28 avgusta 1974 g. N677 (s izmeneniiami ot 28 ianvaria 1983 g., 15 avgusta 1990 g.); Postanovlenie pravitelstva RF ot 17 iulia 1995 g. N713 (v redaktsii ot 16 marta 2000 g.). Residency of half a month or more in the Soviet era, and 10 days or more in modern Russia, needed to be reported within three days. In the Soviet era (from 1974 onwards), failure to register residency was punishable by a fine between 10 and 50 roubles. However, the propiska system only became effective in 1932 (Andreev et al. 1998). 32  Although the registers of births, deaths, etc., and residency registers cannot record everything, people obviously have various incentives to report events and changes in their lives. See Matthews (1993).

3 POPULATION 

75

Using various data presented in sections such as “Population Dynamics in European Russia in the Year ∗∗∗∗” (Dvizhenie naseleniia v evropeiskoi Rossii ∗∗ goda) from Central Statistical Committee publications entitled the Statistical Bulletin of the Russian Empire (Statisticheskii vremmennik Rossiiskoi Imperii), published intermittently between 1866 and 1897, and Statistics of the Russian Empire (Statistika Rossiiskoi Imperii), which was published between 1887 and 1916, it is possible to obtain figures for the period from 1868 to 1915 for the numbers of births, deaths, infant deaths, and rates of these per 1000 people for 50 provinces in imperial European Russia.33 Total population (by province) is presented in some years and not in others. Statistics on births and deaths exist, but they cannot be directly relied upon to paint a picture of dynamics since the middle of the nineteenth century. This is because the imperial notion of “European Russia” differs greatly from the territory covered by modern European Russia or Soviet-­era’s European Russia. From 1904, statistical yearbooks entitled Yearbook of Russia (Ezhegodnik Rossii) (published between 1904 and 1910) and Statistical Yearbook of Russia (Statisticheskii ezhegodnik Rossii) (published between 1912 and 1918) were published at regular intervals. Because the dynamic statistics on the population of European Russia they presented were probably preliminary, for the period 1904–1910, the author used the numbers of births, deaths, and infant deaths carried in sources such as the “Population Dynamics … in the Year ∗∗∗∗” section of Statistics of the Russian Empire, which was published a little after the years to which the data it contains relates. However, Yearbook of Russia and Statistical Yearbook of Russia are useful in that they record the populations of regions (provinces) and districts within them not just for European Russia but for the entire territory of imperial Russia. However, the question of how accurate these statistics are obviously arises. When the total population of European Russia according to the 1897 population census is compared with the total populations extrapolated from the sections on population dynamics in the 1893, 1895, 1896, and 1897 editions of Statistics of the Russian Empire, it is possible to confirm that the disparity is less than 1.5 per cent.34 Judging that it 33  Infant mortality rates can be calculated from tables showing the number of deaths by age in months (there are no tables showing the number of deaths of infants up to one year old). Rates for the other events (births, deaths, etc.) can be calculated as long as a figure for total population, that is, the denominator, can be obtained. Unfortunately, however, figures for total population were only provided in a limited number of years. 34  When calculated by extrapolating from crude death rate and crude birth rate statistics, the total registered population in European Russia in 1897 was around 94,800,000. The census, meanwhile, gives a figure of just over 93,400,000 for European Russia.

76 

K. KUMO

would be possible to rely on these statistics, the author decided, for this chapter, to use the following procedure for processing statistics from the imperial era.35 (1) To begin with, for imperial European Russia for the period 1904– 1916, the author sorted by region (gubernias, oblasts, and krais) all the figures for population and numbers of births, deaths, and infant deaths that the author could obtain for all the years that they had data for by region. (2) Because the national borders of the Russian Federation since the collapse of the Soviet Union do not match the borders of the gubernias, oblasts, and so on, of imperial Russia, this chapter used the proportion of the land area of each of the administrative divisions of imperial Russia that was included in the territory of the Russian Soviet Federated Socialist Republic (RSFSR), that is, the territory of the present Russian Federation, as produced by Leasure and Lewis (1966), to calculate populations and numbers of births, deaths, and so on, for each region. The author then added up the totals to estimate figures for the European part of the present Russian Federation.36 (3) The problem was how to handle the Caucasus, Siberia, and the Far East because no dynamic statistics were published on these regions during the imperial era. The same is true for the portion of imperial Russian Finland that is included in the present Russian Federation, though the total population of this region could be obtained for 1885 and 1904–1916. Looking at the regional distribution of the total population of imperial Russia using the method described in (2), one can see that the total population of the Caucasus, Siberia, the Far East, and the portion of Finland described above as a percentage of the total population of the territory of the present 35  As described, the method used here is an extremely simple one, involving the application of dynamic statistics on the whole of imperial European Russia to the modern Russian Federation. The Appendix contains alternative estimates of the total population made using the ratio between the European and non-European parts of the present Russian Federation for years for which actual data could be obtained. 36  Leasure and Lewis (1966) also calculated the proportions of the land areas of imperial Russian gubernias outside European Russia (the Caucasus, Siberia, the Far East, etc.) that were included in the territory of the RSFSR. They used these proportions to calculate the 1916 total population of regions outside European Russia.

3 POPULATION 

77

Russian Federation was no more than 21.3 per cent in any of the years between 1885 and 1916 for which figures could be obtained, and about four fifths of the total population of these regions resided in European Russia.37 Given this situation, to grasp the overall trend, the author applied the figures for crude birth rate, crude death rate, and infant mortality rate obtained in (2) for the European part of the present Russian Federation to these territories outside European Russia. This chapter applied the crude birth rate, crude death rate, and infant mortality rate for European Russia to the 1916 population of the Caucasus, Siberia, and the Far East (plus part of Finland) calculated using the method described in (2), and used them to go back and calculate populations for previous years. (4) For the years 1901–1903, using the method described in (3) above, this chapter used the crude birth rate, crude death rate, and infant mortality rate for European Russia to go back and extrapolate populations for these years. (5) In addition, modern Kaliningrad38 is not included for the entire imperial era. (6) For reference purposes, the author also calculated dynamics for the years 1891–1900 for the regions of imperial European Russia that lie within the European part of the present Russian Federation. The author then applied the rates of natural increase obtained to the entire territory and produced a time series for total population. In addition, this chapter used crude birth rates and crude death rates for imperial European Russia (not the European portion of the present Russian Federation) to go back and extrapolate populations for the years 1867–1890.39 37  Although the Far East covers a vast area, development there began in earnest not at the end of the nineteenth century but after the twentieth century had begun. Until then, its population was extremely small. Even in 1904, the entire population east of Lake Baikal was less than 1.2 million (Tsentralnii statisticheskii komitet M. V. D. 1905). 38  A part of the Konigsberg region that was broken up and combined by Poland and the Soviet Union after World War II. It was renamed Kaliningrad in 1946 and currently exists as a Russian enclave sandwiched between Poland and Lithuania. 39  Because the author could only obtain by-region birth and death statistics for some of the years between 1867 and 1890, they abandoned efforts to harmonize the old and new territory. Crude birth rates and crude death rates for imperial European Russia were always included in the preamble to the official statistics described earlier.

78 

K. KUMO

3.4.2  Population Statistics in Soviet and Post-Soviet Russia and Problems Relating to Them The biggest problem with studying population statistics on post-­revolution Soviet Russia is that it is not always easy to get hold of reliable data. Although population censuses were carried out in the early years of the Soviet Union, in 1926, 1937, and 1939, and the first census after World War II was conducted in 1959, it is often impossible to obtain from official statistics information to fill in the gaps between these years. This is especially difficult to know what to do with the period from 1917 to 1921, when the revolution, civil war, and incursions by foreign powers turned the country into a battleground. The same obviously goes for 1941–1945, when the nation was in the grip of World War II. It is also extremely difficult to obtain population statistics on the 1930s, a period marked by the collectivization of agriculture and the confusion and major famines it led to, as well as the Great Purge. In short, hardly any population statistics were published from the end of the 1920s to the beginning of the 1950s. Because of this, the only pre-1950 figures that could provide a reliable benchmark were often not official statistics, but historical materials from the statistical authorities that can be viewed by examining official archive materials. Because of this situation, for this chapter, the author abandoned the idea of placing priority on obtaining primary historical materials like these and using them to make independent estimates of Soviet-era population statistics, and decided to focus instead on presenting as many figures as the author could obtain that could serve as a basis for such statistics. This chapter used officially published statistics and historical materials from the archives (Russian State Economic Archive, RGAE).40 From 1956 onwards, statistics were published without intermission, and it was relatively easy to obtain data dating back to 1950. Next one had to take into account the changes in administrative divisions. Various changes in administrative divisions and their territories 40  However, the author obtained the total population for 1937 not from official statistics or archived historical materials, but from Poliakov et al.’s (2007) collection of archived historical materials relating to the 1937 population census. This is because throughout the period from the beginning of our study to writing this chapter, the tables of results of the 1937 census were out on loan to some officials of the RGAE, and the author was therefore unable to examine them. Obviously, however, the author examined all the other historical materials personally.

3 POPULATION 

79

occurred after the revolution and around the time the Soviet Union was established, in the 1930s, and because of World War II. Even if one ignores the changes that resulted from the war, a major systemic shift occurred with the establishment of the republics that were to make up the Soviet Union, which were created for each of the nation’s different ethnic groups. Although it would be impractical to list all the changes one by one, a few points, given below, need to be kept in mind. Most of the changes of the 1920s and 1930s were made in accordance with the Soviet Union’s famed “national delimitation” policy of redrawing the boundaries of imperial Russian administrative divisions on ethnic lines, which led to the establishment of republics named after the predominant ethnic group they contained.41 • From the establishment of the RSFSR in 1917 until 1936, modern Kazakhstan and Kyrgyzstan were included in the RSFSR as the Kazakh Autonomous Republic and Kyrgyz Autonomous Oblast (later the Kyrgyz Autonomous Republic). • Modern Uzbekistan, Tajikistan, Turkmenistan, and a part of Kazakhstan were included in the RSFSR as the Turkmenistan Autonomous Republic from the revolution until 1924. • Until 1924, the Orenburg Oblast of modern Russia was included in the Kazakh Autonomous Republic described above. Therefore, for this period until 1924, it must be included in the RSFSR. • In 1924, the Vitebsk Oblast, now part of Belarus, was transferred from the RSFSR to the Byelorussian Republic. The same thing happened to the Gomel Oblast, also now part of Belarus, between 1924 and 1926. The above factors need to be taken into account when using statistics from the 1920s and 1930s to derive population statistics for the territory covered by the modern Russian Federation. Care also needs to be taken with factors such as (1) the treatment of the area around the Karelian Isthmus and the Republic of Karelia of the modern Russian Federation, which were acquired from Finland following the Winter War of 1939– 1940 and the Continuation War (1941–1944), (2) the incorporation into the present Ukraine (where it remains) of the Crimean Autonomous Republic (later the Crimean Oblast), which was under the control of the  Sulkevich (1940) provides a short summary of this.

41

80 

K. KUMO

RSFSR until 1954, and (3) the inclusion of the Tyva autonomous republic into the RSFSR, which occurred after 1944.

3.5   Results Figures 3.1, 3.2, and 3.3 and Table  3.1 show the results of compiling population statistics on imperial Russia, Soviet Russia, and modern Russia using the methods described in the previous section. The author now provides a short summary of these results. As can be seen from the figures for total population shown in Fig. 3.1, the impact of the Russian Revolution and the turmoil that followed it, and that of World War II, was enormous. Following the revolution in 1917, it took until around 1930 for the population to recover to its pre-revolution People

160000000

140000000

120000000

100000000

80000000

60000000

40000000

20000000

0 Year 1874 1882 1890 1898 1906 1914 1922 1930 1938 1946 1954 1962 1970 1978 1986 1994

Fig. 3.1  Total population. Notes: The figures for the period during World War II are just rough estimates because data was lacking for numerous regions. In addition, the figures for 1928–1938 (extrapolated from the population in 1927) and 1945–1949 (extrapolated from the population in 1950) were calculated using the difference between the number of births and deaths and, therefore, do not reflect changes caused by social factors such as migration. Source: Table 3.1

3 POPULATION  1/1000

Crude Birth rate

81

Crude Death Rate

60

50

40

30

20

10

0 Year 1873 1880 1887 1894 1901 1908 1915 1922 1929 1936 1943 1950 1957 1964 1971 1978 1985 1992 1999

Fig. 3.2  Crude birth rate and crude death rate. Notes: Rates for 1867–1890 are for the European part of imperial Russia; rates for 1891–1917 are for the territory of European Russia within the present Russian Federation; rates for 1918–2002 are for the entire territory of the present Russian Federation. Rates for the 1927–1938 and 1942 periods are just rough estimates because data was lacking for an extremely large number of regions. Figures for 1924–1925 were only calculated for European Russia. Source: Table 3.1

level. In addition, it was not until 1956 that the population surpassed the level it was on January 1, 1941, just before the outbreak of the war with Germany. If one compares the population of the territory covered by the present Russian Federation at the end of the imperial era with that in 1946, one can see that nearly 30  years of population growth had been wiped out. Although this is a widely known fact among those that study the demographic history of the Soviet Union (see Poliakov and Zhiromskaia 2000, 2001; Vishnevskii 2006), this chapter is the first attempt to produce a population time series for the period from the 1860s in the late imperial era for the territory covered by the present Russian Federation. As mentioned earlier, it is possible, based on the limited data available, to use the total population and number of births, deaths, and infant deaths at the end of the nineteenth century to go back and extrapolate data on the European part of the present Russian Federation during the imperial

82 

K. KUMO

a 1/1000 350

300

250

200

150

100

50

0 Year 1873 1880 1887 1894 1901 1908 1915 1922 1929 1936 1943 1950 1957 1964 1971 1978 1985 1992 1999

b 1/1000 350

300

250

200

150

100

50

0 Year 1873 1880 1887 1894 1901 1908 1915 1922 1929 1936 1943 1950 1957 1964 1971 1978 1985 1992 1999

Fig. 3.3  (a) Infant mortality (including archive data for the period of World War II). (b) Infant mortality (excluding archive data for the period of World War II). Note: Notes are the same as those for Fig. 3.2. Source: Table 3.1

45,606,000 46,262,000 46,668,000 47,202,000 47,870,000 48,482,000 48,903,000 49,679,000 50,497,000 51,359,000 52,177,000 52,976,000 53,463,000 54,294,000 55,033,000 55,844,000 56,461,000 57,191,000 58,136,000 58,947,000 59,866,000 60,793,000 61,884,000 62,782,000 63,577,000 64,435,000 64,443,000

1867 1868 1869 1870 1871 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1882 1883 1884 1885 1886 1887 1888 1889 1890 1891 1892 1893

2,293,000 2,165,000 2,301,000 2,285,000 2,413,000 2,380,000 2,533,000 2,549,000 2,585,000 2,583,000 2,572,000 2,506,000 2,673,000 2,650,000 2,631,000 2,815,000 2,791,000 2,802,000 2,815,000 2,742,000 2,844,000 3,034,000 3,020,000 3,026,000 3,383,000 3,041,000 3,307,000

Total population No. of births

Year

Table 3.1 Results

1,647,000 1,762,000 1,773,000 1,626,000 1,809,000 1,963,000 1,769,000 1,744,000 1,738,000 1,778,000 1,785,000 2,023,000 1,855,000 1,921,000 1,830,000 2,205,000 2,070,000 1,873,000 2,015,000 1,837,000 1,930,000 1,962,000 2,135,000 2,241,000 2,537,000 3,033,000 2,477,000

No. of deaths

593,900 606,500 558,700 614,600 658,500 631,900 647,000 658,100 647,200 586,500 625,900 574,800 689,900 608,100 836,300 772,900 711,800 760,600 680,400 727,400 758,600 830,000 883,000 920,500 932,700 833,300

No. of infant deaths 50.3 46.8 49.3 48.4 50.4 49.1 51.8 51.3 51.2 50.3 49.3 47.3 50.0 48.8 47.8 50.4 49.4 49.0 48.4 46.5 47.5 49.9 48.8 48.2 53.2 47.2 51.3

36.1 38.1 38.0 34.4 37.8 40.5 36.2 35.1 34.4 34.6 34.2 38.2 34.7 35.4 33.3 39.5 36.7 32.7 34.7 31.2 32.2 32.3 34.5 35.7 39.9 47.1 38.4 274.3 263.6 244.6 254.7 276.6 249.4 253.9 254.5 250.5 228.0 249.8 215.0 260.4 231.2 297.1 276.9 254.0 270.2 248.1 255.8 250.1 274.8 291.8 272.1 306.7 252.0

Crude Crude Infant birth rate death rate mortality 14.2 8.7 11.3 14.0 12.6 8.6 15.6 16.2 16.8 15.7 15.1 9.1 15.3 13.4 14.5 10.9 12.8 16.3 13.8 15.4 15.3 17.6 14.3 12.5 13.3 0.1 12.9

Natural increase

(Continued)

[38], [60], [64] [38], [60] [38], [60] [38], [60], [63] [38], [55], [59] [38], [55], [58] [38], [55], [57] [38], [55], [56] [38], [54], [55] [38], [53], [54] [38], [53] [38], [51], [52] [38], [49], [51] [38], [47], [49] [38], [46], [47] [38], [45], [46] [38], [45], [48] [38], [39], [44] [38], [39], [40], [41] [37], [38], [40], [46] [36], [37] [36] [34], [35] [33], [34] [12], [30], [31] [12], [29], [30], [31], [32] [2], [12], [31]

Source

3 POPULATION 

83

65,284,000 66,184,000 67,076,000 68,128,000 69,334,000 70,251,000 71,514,000 72,780,000 73,895,000 75,136,000 76,553,000 77,989,000 79,365,000 80,874,000 82,871,000 85,962,000 87,960,000 89,832,000 92,533,000 94,260,000 96,307,000 98,832,000

100,563,000 96,585,000

1894 1895 1896 1897 1898 1899 1900 1901 1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 1914 1915

1916 1917

3,358,000 3,477,000 3,559,000 3,576,000 3,543,000 3,622,000 3,732,000 3,771,000 3,868,000 3,924,000 3,999,000 3,778,000 4,028,000 4,079,000 3,957,000 4,077,000 4,227,000 4,287,000 4,228,000 4,553,000 4,317,000 4,578,000

Total population No. of births

Year

Table 3.1 (Continued)

2,471,000 2,597,000 2,522,000 2,391,000 2,638,000 2,382,000 2,488,000 2,674,000 2,647,000 2,533,000 2,553,000 2,734,000 2,660,000 2,571,000 2,631,000 2,844,000 3,003,000 2,731,000 2,772,000 3,026,000 2,756,000 3,042,000

No. of deaths

1915–1917: World War I

889,600 972,900 975,100 928,000 987,800 868,200 942,200 1,024,000 998,700 1,006,000 926,300 1,026,000 998,700 919,700 965,900 1,024,000 1,125,000

No. of infant deaths 51.4 52.5 53.1 52.5 51.1 51.6 52.2 51.8 52.3 52.2 52.2 48.4 50.7 50.4 47.7 47.4 48.1 47.7 45.7 48.3 44.8 46.3

37.8 39.2 37.6 35.1 38.0 33.9 34.8 36.7 35.8 33.7 33.3 35.1 33.5 31.8 31.8 33.1 34.1 30.4 30.0 32.1 28.6 30.8

264.9 279.8 274.0 259.5 278.8 239.7 252.4 271.6 258.2 256.3 231.6 271.5 248.0 225.4 244.1 251.3 266.1

Crude Crude Infant birth rate death rate mortality 13.6 13.3 15.5 17.4 13.0 17.7 17.4 15.1 16.5 18.5 18.9 13.4 17.2 18.7 16.0 14.3 13.9 17.3 15.7 16.2 16.2 15.5

Natural increase

[1] [1]

(Continued)

[12], [26], [27], [30] [12], [26], [28], [29] [12], [26], [27], [28] [12], [26] [12], [25] [12], [24], [25] [12], [23], [24] [12], [22], [23] [21], [22] [13], [20], [21] [12], [19], [20] [11], [18], [19] [10], [17], [18] [9], [16], [17], [18] [8], [15], [16] [7], [14], [15] [6], [14] [4], [5], [6] [3], [4], [5] [2], [3], [4] [2], [3] [1], [2]

Source

84  K. KUMO

88,413,000 89,874,000 92,372,000 94,458,371∗ 96,893,759∗ 98,933,086∗ 100,633,851∗ 102,187,086∗ 103,488,404∗ 103,274,522∗ 103,908,192∗ 105,384,582∗ 104,929,343 106,947,884∗ 108,380,000 109,813,600∗ 111,016,200∗ 89,794,900∗ ∗∗ 78,708,500∗ ∗∗ 90,688,500∗ ∗∗ 87,992,300∗ ∗∗ 95,904,000∗ 97,168,000∗ 98,283,000∗

86,265,000

2,362,495∗∗∗ 2,983,462∗∗∗ 3,486,044∗∗∗ 4,020,000 4,166,971∗ 4,276,332∗ 4,138,975∗ 3,576,495∗ 3,573,238∗ 3,339,568∗ 2,706,729∗ 2,627,899∗ 3,339,922∗ 3,648,268∗ 4,197,595∗ 4,140,000∗ 4,017,939∗ 3,624,000∗ 3,682,726∗ 1,654,086∗ ∗∗ 947,612∗ ∗∗ 1,049,543∗ ∗∗ 1,387,556∗ ∗∗ 2,325,368∗ 2,563,151∗ 2,358,263∗

83,077,000

1918 1919 1920 1921 1922

1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948

Total population No. of births

Year

Table 3.1 (Continued)

1,262,658∗∗∗ 1,658,396∗∗∗ 1,903,550∗∗∗ 1,919,000 2,080,600∗ 1,840,944∗ 2,099,648∗ 1,875,730∗ 2,020,003∗ 2,038,250∗ 2,920,611∗ 1,994,229∗ 1,863,532∗ 2,261,761∗ 2,179,054∗ 2,096,000∗ 2,080,643∗ 2,262,000∗ 2,263,056∗ 2,084,172∗ ∗∗ 1,598,199∗ ∗∗ 1,413,788∗ ∗∗ 1,040,687∗ ∗∗ 1,061,793∗ 1,448,482∗ 1,145,486∗

No. of deaths

546,042∗ 744,653∗ 760,306∗ 758,968∗ 764,149∗ 743,000∗ 777,885∗ 480,933∗ ∗∗ 152,213∗ ∗∗ 111,723∗ ∗∗ 108,806∗ ∗∗ 176,157∗ 326,986∗ 224,249∗

1918–1922: Turmoil of the revolution, civil war, and incursions by foreign powers 329,968∗∗∗ 579,232∗∗∗ 716,349∗∗∗ 756,000

No. of infant deaths

44.1∗∗∗ 45.3∗∗∗ 44.7 45.1∗ 46.3∗ 43.8∗ 36.9∗ 35.0∗ 32.2∗ 25.7∗ 24.6∗ 31.4∗ 34.1∗ 40.0∗ 38.9∗ 37.1∗ 33.0 33.2∗ 18.4∗ ∗∗ 12.0∗ ∗∗ 11.6∗ ∗∗ 15.8∗ ∗∗ 24.2∗ 26.4∗ 24.0∗

24.5∗∗∗ 24.8∗∗∗ 21.4 22.5∗ 19.9∗ 22.2∗ 19.4∗ 19.8∗ 19.6∗ 27.7∗ 18.7∗ 17.5∗ 21.1∗ 20.8∗ 19.7∗ 19.2∗ 20.6 20.4∗ 23.2∗ ∗∗ 20.3∗ ∗∗ 15.6∗ ∗∗ 11.8∗ ∗∗ 11.1∗ 14.9∗ 11.7∗

Natural increase

19.6∗ 20.5∗ 23.4∗ 22.6∗ 26.4∗ 21.6∗ 17.6∗ 15.2∗ 12.5∗ -2.0∗ 5.9∗ 163.5∗ 13.9∗ 204.1∗ 12.9∗ 181.1∗ 19.2∗ 183.3∗ 19.2∗ 190.2∗ 17.9 205.0 12.4 211.2∗ 12.8∗ 290.8∗ ∗∗ -4.8∗ ∗∗ 160.6∗ ∗∗ -8.2∗ ∗∗ 106.4∗ ∗∗ -4.0∗ ∗∗ 78.4∗ ∗∗ 4.0∗ ∗∗ 75.8∗ 14.0 127.6∗ 12.2 95.1∗ 13.0

194.1∗∗∗ 205.5∗∗∗ 188.1

Crude Crude Infant birth rate death rate mortality

(Continued)

See notes at the end for 1918~1945

Source

3 POPULATION 

85

99,496,000∗ 101,438,000 102,945,000 104,587,000 106,715,000 108,430,000 110,537,000 112,266,000 114,017,000 115,665,000 117,534,000 119,046,000 120,766,000 122,407,000 123,848,000 125,179,000 126,309,000 127,189,000 128,026,000 128,696,000 129,379,000 129,941,000 130,563,000 131,304,000 132,069,000 132,799,000 133,634,000 134,549,000 135,504,000 136,455,000 137,410,000 138,127,000

1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

2,977,280∗ 2,476,000 2,825,000 2,819,000 2,717,000 2,949,000 2,866,000 2,769,000 2,832,000 2,819,000 2,796,000 2,782,000 2,662,000 2,483,000 2,332,000 2,122,000 1,991,000 1,958,000 1,851,000 1,817,000 1,848,000 1,904,000 1,975,000 2,015,000 1,995,000 2,080,000 2,106,000 2,147,000 2,157,000 2,179,000 2,179,000 2,203,000

Total population No. of births

Year

Table 3.1 (Continued)

1,034,963∗ 1,031,000 1,059,000 1,009,000 998,900 1,014,000 935,200 880,700 935,900 861,600 920,200 886,100 901,600 949,600 932,100 901,800 958,800 974,300 1,017,000 1,040,000 1,107,000 1,131,000 1,143,000 1,182,000 1,214,000 1,222,000 1,310,000 1,353,000 1,388,000 1,417,000 1,490,000 1,526,000

No. of deaths

175,572∗ 137,604∗ 134,108∗ 115,600 113,110∗ 102,000 88,540 81,190 73,550 62,640 53,800 50,090 47,450 46,390 45,150 43,510 41,520 43,430 44,340 46,930 49,810 53,330 52,210 51,290 49,150 48,500

248,156∗ 200,600 257,404∗ 216,356∗

No. of infant deaths 29.9∗ 24.4 27.4 26.9 25.5 27.2 25.9 24.7 24.8 24.4 23.8 23.4 22.0 20.3 18.8 17.0 15.8 15.4 14.5 14.1 14.3 14.7 15.1 15.3 15.1 15.7 15.8 16.0 15.9 16.0 15.9 15.9

10.4∗ 10.2 10.3 9.6 9.4 9.3 8.5 7.8 8.2 7.4 7.8 7.4 7.5 7.8 7.5 7.2 7.6 7.7 7.9 8.1 8.6 8.7 8.8 9.0 9.2 9.2 9.8 10.1 10.2 10.4 10.8 11.0 61.3∗ 49.7∗ 47.4∗ 41.0 40.5∗ 36.7 33.3 32.7 31.5 29.5 27.0 25.6 25.6 25.5 24.4 22.9 21.0 21.6 22.2 22.6 23.6 24.8 24.2 23.5 22.6 22.0

83.3∗ 81.0 91.1∗ 76.7∗

Crude Crude Infant birth rate death rate mortality 20.7 14.2 17.2 17.3 16.1 17.8 17.5 16.8 16.6 16.9 16.0 15.9 14.6 12.5 11.3 9.7 8.2 7.7 6.5 6.0 5.7 5.9 6.4 6.3 5.9 6.5 6.0 5.9 5.7 5.6 5.0 4.9

Natural increase

(Continued)

See notes at the end

Source

86  K. KUMO

138,839,000 139,604,000 140,530,000 141,583,000 142,539,000 143,528,000 144,784,000 145,988,000 147,022,000 147,665,000 148,274,000 148,515,000 148,562,000 148,356,000 148,460,000 148,292,000 148,029,000 147,802,000 147,539,000 146,890,000 146,304,000 145,649,000

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

1,524,000 1,504,000 1,564,000 1,651,000 1,625,000 1,498,000 1,532,000 1,569,000 1,584,000 1,656,000 1,691,000 1,807,000 2,129,000 2,301,000 2,204,000 2,082,000 2,016,000 1,989,000 2,144,000 2,225,000 2,255,000 2,332,000

No. of deaths 47,990 46,990 49,190 50,720 49,380 47,580 48,510 44,780 39,030 35,090 32,490 29,210 27,950 26,140 24,840 22,830 21,740 21,100 20,730 19,290 19,100 18,410

No. of infant deaths 16.1 16.7 17.6 17.0 16.7 17.3 17.3 16.1 14.7 13.5 12.1 10.7 9.3 9.5 9.2 8.8 8.5 8.7 8.2 8.6 9.0 9.6

11.0 10.8 11.1 11.7 11.4 10.4 10.6 10.7 10.8 11.2 11.4 12.2 14.3 15.5 14.8 14.0 13.6 13.5 14.5 15.1 15.4 16.0

21.5 20.2 19.8 21.1 20.8 19.1 19.4 19.1 18.1 17.6 18.1 18.4 20.3 18.6 18.2 17.5 17.3 16.4 17.1 15.2 14.6 13.2

Crude Crude Infant birth rate death rate mortality 5.1 5.9 6.5 5.4 5.3 6.9 6.7 5.3 3.9 2.3 0.7 −1.5 −5.1 −6.0 −5.7 −5.2 −5.1 −4.8 −6.3 −6.5 −6.4 −6.4

Natural increase

Source

# The accuracy of data for the imperial era differed from year to year and region to region.

(Continued)

# The statistical books contained numerous miscalculations and typographical errors. Particularly conspicuous were instances where the populations of all the provinces did not add up to the figure for the total population and instances where the populations of all the districts of a province did not add up to the population of the province. In cases like these, when the data was clearly incorrect, the author presented more appropriate figures by making recalculations and checking that the figures matched each other, wherever this was possible.

Notes to the data on Imperial Russia:

2,237,000 2,328,000 2,478,000 2,410,000 2,375,000 2,486,000 2,500,000 2,348,000 2,161,000 1,989,000 1,795,000 1,588,000 1,379,000 1,408,000 1,364,000 1,305,000 1,260,000 1,283,000 1,215,000 1,267,000 1,312,000 1,397,000

Total population No. of births

Year

Table 3.1 (Continued)

3 POPULATION 

87

(Continued)

∗Total populations for 1940–1945, numbers of births and deaths for 1927–1938 and 1941–1949, and numbers of infant deaths for 1935–1939, 1941–1949, 1951–1952, 1955–1957, and 1959 were extracted not from officially published statistics but directly from archive materials. The author eliminated the data

Notes to the data on Soviet and Post-Soviet Russia:

[1] Statisticheskii ezhegodnik Rossii, vip. 13 (1918); [2] to zhe, vip. 12 (1916); [3] to zhe, vip. 11 (1915); [4] to zhe, vip. 10 (1914); [5] to zhe, vip. 9 (1913); [6] to zhe, vip. 8 (1912); [7] Ezhegodnik Rossii, vip. 7 (1911); [8] to zhe, vip. 6 (1910); [9] to zhe, vip. 5 (1909); [10] to zhe, vip. 4 (1908); [11] to zhe, vip. 3 (1907); [12] to zhe, vip. 2 (1906); [13] to zhe, vip. 1 (1905); [14] Statistika Rossiiskoi Imperii: dvizhenie naseleniia v evropeiskoi Rossii za 1910 god, vip. 93 (1916); [15] to zhe, 1909 god, vip. 89 (1914); [16] to zhe, 1908 god, vip. 88 (1914); [17] to zhe, 1907 god, vip. 87 (1914); [18] to zhe, 1906 god, vip. 85 (1914); [19] to zhe, 1905 god, vip. 84 (1914); [20] to zhe, 1904 god, vip. 74 (1911); [21] to zhe, 1903 god, vip. 70 (1909); [22] to zhe, 1902 god, vip. 66 (1907); [23] to zhe, 1901 god, vip. 63 (1906); [24] to zhe, 1900 god, vip. 62 (1906); [25] to zhe, 1899 god, vip. 58 (1904); [26] to zhe, 1898 god, vip. 56 (1903); [27] to zhe, 1897 god, vip. 50 (1900); [28] to zhe, 1896 god, vip. 48 (1899); [29] to zhe, 1895 god, vip. 47 (1899); [30] to zhe, 1894 god, vip. 45 (1898); [31] to zhe, 1893 god, vip. 41 (1897); [32] to zhe, 1892 god, vip. 38 (1896); [33] to zhe, 1891 god, vip. 34 (1895); [34] to zhe, 1890 god, vip. 33 (1895); [35] to zhe, 1889 god, vip. 24 (1893); [36] to zhe, 1888 god, vip. 21 (1892); [37] to zhe, 1887 god, vip. 18 (1891); [38] to zhe, 1886 god, vip. 12 (1890); [39] to zhe, 1885 god, vip. 11 (1890); [40] Statistika Rossiiskoi Imperii: Sbornik svedeniia po Rossii, 1890, vip. 10 (1890); [41] to zhe, 1884–1885 godi, vip. 1 (1887); [42] Statisticheskii vremennik Rossiiskoi Imperii: Sbornik svedenii po Rossii, vip. 40 (1897); [43] Statisticheskii vremennik Rossiiskoi Imperii: dopolnitelnaiia svedeniia po divizheniiu naseleniia v evropeiskoi rossi za 1876, 1877 i 1878 godi (po ulzdaniia tablitsi), ser. 3, vip. 25 (1890); [44] Statisticheskii vremennnik Rossiiskoi Imperii: dvizheniie naseleniia v evropeiskoi rosii za 1884 god, ser. 3, vip. 24 (1889); [45] to zhe, 1883 god, ser. 3, vip. 23 (1887); [46] to zhe, 1882 god, ser. 3, vip. 21 (1887); [47] to zhe, 1881 god, ser. 3, vip. 20 (1887); [48] ser. 3, vip. 8 (1886); [49] to zhe, 1880 god, ser. 3, vip. 7 (1887); [50] to zhe, 1876–1880 gg., ser. 3, vip. 6 (1885); [51] to zhe, 1879 god, ser. 3, vip. 3 (1884); [52] to zhe, 1878 god, ser. 2, vip. 25 (1884); [53] to zhe, 1877 god, ser. 2, vip. 24 (1883); [54] to zhe, 1876 god, ser. 2, vip. 23 (1883); [55] to zhe, 1875 god, ser. 2, vip. 22 (1883); [56] to zhe, 1874 god, ser. 2, vip. 21 (1882); [57] to zhe, 1873 god, ser. 2, vip. 20 (1882); [58] to zhe, 1872 god, ser. 2, vip. 18 (1882); [59] to zhe, 1871 god, ser. 2, vip. 17 (1881); [60] to zhe, 1870 god, ser. 2, vip. 14 (1879); [61] to zhe, 1869 god, ser. 2, vip. 13 (1877); [62] to zhe, 1868 god, ser. 2, vip. 12 (1877); [63] Statisticheskii vremennnik Rossiiskoi Imperii, ser. 2, vip. 10 (1875); [64] to zhe, ser. 2, vip. 1 (1871); [65] to zhe, vip. 1 (1866); [66] Statisticheskii tablitsi Rossiiskoi Imperii (1863); [67] to zhe (1858).

Sources of data for the imperial era:

# The author calculated the numbers of infant deaths for the years up to and including 1883 by adding up the numbers of deaths of males and females under one month, between one and three months, between three and six months, and between six months and one year for all religious sects.

# Because infant mortalities per 1000 child deaths in 1867–1869 were not presented, the author calculated them using data for each province. However, data on the number of deaths by age could not be obtained for some provinces from the tables of data for each province, and so, the author did not include such provinces in the total number of deaths (denominator) and the number of deaths for each age (numerator).

# The numbers of births, deaths, and marriages for 1871 do not represent the total of such figures for each province.

Table 3.1 (Continued)

88  K. KUMO

Sources of and notes on total populations:

(Continued)

∗∗∗This note applies to all the dynamic statistics for 1923–1925. (1) The figures are only for European Russia. (2) The regions for which data was lacking changed year by year. (3) There were large differences in the accuracy of the data for different regions. (4) Because there are differences in the regions covered, as described in (2), changes in absolute figures are meaningless (e.g. the figures for 1923 are all small because Uralskaia Ob., Orenburgskaia Gubernia (Gb), Mariiskaia Ob., Chbashskaia ASSR, and Votskaia Gb. were not covered during this year alone). The numbers of births, deaths, and infant deaths are for the European parts of the RSFSR less than those for Krimiskaia ASSR and Gomelskaia Gb. Crude birth, death, and infant mortality rates for 1924 and 1925 were calculated using only the total populations of regions for which the numbers of births, deaths, and infant deaths could be obtained. Note that although Krimiskaia ASSR was excluded from the rates, this could not be done for the Gomelskaia Gb. because the source did not give the population, so the rates include the data for the Gomelskaia Gb. No rates are given for 1923, and it was impossible even to make rough estimates because one could not even obtain the total population for European Russia.

∗∗Statistics for 1942–1945 do not exist for a large number of regions. Both dynamic statistics and total populations are lacking, so the dynamic statistics and total population statistics for these regions do not match. The dynamic statistics do not include regions that were under occupation or regions where the ZAGS system was not functioning normally because of the turmoil of the war. The lack of data took many forms, with, for example, there being no data for January–May for some regions, only data for January and February for others, and no data at all for some regions. There was so much variation that it is impossible to describe here the individual situations of all the regions affected.

for Krimskaia Autonomous Soviet Socialist Republic (ASSR)/oblast (ob) from the data for the Russian Soviet Federated Socialist Republic (RSFSR) (it was not necessary to do this for 1957) and added to it the data for the Karelo-Finskaia Soviet Socialist Republic (SSR) when it was possible and necessary to do so. The data does not include numbers of births and deaths for (1) the Iakutskaia ASSR for 1927 and 1933–1937, (2) the Dagestanskaia ASSR, Sakhalin, and Kamchatka for 1927, (3) the Ingushskaia Autonomous Oblast (AO), Kabardino-Barkarskaia AO, and the Chechenskaia AO for 1929, (4) Sakhalin and Kamchatka for 1930, (5) two regions in the Gorkovskii Krai, three regions in the ASSR of Nemstev-­Povolzhia, rural parts of the Chechenskaia AO, the Ingushskaia AO, Sakhalin, and Kamchatka for 1931, and (6) rural parts of the Ingushskaia AO and Chechenskaia AO, the Severo-Osetinskaia AO, Sakhalin, and Kamchatka for 1932. Note that these regions were late to be covered by the ZAGS system for registering births, deaths, and so on (see Footnote 29 of the main text). In addition, dynamic statistics for 1941 and total populations for 1944–1945 are lacking for the Karelo-Finskaia SSR and are therefore not included. For 1948–1949, there is a note that around 100 ZAGS branches were not functioning properly. For reference, in December 1949, there were 42,704 ZAGS branches in the RSFSR (RGAE, F. 1562, O. 20, D. 841, L. 2). In rural regions in 1926, a single ZAGS branch would serve between 900 and 4000 residents (TsSU SSSR 1928a). Total populations for 1928–1936 and 1938 were calculated using the cumulative numbers of births and deaths for 1927–1935 and 1937, as given in archived historical materials. The total populations for 1946–1949 were extrapolated from the total population in 1950, as given in officially published statistics, and the numbers of births and deaths as given in archived historical materials. Crude birth and death rates for these years are no more than rough estimates derived from these extrapolated total populations. Infant mortality rates for 1951–1952, 1955–1957, and 1959 were calculated by dividing the numbers of infant deaths as given in archived historical materials by the numbers of births as given in officially published statistics.

Table 3.1 (Continued)

3 POPULATION 

89

(Continued)

1990–2002: Rosstat Website, http://www.gks.ru/wps/portal accessed on June 22, 2007; 1960, 1965, 1970, 1975, 1980–1989: Demograficheskii ezhegod-

Sources of numbers of births and deaths and birth and death rates:

# All figures are for January 1, except for years in which a population census was conducted. The figure for 1989 is for January 12 (when a population census was conducted). The figure for 1979 is for January 17 (when population census was conducted). The figures for 1959 and 1970 are for January 15 (when population censuses were conducted). Figures for 1941 and after including the Karelian Isthmus and Ladoga Karelia, which were acquired from Finland. Figures for 1946 and after include Kaliningrad (acquired from Germany during World War II), the southern part of Sakhalin, and the Kurile Islands (both acquired from Japan during World War II). The figure for 1939 is for January 17 (when a population census was conducted) and is for the RSFSR excluding the population of the Krimskaia ASSR. The figure for 1937 is for January 6 (when a population census was conducted) and is for the RSFSR excluding the population of the Krimskaia ASSR plus the number of persons serving in the Red Army and the Ministry of the Interior’s Border Guard Service. The figure for 1927 is for the RSFSR excluding the populations of the Krimskaia ASSR, the Kazakhskaia ASSR, the Kara-Kalpakskaia AO, and the Kirgizskaia ASSR. The figure for 1926 is for December 17, when a population census was conducted, and is for the RSFSR excluding the populations of the Krimskaia ASSR, the Kazakhskaia ASSR, and the Kirgizskaia ASSR. It is noted that the registered populations of regions such as the Caucasus are frequently incomplete, but there is so much variation that it is impossible to describe here the individual situations of all the regions affected. The figure for 1925 is for the RSFSR excluding the populations of the Krimskaia ASSR, the Kazakhskaia ASSR, the Gomelskaia Gb., and the Kirgizskaia AO plus that of the Orenburgskaia Gb., which was part of the Kazakhskaia ASSR at that time. The figure for 1923 is for March 15, and is the total population of the RSFSR on that date excluding the populations of the Krimskaia ASSR, the Gomelskaia Gb., the Kirgizskaia ASSR, and the Turkestanskaia AR plus that of the Orenburgskaia Gb., which was part of the Kirgizskaia ASSR at that time. Figures for rural residents in 1916 and urban residents in 1920 for the Turkestanskaia Autonomous Republic (AR) are each based on census figures. The figure for 1920 is for August 28, when a census was conducted, and is based on the administrative divisions as of January 1, 1925. It is the population of the RSFSR excluding the populations of the Krimskaia ASSR, the Gomelskaia Gb, the Kirgizskaia ASSR, and the Turkestanskaia AR plus that of the Orenburgskaia Gb., which was part of the Kirgizskaia ASSR at that time.

1990–2002: Chislennost naseleniia rossiiskoi federatsii na nachalo 1990–2002, Rosstat, Moskva, 2006; 1966–1969, 1971–1974, 1976–1979, 1981–1984, 1986–1989: Demograficheskii ezhegodnik Rossii 2002, Goskomstat, Moskva, 2003; 1960, 1965, 1970, 1975, 1980, 1985: Demograficheskii ezhegodnik Rossii 2005, Goskomstat, Moskva, 2006; 1961–1964: Demograficheskii ezhegodnik Rossii 2001, Goskomstat, Moskva, 2002; 1950–1959: Naselenie SSSR 1987, Goskomstat SSSR, Finansy i Statistika, Moskva, 1988; 1946–1949: see Note ∗ above; 1945: RGAE, F. 1562, O. 20, D. 564, L. 2; 1944: RGAE, F. 1562, O. 20, D. 479, L. 2–3; 1942–1943: RGAE, F. 1562, O. 329, D. 1452, L. 111–113; 1941: RGAE, F. 1562, O. 20, D. 242, L. 3–4; 1940: RGAE, F. 1562, O. 20, D. 241, L. 35–41; 1939: Itogi vsesoyuznoi perepisi naseleniia 1959 goda, TsSU, Moskva, 1962; 1937: Poliakov, Yu. A., Zhiromskaia, V.B., Tiurina, E.A. and Vodarskii, Ia.E. eds. (2007), Vsesoiuznaia perepis naseleniia 1937 goda: obshie itogi, Sbornik dokumentov i meterialov, Moskva, ROSSPEN; 1928–1936, 1938, 1947–1949: see Note ∗ above; 1927, 1931: NarKhoz SSSR statisticheskii spravochnik 1932, TsNKhU SSSR, Moskva, 1932; 1926: Estestvennoe dvizhenie naseleniia RSFSR za 1926 god, TsSU RSFSR, Moskva 1928; 1923: Sbornik statisticheskikh svedenii po soyuzu SSR 1918–1923, TsSU SSSR, Moskva, 1924; 1920, 1925: Statisticheskii Ezhegodnik 1924 g., TsSU SSSR, Moskva, 1925.

Table 3.1 (Continued)

90  K. KUMO

1970, 1980, 1990, 1995, 2000–2005: Rosstat Website, http://www.gks.ru/wps/portal accessed on June 22, 2007; 1960, 1965, 1975, 1980–1989, 1991–1994, 1996–1999: Demograficheskii ezhegodnik Rossii 2006, Rosstat, Moskva, p. 66; 1959: RGAE, F. 1562, O. 27, D. 808, L. 4; 1957: RGAE, F. 1562, O. 27, D. 353, L. 3–11; 1956: RGAE, F. 1562, O. 27, D. 212, L. 15; 1955: RGAE, F. 1562, O. 27, D. 103, L. 4; 1952: RGAE, F. 1562, O. 20, D. 1011, L. 2, L. 23, L. 192; 1951: RGAE, F. 1562, O. 20, D. 962, L. 2, L. 17, L. 44; 1940, 1950, 1958: NarKhoz RSFSR 1964, TsSU RSFSR; 1939, 1941–1949, 1961–1964, 1966–1969, 1971–1974, 1976–1979: (same as numbers of births etc.); 1935–1938: F. 1562, O. 329, D. 256, L.138. Figures for 1935 and 1937 do not include the Iakutskaia ASSR. Figures for 1936 do not include the Dalnevostochnii Krai. In addition, because the data is at the macro level, they include the Krimskaia ASSR. (The total population used as the basis for calculating the rates does not include the population of the Krimskaia ASSR, and this imbalance needs to be borne in mind.) The Karelo-Finskaia SSR was not included because of a lack of data; 1927: Statisticheskii spravochnik SSSR za 1928, TsSU, Moskva, 1929; 1924–1926: (same as for numbers of births, deaths, etc.).

Sources of numbers of infant deaths and infant mortality rates:

nik Rossii 2006, Rosstat, Moskva, p. 66; 1961–1964, 1966–1969, 1971–1974, 1976–1979: Demograficheskii ezhegodnik Rossii 2000, Goskomstat, Moskva, 2001, p. 55; 1950–1959: Naselenie SSSR 1973, TsSU SSSR, 1975, Moskva, p. 70; 1949: RGAE F. 1562, O. 20, D. 841, L. 2, L. 14, L. 43; 1948: RGAE, F. 1562, O. 20, D. 758, L. 2, L. 14, L. 47; 1947: RGAE, F. 1562, O. 20, D. 696, L. 6, L. 51, L. 121; 1946: RGAE, F. 1562, O. 20, D. 636, L. 3, L. 48, L. 117; 1945: RGAE, F. 1562, O. 20, D. 577, L. 6, L. 51, L. 130; 1944: RGAE, F. 1562, O. 20, D. 501; 1943: RGAE, F. 1562, O. 20, D. 418; 1942: RGAE, F. 1562, O. 20, D. 341; 1941: RGAE, F. 1562, O. 329, D. 553, L. 4, L. 157; 1940: NarKhoz RSFSR 1964, TsSU RSFSR; 1939: RGAE F. 1562, O. 20, D. 152; 1927–1938: RGAE, F. 1562, O. 329, Ed. Khr. 256, L. 15–26; 1926: Estestvennoe dvizhenie naseleniia RSFSR za 1926 god, TsSU RSFSR, Moskva 1928; 1924–1925: Estestvennoe dvizhenie naseleniia soiuza SSR 1923–1925, TsSU SSSR, Moskva 1928.

Table 3.1 (Continued)

3 POPULATION 

91

92 

K. KUMO

era. In addition, as described in Sect. 3.4, because figures can actually be obtained for each of the regions (called gubernias in the imperial era) from 1891 to the early twentieth century, the data for these regions can be considered to be reasonably accurate. However, the method used in this chapter cannot ensure the accuracy of the figures for the non-European territory of the present Russian Federation. What is noticeable when looking at Fig. 3.2 is the high crude birth rate in the late imperial era and the slight decline in the crude death rate at the end of that era.42 These observations have already been made by researchers such as Rashin (1956) and Vishnevskii (2006), but apart from the study by Rashin (1956), no other research has made use of primary historical materials. In fact, most other studies have simply quoted Rashin’s (1956) study. The current chapter, however, proves that Rashin’s (1956) findings were correct.43 No clear upward or downward trend in the infant mortality rate can be discerned. If one now links together the imperial and Soviet eras, one can see from Fig. 3.2 that there was a marked decline in the crude birth rate and death rate before and after the two world wars. This was also pointed out by Vishnevskii (2006). In producing for this chapter a time series of population during the imperial era, the author simply invoked the data on crude birth and death rates for the European part of the present Russian Federation (for 1891–1903) and the entire European part of imperial Russia (for the period up to and including 1890). This means that the findings this chapter has obtained by using rates as the basis for the author’s findings more or less match the findings of previous research. For the early Soviet era, this chapter attempted a survey of archived historical materials but was unable to find all the figures the author needed. In addition, the notes to Table 3.1 mention that depending on the year, there were large differences in the accuracy of the data, in terms of the regions covered, for example. There was almost no data at all for 1916–1923, which includes the period from the end of the revolution to the conclusion of the civil war, while for 1928–1945, there were numerous regions for which data was lacking. There will obviously be large gyrations in the figures for these two periods. Of course, they were Russia’s most tumultuous periods, and so, even if data could be obtained, it would probably not be particularly 42  The decline in the crude death rate from 1891 is statistically significant, while the crude birth rate shows no clear upward or downward trend. 43  Rashin (1956) produced and discussed processed statistics for periods five years apart.

3 POPULATION 

93

reliable.44 However, if it is admissible to overlook gyrations caused by external factors, the results of the examination presented in this chapter should be of some help in identifying population trends. Now the author discusses the data for the Soviet era. Apart from the figures for infant deaths between 1927 and 1938, the dynamic statistics presented here are from exactly the same historical materials used by Andreev et  al. (1998). As for the infant deaths figures, Andreev et al. (1998) give the source as the Goskomstat Soyuz Sovetskikh Sotsialisticheskikh Respublik (SSSR) archives, but this cannot be verified because they did not identify the registered number of the materials. The author of this chapter therefore conducted his own investigation at other public archives in order to determine the authenticity of the data. Although the historical materials this chapter used to extract total populations for 1941–1945 partially match those used by Ispov (2001), the figures this chapter presents are different. This is because Ispov (2001) did not make adjustments for places like the Crimean Autonomous Republic (later Oblast), and the author would like to stress that the figures presented in this chapter are correct as population figures for the territory of the present Russian Federation excluding regions that were under occupation. This chapter identified the numbers of births, deaths, and infant deaths for World War II (1941–1945) period. While Ispov (2001) produced only two- to three-year time series; for this chapter, the author was able to provide figures for every year. However, because data is lacking for many regions for this period, it is impossible to use the statistics as is. In addition, the crude death rate for regions for which data could be obtained would undoubtedly have been lower than it was for regions for which data is lacking (e.g. regions that were under occupation). So the key problem is the unusually high death rate that one would expect to see in these regions for which data was lacking. In fact, unless the natural rate of increase is a negative figure whose absolute value is larger than the figure obtained here, it is impossible to explain the decline in total population during World War II. The infant mortality rate jumps in 1943, and archived historical materials support this (Fig. 3.3a). Whether or not this reflects reality cannot be determined from the historical materials obtained. If the infant mortality rates for World War II are eliminated, it is possible to discern a major trend (Fig. 3.3b). The numbers of births, deaths, and infant deaths for 1946–1949 and the numbers of infant deaths for 1951–1952, 1955–1957, and 1959 differ from those in the historical materials used by Andreev et  al. (1998). 44  Although the author was able to obtain dynamic statistics for 1927–1938 and dynamic and population statistics for 1942–1945 from the Russian State Economic Archive, data was lacking for some regions for every one of the years. (See the notes to Table 3.1.)

94 

K. KUMO

Unfortunately, however, there is no way of ascertaining the causes of these not insignificant differences because the historical materials for 1946– 1955 used by Andreev et  al. (1998) remain classified.45 The author did manage to find, however, dynamic statistics for 1946–1955 by examining declassified historical materials. With regard to this period, it is worth mentioning that the author obtained the population at the beginning of 1946 and the population on February 1, 1947 from archived historical materials but experienced huge difficulties when trying to compare them with the 1950 population as presented in official statistics.46 This chapter therefore used the number of births and deaths to go back and extrapolate populations for 1946–1949 from the population in 1950. Finally, the dynamics of modern Russia are well known (Shimchera 2006; Vishnevskii 2006). The rise in the crude death rate since 1991 is particularly striking. In imperial Russia, the crude death rate climbed most noticeably in 1891, during which there was a large-scale famine, while the periods in which the crude death rate jumped during the Soviet-era periods for which the author was able to obtain data were 1933–1934, also a time of severe famine, and World War II period. That the population dynamics seen in the present Russian Federation since 1991 are unusual is clear for all to see.

3.6   Challenges Remaining In this chapter, the author began with a review of the systems that have been used to compile population statistics in Russia from the imperial era, through the Soviet era, and into the modern Russian era. Next,  At the time of writing in October 2007, the historical materials they used are archived as “RGAE, Fond 1562, Opis 33 s, Delo 2638”. The “s” following the Opis series number stands for sekretno, which means “classified”, and it is unclear how they were able to access them. The author was refused such access. 46  According to RGAE, F. 1562, O. 20, D. 626, L. 2–3 (1946) and RGAE, F. 1562, O. 20, D. 684 (1947), the population was 90,295,000 at the beginning of 1946 and 94,661,000 on February 1, 1947. However, compared with the 1950 population of 101,438,000, these figures are too small. Moreover, the difference between the figures for 1946 and 1947 is too large. Between 1946 and 1949, increases/decreases due to inter-Union republican and international migration were tiny, so the author decided that one could not rely on the total population figures for these years. Note also that the author was unable to find out the total population in 1948–1949 using archived historical materials. (The Delo list in the Soviet Union’s Central Statistical Board’s Opisi 20 series of population statistics did not contain any population statistics.) 45

3 POPULATION 

95

using primary sources, the author went on to estimate and present a time series of the imperial Russian population of the territory covered by the present Russian Federation by adjusting population statistics for imperial Russia to match this territory. This chapter then did the same for the Soviet and post-Soviet era, basing its figures on as many primary sources as the author could obtain. The aim was to build a foundation for viewing in an integrated way the populations of imperial, Soviet, and post-Soviet Russia. However, many of the problems one faced could not be solved, and the author has had to set them aside as requiring further investigation. 3.6.1  Reliability of Imperial-Era Data and Estimates for Non-­ European Regions of Russia It is probably inevitable that the accuracy of data from the imperial era will be doubted. Nevertheless, a time series for European Russia that meets certain standards can still be put together, and it is sometimes possible to compare estimates based on dynamic statistics with the figures for total population included in official statistics. A major problem one faces is obtaining, and judging the reliability of, data on regions outside European Russia such as the Caucasus, Siberia, and the Far East. As mentioned earlier, it is almost impossible to get dynamic statistics or total populations for regions outside European Russia in the nineteenth century. From the historical materials examined, the author was able to obtain total populations and dynamics for 1856, total populations for 1858, and total populations for 1885, but their accuracy is open to question.47 The methods used to prepare population statistics in imperial Russia described in Sect. 3.3 of this chapter were also applied to non-­ European Russia. However, no information, except for some data for 1856, on dynamics in the regions outside European Russia was published. Therefore, to produce the long-term time series of the population for this chapter, the author accepted the statistics for the European part of imperial Russia at face value, though they do need to be re-examined. It will also be necessary to try to find other usable statistics. 47  In this chapter, the author did not use the statistics for 1856 and 1858. This was because population statistics for these two years relied entirely on data from the household census, and the Ministry of the Interior’s Central Statistical Committee noted that they were incomplete (MVD RI 1858, 1863).

96 

K. KUMO

3.6.2  Scrutiny of Historical Materials for 1910s–1930s in the Official Archives and Re-examination of Statistics Given the tragedies of the revolution, civil war, incursions by foreign powers, war communism, and famine, it would not be odd to observe a marked decline in population from the end of the 1910s to the early 1920s. This is indeed the case. In the last years of the imperial era and at the beginning of the Soviet era, the population dropped sharply, probably because of factors such as the large number of people who fled the country during the revolution and ensuing civil war. As far as the author can tell from the investigations made for this chapter, there is no data at all for the period from the revolution to the first half of the 1920s. The same can be said for the 1930s. Between 1930 and 1933, the collectivization of agriculture led to a decline in crop yields, and this resulted in famine. Yet, it is widely known that crops continued to be exported from regions such as the Ukraine despite the fact that people at home were starving (Rosefielde 1983). In addition, it has been pointed out that the Great Purge, which reached its peak in 1936–1938, claimed several million victims (Rosefielde 1983; Wheatcroft 1984).48 This presents the problem of whether to trust dynamic statistics that do not show anything unusual other than the marked increase in the crude death rate between 1933 and 1934, even if these statistics have been stored in the official archives yet not made public. Andreev et al. (1998) raised clear objections to this and made their own estimates. Any large change in dynamics can easily be seen years later in the distorted population pyramids it leads to, so the author recognizes the need for a re-examination. 3.6.3  Surveys of Statistics for During and Immediately After World War II World War I and World War II turned Russia into a battlefield, and it is hardly surprising that statistics are lacking for regions that were under occupation. The archived historical materials the author found enabled one to identify the regions for which data is lacking. However, even the figures for regions for which data can be obtained are severely lacking in 48  According to documents discovered by Zemskov (2000) in the Russian State Historical Archive, between 700,000 and 1,300,000 people were sent to labour camps each year between 1935 and 1940. (Note, however, that the author has not examined these documents.)

3 POPULATION 

97

credibility.49 Statistics for just the regions for which data for 1942–1944 can be obtained show a negative rate of natural increase was indeed negative, but the annual rate of decline is less than 1 per cent. These statistics therefore do not reflect the true population dynamics of World War II period, which show up clearly in the distorted age distribution derived from the 1959 census. Further investigations and estimates are therefore required. It would obviously be unrealistic to expect a high level of accuracy from statistics for post-revolutionary period, World War II, and the period just after World War II, times when the country was in turmoil. However, one also needs to be careful not to immediately deny the usefulness of such statistics and reject them out of hand. This is because if one demands precision, usable statistics for the early years of the Soviet Union are extremely scarce. The author thinks that it is therefore better to obtain whatever statistics are available and use them to get an idea of overall trends. As described in this chapter, demographic history of Russia had faced with extreme fluctuation. If one looks as the trends from the late imperial era to the early Soviet period, it is easy to grasp that huge turmoil caused by the Russian Revolution, Great Purges, and World War II affected the dynamics of Russian demography deeply. Data mining and processing presented in this chapter were enabled, thanks to the fact that governmental archive materials became accessible after the collapse of the Soviet Union. Mining and consolidation of formerly closed data were, however, still under progress and it is difficult to take analytical approaches yet at a national level. After the dissolution of the Soviet Union, Russian demographics suffered from huge changes again. They were already indicated in Table 3.1 and Fig. 3.1 in this chapter: but more specifically, decline of total population was observed because of rapid decrease in fertility and increase in mortality. Modern demographic analysis in Russia became widely possible after the collapse of the Soviet Union and the birth of modern Russia. The backgrounds of this are, first, the fact that household-level and individual-­ level micro-survey data became accessible in these years, and second, the 49  During World War II, the eastern front shifted frequently, and TsSU SSSR (1942), which presents population statistics for the first day of every month in 1942, shows that the occupied regions for which data was lacking changed from month to month.

98 

K. KUMO

fact that more internal and formerly closed materials of the governmental statistical organization became usable for researchers. The usable data for the demographic trends in the Soviet Union and that for modern Russia differ much from each other; therefore, the approaches to be taken should be different ones as well. The demographic trend at the current time is, however, a mirror of the phenomenon of the past. Without any relation with the break or the gap in the analytical approaches taken, the trends in the past remain and affect the demographic dynamics of modern Russia.

Appendix: Time Series of Alternative Estimates of the Total Population of the Territory Covered by the Present Russian Federation in the Imperial Era As the author said in the main text, it possible to produce a time series for the population of European Russia that meets certain standards, with the problem being the populations of regions outside European Russia such as the Caucasus, Siberia, and the Far East. Here the author makes alternative estimates based on the statistics for European Russia during the imperial era. (1) The populations of each province during the imperial era can be obtained as (a) actual data only for certain years, namely 1867, 1870, 1883, 1885, 1886, and 1891 and after. In addition, because data on births and deaths for each province exists for every year from 1867, it is possible to extrapolate (b) estimated populations for the other years by subtracting figures for natural increase from the populations in 1916. Furthermore, it is possible to adjust the actual data for the years mentioned above to the area of the European part of the present Russian Federation. The population of the present territory of European Russia was between 60 and 63.5 per cent of the population of imperial European Russia, but the trend was for this percentage to decline. For the other years, meanwhile, only the total population (not the population of each province) of Imperial European Russia could be obtained. For these total populations, the author adopted a (c) procedure whereby the author focused on years for which it was possible to make adjustments for area and applied, with some leeway, the ratio

3 POPULATION 

99

of the total population of the present territory of European Russia and the total population of imperial European Russia and calculated means for years for which both total and by-province populations were available. The author used this procedure to calculate the total population of the territory covered by modern European Russia. (2) The populations of the non-European territory of the present Russian Federation in the imperial era were obtained from (a’) actual data for 1885 and 1904 and after. Although statistics do not exist for other years, it is possible to produce a (b’) time series for cases where the rate of increase was exactly the same as that of imperial European Russia. The total population of this territory as a proportion of the total population of the territory of modern European Russia increased continuously from 1885, when it was 18.3 per cent, to 1916, when it was 26.9 per cent. Here, (c’) for 1885 and earlier, the author fixed the total population of this territory as a proportion of the territory of modern European Russia at 18 per cent, steadily increased this percentage for the years that followed, and then applied actual percentages once again to 1904 and after, in order to calculate hypothetical populations for the non-­European parts of the present Russian Federation. In doing this, the author calculated the base total populations of European Russia using both (b) and (c). Next, the author puts the above figures together to present a time series for the total population of the territory covered by the present Russian Federation. The results are shown in Fig.  3.4 alongside the estimated (main) time series from the main text, and one can see that the two series are similar. This is because both series are based on dynamic statistics for imperial European Russia, and because during the imperial era, the total population of the non-European part of the present Russian Federation as a proportion of the total population of the territory of the present Russian Federation was always less than 23 per cent. However, neither method accurately takes into account the population dynamics of non-European part of the present Russian Federation. If it were possible to use time series for indicators such as grain yields, it would obviously be better to use such figures. Again, though, the problem is whether such data could be obtained.

100 

K. KUMO

People 110000000

100000000

90000000

80000000

70000000

60000000

50000000

40000000 1867

1871

Actual data (a) + (a’)

1875

1879

1883

1887

Natural increase (b) + (b’)

1891

1895

1899

Population ratio (b) + (c’)

1903

1907

1911

Population ratio (c) + (c’)

1915 Main

Fig. 3.4  Comparison of substitute time series of estimates of the total population of the territory covered by modern Russia

References Anderson, B.A. and SIlver, B.D. (1985). Demographic Analysis and Population Catastrophes in the USSR. Slavic Review, 44(3), 517–536. Andreev, E.M., Darskii, L.E. and Kharkova, T.L. (1993). Naselenie sovetskogo soiuza: 1922–1991. Moskva: Nauka. Andreev, E.M., Darskii, L.E. and Kharkova, T.L. (1998). Demograficheskaia istoriia Rossii: 1927–1959. Moskva: Informatika. Clem, R.S. (1986). Research Guide to the Russian and Soviet Censuses. Ithaca and London: Cornell University Press. Coale, A.J., Anderson, B.A. and Harm, E. (1979). Human Fertility in Russia since the Nineteenth Century. Princeton: Princeton University Press. Den, V.E.(1902). Naselenie Rossii po piatoi revizii, Moskva: Universitetskaia tipografiia. Falkus, M.E. (1972). The Industrialization of Russia 1700–1914, Economic History Society. London: Macmillan.

3 POPULATION 

101

Goskomstat Rossii (1996). Rossiiskaia gosudarstvennaia statistika 1802–1996. Moskva: IzdatTsentr. Goskomstat Rossii (1998). Naselenie rossii za 100 let (1897–1997). Moskva: Goskomstat Rossii. Goskomstat Rossii (2001). Rossiiskii statisticheskii ezhegodnik 2001. Moskva: Goskomstat Rossii. Gozulov, A.I. and Grigoriants, M.G. (1969). Narodonaselenie SSSR. Moskva: Statistika. Heer, D.M. (1968). The Demographic Transition in the Russian Empire and the Soviet Union. Journal of Social History, 1(3), 193–240. Herman, E. (1982). Forwards for The Serf Population in Russia: According to the 10th National Census, by A. Troinitskii (originally published in 1861) (pp.iii-­ xxiii). Newtonville: Oriental Research Partners. Ispov, V.A. (2001). Demograficheskie protsesi v tilovikh raionakh rossii. In Poliakov, Yu.A. and V.B.  Zhiromskaia (Eds.), Naselenie rossii v XX veke: istoricheskie ocherki t. 1 (glava VI, pp. 82–105). Moskva: ROSSPEN. Kabuzan, V.M. (1963). Narodonaselenie rossii v XVIII-pervoi polovine XIX v. (po materialam revizii). Moskva: Izdatelstvo akademii nauk SSSR. Kabuzan, V.M. (1971). Izmeneniia v razmeshenii naseleniia rossii v XVIII-pervoi polovine XIX v. (po materialam revizii). Moskva: Nauka. Kluchevsky, V.O. (1918). A History of Russia, vol. IV, translated by Hogarth, C. J., 1931. London: Dent & Sons. Koeppen, P. (1847). Unber die Vertheilung der Bewohner Russlands nach Standen in den verschiedenen Provinzen. Aus den Memoires de l’Academie Imperiale des sciences de St.-Petersbourg, VI Serie, sciences politiques etc. tome VII, besonders abgedruckt (pp. 401–429). St. Petersburg. Kumo, K (2003). Migration and Regional Development in the Soviet Union and Russia: A Geographical Approach. Moscow: Beck Publishers Russia. Leasure, S.W. and Lewis, R.A. (1966). Population Changes in Russia and the USSR: A Set of Comparable Territorial Units, Social Science Monograph Series vol. 1, no. 2. San Diego: San Diego State Collage Press. Lorimer, F. (1946). The Population of the Soviet Union: History and Prospects. Geneva: League of Nations. Matthews, M. (1993). The Passport Society: Controlling Movement in Russia and the USSR. Oxford: Westview Press. Ministerstvo vnutrennikh del Rossiiskoi Imperii (MVD RI) (1858). Statisticheskii tablitsy Rossiiskoi Imperii vip. perviii, nalichnoe naselenie imperiia za 1856 god. Sankt-Petersburg. Ministerstvo vnutrennikh del Rossiiskoi Imperii (MVD RI) (1863). Statisticheskii tablitsy Rossiiskoi Imperii vip. vtoroi, nalichnoe naselenie imperiia za 1858 god. Sankt-Petersburg.

102 

K. KUMO

Ministerstvo vnutrennikh del Rossiiskoi Imperii (MVD RI) (1866). Statisticheskii vremmennik Rossiiskoi Imperii tom 1. Sankt-Petersburg. Ministerstvo vnutrennikh del Rossiiskoi Imperii (MVD RI) (1890). Statistika Rossiiskoi Imperii, XII, Dvizhenie naseleniia v evroepiskoi Rossii za 1886g. Sankt-Petersburg. Otchet o sostoianii Iaroslavskoi gubernii za 1864 g. TsGIA (Tsentralnii gosudarstvennii istoricheskii arkhiv), Fond 1281, Opis 7, Delo 48. Otchet o sostoianii Sankt-peterburkskoi gubernii za 1864 g. TsGIA, Fond 1281, Opis 7, Delo 27. Podiachikh, P.G. (1961). Naselenie SSSR. Moskva, Gosudarstvennoe izdatel’stvo politicheskoi literaturi. Poletaev, V.E. and Polskii, M.P. (1992). Vsesoyuznaia perepis’ naseleniia 1939 goda: Osnovnie itogi, Rossiiskaia akademiia nauk, Nauchnii sovet po ­istoricheskoi geografii, Institut possiiskoi istorii, Upravlenie statistiki naseleniia Goskomstata. Moskva: Nauka. Poliakov, Yu.A. and Zhiromskaia, V.B. eds. (2000, 2001). Naselenie rossii v XX veke: istoricheskie ocherki v 3-kh t. Moskva: ROSSPEN. Poliakov, Yu.A., Zhiromskaia, V.B., Tiurina, E.A. and Vodarskii, Ia.E. eds. (2007). Vsesoiuznaia perepis naseleniia 1937 goda: obshie itogi, Sbornik dokumentov i meterialov. Moskva: ROSSPEN. Polnoe sobranie zakonov Rossiiskoi Imperii, sobranie 2 (1825–1881). Sankt-Petersburg. Popov, P.I. (1988). Gosudarstvennaia statistika i V.  I. Lenin. Vestnik statistiki, (7), 48–54. Rashin, A.G. (1956). Naselenie Rossii za 100 let. Moskva: Gosudarstvennoe Statiskichekoe Izdatelstvo. Rosefielde, S. (1983). Excess Mortality in the Soviet Union: A Reconsideration of the Demographic Consequences of Forced Industrialization 1929–1949. Soviet Studies, 35(3), 385–409. Shimchera, V.M. (2006). Razvitie ekonomiki Rossii za 100 let: istoricheskie riadi. Moskva: Nauka. Sulkevich, S.I. (1940). Territoriia i naselenie SSSR, Politizdat pri TsK VKP, Moscow. Troinitskii, A. (1861). The Serf Population in Russia: According to the 10th National Census, translated by Herman, E., 1982. Newtonville, Oriental Research Partners. Tsentralnii statisticheskii komitet MVD (1905–1911). Ezhegodnik Rossii, 1905, v …, 1911. Sankt-Petersburg. Tsentralnii statisticheskii komitet MVD (1912–1918). Statisticheskii ezhegodnik Rossii, 1912, …, 1916, 1918. Sankt-Petersburg. Tsentralnoe Statisticheskoe Upravlenie (TsSU) RSFSR (1928). Estestvennoe dvizhenie naseleniia RSFSR za 1926 g. Moskva: TsSU.

3 POPULATION 

103

TsSU SSSR (1928a). Estestvennoe dvizhenie naseleniia soiuza ssr 1923–1925. Moskva: TsSU. TsSU SSSR (1928b). Estestvennoe dvizhenie naseleniia soiuza ssr v 1926 g. Moskva: TsSU. TsSU SSSR (1937). Dannie TsUNKhU o perepisi naseleniia a 1937 god (formi NN11, 12, 12-a I 17), RGAE (Rossiiskii gosudarstvennii arkhiv ekonomiki), Fond 1562, Opis 329, Delo 144. TsSU SSSR (1941). Sbornik tablitsi naselenie SSSR po perepisi 1897 goda v granitsakh na 1 ianvaria 1941 goda, RGAE, Fond 1562, Opis 20, Delo 190. TsSU SSSR (1942). Otchetnost’ statisticheskikh upravnenii soiuznikh respublik po ischisleniiu naseleniia 1941–1942 gg. Tom II, RGAE, Fond 1562, Opis 20, Delo 322. Valentei, D.I. (Eds.) (1985). Demograficheskii entsiklopedicheskii slovar. Moskva: Sovetskaia entsiklopediia. Vishnevskii, A.G. (Eds.) (2006). Demograficheskaia modernizatsiia rossii 1900– 2000. Moskva: Novoe izdatel’stvo. Vodarskii, Ia.E. (1973). Naselenie rossii za 400 let (XVI-nachalo XX vv.). Moskva: Prosveshenie. Wheatcroft, S.G. (1984). A Note on Steven Rosefielde’s Calculations of Excess Mortality in the USSR: 1929–1949. Soviet Studies, 36(2), 277–281. Wheatcroft, S.G. (1990). More Light on the Scale of Repression and Excess Mortality in the Soviet Union in the 1930s. Soviet Studies, 42(2), 355–367. Yamaguchi, A. (2003). Foundation of Russian Governmental Statistical Systems, Chiba: Azusa-Shuppan (in Japanese). Zemskov, V.N. (2000). Massovie repressii: zaklyuchennie, Naselenie rossii v XX veke: istoricheskie ocherki t.1. In Poliakov, Yu.A. and Zhiromskaia, V.B. (Eds.), (pp. 311–330). Moskva: ROSSPEN. Zhiromskaia, V.B. (2000). Demograficheskaia istoriia rossii v 1930-e godi. Moskva: ROSSPEN.

CHAPTER 4

Labor Yoshisada Shida, Kazuhiro Kumo, and Yasushi Nakamura

4.1   Introduction Labor statistics at the macroeconomic level has a short history, compared with other macroeconomic statistics. Even if labor statistics covering an entire country are available, they are often difficult to be compared with each other because the labor statistics of each country have distinctive features reflecting the employment and work practices specific to the country and the period concerned (Bairoch 1968). Progress is being made with international standardization, particularly through the International Labour Organization (ILO), but the labor statistics of each country are often still strongly influenced by unique factors of the country. Y. Shida Research Division, The Economic Research Institute for Northeast Asia, Niigata, Japan e-mail: [email protected] K. Kumo Institute of Economic Research, Hitotsubashi University, Kunitachi, Tokyo, Japan e-mail: [email protected] Y. Nakamura (*) Graduate School of International Social Sciences, Yokohama National University, Yokohama, Japan e-mail: [email protected] © The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5_4

105

106 

Y. SHIDA ET AL.

For Russia, large changes in statistical systems, concepts and methodologies, and data availability from era to era compounded the general problems of labor statistics. During the Imperial period, there was neither an institution for making nation-wide labor statistics nor labor statistics data covering the entire economy, although industrial statistics and Zemstvo (local commune) statistics included some fragmented data related to labor and employment. After the Emancipation reform of 1861, the modernization and industrialization had progressed; the formation of free labor market increased the importance of labor statistics. In the 1890s, industrial surveys began to be executed and labor statistics started to be systematically produced. The 1897 population census provided for the first time the statistical data such as figures of employed persons covering the entire territory of Imperial Russia (Fig.  4.1), although it is difficult to make the data of 1897 population census comparable with labor statistics data of the Soviet and the present Russia periods (see the note of Fig. 4.1).1 During the Soviet period, methodologies of labor statistics which were suited to the socialist ideology and the planned economy were developed and labor statistics were produced by a statistical system unique to the Soviet Russia. The Soviet labor statistics methodology and system had the following features: First, the concept of unemployment did not exist after the official declaration of the eradication of unemployment in 1933 (Gladkov 1977, pp.  491–497).2 Second, the focus of labor statistics was to quantify the available supply of labor force, that is, labor resource fund,  because the Soviet government needed to administratively allocate the labor force. Third, the Soviet government intentionally decreased the availability of labor statistics. Otsu (1988, p. 351) wrote that labor statistics were regarded as “military secrets” during the Soviet period. The low availability of labor statistics makes it difficult to compare labor dynamics in the Soviet Russia with those of the Imperial and present Russia and of other countries 1  G. Kessler, A. Markevich, and others are working on recompiling the population census data of the Imperial, Soviet, and modern Russia. As of October 23, 2017, the results in the labor sphere more detailed than Fig. 4.1 is not published yet (https://ristat.org). 2  A report on the 1931 annual economic plan issued in October 1930 indicated that 1.3 million workers would be in short in the industry in 1931 (Otsu 1988, pp. viii–xi). In January 1933, a party-government conference held for preparation of the second FYP officially announced that the eradication of unemployment was one of the two major results of the first FYP.

4 LABOR 

107

1926

1897

0%

20%

40%

60%

1926

80%

100%

8,224

1897

2,868 0

2000

4000

6000

8000

10000

thousand persons

Agriculture, forestry, and fishing

Mining and manufacturing

Construction Transport and communication Other

Trade, finance, etc. Services

Fig. 4.1  Employment structure in 1897 and 1926. Notes: (1) 1897: Based on the first population census of imperial Russia, which was performed in 1897. Poland is not included, but Russians in Finland, Bukhara, and Khiva are included (40,600 people). Mining and manufacturing include gas, water, electricity, and cleaning in addition to ore extraction, but do not include coal and gold mining. Services refer to services provided by companies and organizations, including communication and military service, and include bankers, soldiers, clergymen, and day laborers. Trade and finance include breweries and distilleries. Most people working for family businesses, particularly the approximately 71 million people working on family farms, are not included. (2) 1926: Based on the 1926 population census of the Soviet Union. Unemployed persons, the approximately 1.13 million child laborers younger than 10 years old, and the approximately 800,000 workers for whom the employer was unknown are not included. Agriculture includes handicraft workers, and mining and manufacturing include construction-­related handicraft workers. Sources: Bairoch (1968, pp.  119, 211–219) and Troitskii (1906, pp. vii–xx)

108 

Y. SHIDA ET AL.

(Treml and Hardt eds. 1972, pp. 195–228, 287–314; Mochizuki 1974). The available published sources of Soviet labor statistics are limited. Other than reports of the population censuses, the statistical yearbooks of the Soviet Union and the Russian Soviet Federative Socialist Republic (RSFSR) nearly regularly published, and the collections of labor statistics for the Soviet Union and for the RSFSR irregularly published are virtually all statistical sources available for both Soviet and non-Soviet observers.3 These sources, however, did not report even the basic labor statistics such as the participation ratio and the population structure by age. The numbers of persons employed in certain industries or by certain companies were hardly ever revealed, not only in the published statistical books but also in journals and newspapers. Moreover, the published data also were often intentionally obscured. In some cases, only the total or the average figures were provided without giving breakdowns; in other cases, data were only partially disclosed without giving their total or the average.4 After the beginning of the transition to a market economy, Russia has been working on establishing a labor statistics system in accordance with the ILO standard. It, nevertheless, takes time to establish an entirely new nation-wide statistical system. Moreover, the labor statistics system of new Russia has a number of ­elements specific to Russia. Chapter 4 aims to construct the long-term series of labor statistics going back to the Soviet period and being based on the labor statistics methodology of new Russia. It is difficult to include the Imperial period for complete lack of macroeconomic labor data of the period. Section 4.2 briefly describes the historical development of the labor statistics system from the Soviet period to the present. Section 4.3 discusses the differences in the methodologies and concepts of the Soviet and new-Russian labor statistics. Section 4.4 explains the compilation method of the time series and briefly discusses its results.

3  The population census for the entire USSR was performed in 1920, 1926, 1937, 1939, 1959, 1970, 1979, and 1989 (see Chap. 3). 4  One good thing is that indicators related to labor and employment are measured in physical units. Seliunin and Khanin (1987) assert that the bias problem of overestimation and inflation was small in the labor statistics, while values in money statistics such as national income and output values were highly unreliable because of the bias problem.

4 LABOR 

109

4.2   Historical Development of Labor Statistics5 The Soviet labor statistics system began to operate as the statistics department of the Russian Republic People’s Commissariat of Labor (Narodnyi komissariat truda), which was equivalent to the ministry of labor, was established after the Russian revolution of 1917.6 Then, the People’s Commissariat of Labor’s statistics department began to publish a journal Labor Statistics in 1918. Around the same time, the All-Union Central Council of Trade Unions and the Supreme Soviet of the National Economy established their statistical departments. The Labor Statistics Council was organized to coordinate operations of the three statistical departments and played the leading role in the production of labor statistics. The directive on “state statistics” issued by the Council of People’s Commissars on July 25, 1918 ordered to establish the Central Statistical Administration (Tsentral’noe statisticheskoe upravlenie, TsSU) including its labor statistics department. Then, the People’s Commissariat of Labor, the All-Union Central Council of Trade Unions, and TsSU organized Central Labor Statistics Bureau (Tsentral’nyi biuro statistiki truda) in 1930 that played the leading role in making of the labor statistics. After the transformation of the People’s Commissariat of Labor into the State Committee of the problems of labor and wage in the 1933 government restructuring, TsSU assumed all services of labor statistics. After that, the structure that a single centralized organization, TsSU or Goskomstat, executes all labor statistics services continued more or less unchanged until the end of the Soviet Union. The first notable product of the Soviet labor statistics was the all-Russia industry census in 1918. The census results included the numbers of workers and employees by industry sector, age group, gender, and wage level. The reporting forms were standardized from the 1919 industry census, and the industrial survey had been conducted regularly since 1920. In 1920, the first population census was conducted; the census gave statistical information on workers and employees of all economic sectors in the 5  Goskomstat Rossii (1996a) provides a summary of changes in the Russian state statistics system from  the  imperial era to  today. The  website of  the  Russian Federal State Statistics Service (Rosstat) also explains the development of state statistics system from 1811 to 2011: http://www.gks.ru/free_doc/new_site/rosstat/smi/stat_2012-10-10.pdf. 6  See the State Archive of the Russian Federation (GARF), Research Guide, Vol. 2, Collections of the State (Russian Soviet Federative Socialist Republic People’s Commissariat of Labor, 1917–1933) and organizations under its jurisdiction, http://guides.rusarchives. ru/guides/5/9/fondy-garf-po-istorii-rsfsr-putevoditel-tom-2-1996; http://guides.rusarchives.ru/node/1068.

110 

Y. SHIDA ET AL.

whole Soviet Union for the first time. It should be noted, however, that the geographical areas the census covered was the territory under the control of Bolsheviks as of 1920 (see Chap. 3). The 1926 population census covered all territory of the Soviet Union comparable to that at the beginning of World War II. In 1938, when the third five-year plan (FYP) started and the Soviet economic administration system was more or less consolidated, the regular industry census was abolished because the enterprises’ operating reports included the information on labor and employment that the industry census collected. Since then, the principle information source for the Soviet labor statistics had been operating reports from the enterprises and organizations: the enterprises and organizations were obligated to submit “labor plan execution report” (otchet o vypolnenii plana po trudu) to their upper administrative organizations. The report was prepared in accordance with the “Instruction in the composition of wages fund for workers and employees” and contained such information as the numbers of workers, employees, and other personnel; their gender compositions; the amounts of wages paid, bonuses, and non-wage benefits (allowances, pensions, and so on), and social insurance premiums. The central statistical office also used results of surveys and inspections such as wage inspection (the so-called “March wage survey”, every four years), the survey of workers and employees by age and service years (irregular), the survey of workers receiving pension benefits, the survey of workers and employees by job category and wage payment form (every three years), and the survey of labor turnover. The statistical information from those surveys and inspections had, however, only a supplementary role next to the operating reports of enterprises and organizations. It should also be noted that the originals of operating reports and results of surveys and inspections are hardly available then and now. Once the Soviet economy, which had been sarcastically described as the “workers’ paradise”, collapsed and the transition to market economy began, the environment surrounding both workers and workers’ behavior changed drastically. In parallel to the transition to market, the labor statistics system and methodology were also renewed. The Soviet statistical administration was transformed into the Russian Federal State Committee for Statistics (Goskomstat) and then to the Russian Federal State Statistics Service (Rosstat). At present, Rosstat’s labor statistics section is the central organization in charge of labor statistics.

4 LABOR 

111

The principal information source for labor statistics changed from operating reports of the enterprises to the survey of labor and employment issues that corresponds to the labor force survey defined by the ILO.  The results of the survey are published under the titles of “Population survey on employment problems” and “Labor force survey” (since 2016 1Q). According to “Statistical Compendium of Labor and Employment in Russia” (LER 1995, p. 5, 1996, p. 5), the survey covered approximately 600,000 people in the age group of 15–72 (0.55% of the target population) from 1992 to 1994, and it covered around 160,000 people (0.15% of the target population) in 1995. Chernyshev (1997, p. 33) asserted in 1997 that the quality of the Russian labor force survey reached to that of advanced countries. Since January 2017, the scope of the survey has been extended to include the people aged 15 and older; the labor force survey of 2017 1Q covered 770,000 people or 0.66% of the target population. The frequency of the survey was annual in the early days of the transition period, then became quarterly, and is monthly now. Rosstat uses other annual, quarterly, and monthly reports of enterprises and organizations and other statistical surveys as well to make labor statistics (Chernyshev 1997, p.  107). In addition to the publication of “Labor force survey”, Rosstat bi-annually publishes another important material on labor statistics, “Statistical Compendium of Labor and Employment in Russia” (referred as LER in this chapter). This compendium contains data from various censuses and sampling surveys conducted by Rosstat and data from operating materials of the Ministry of Education and Science, the Russian Federal Service for Labor and Employment (Rostrud), the Federal Migration Service, and so on. We may conclude that the Russian labor statistics system has been improved and catching up with the standard labor statistics system after the beginning of the transition to the market.

4.3   Basic Concepts in Labor Statistics The Soviet labor statistics were little available, and their methodology did not conform to the standard approaches. It is difficult to compare Soviet labor statistics data with those of the other economies including present Russia. This section discusses the concepts of the labor statistics, comparing those in the Soviet and new-Russian periods.

112 

Y. SHIDA ET AL.

4.3.1  Soviet Methodology of Labor Statistics The most important indicators of the Soviet labor statistics were the “number of workers and employees” and the “number of collective farmers”. The names of these indicators were sometimes accompanied by explanatory modifiers such as employed (or working) in the national economy (or a sector). The number of workers and employees and the number of collective farmers differs conceptually from the “number of employed persons” or “economically active population (EAP)” defined by the ILO. Hereafter, the term “enrolled workforce” (spisochnyi sostav) is used instead of the terms “number of workers and employees” and “number of collective farmers” for avoiding confusion and for simplicity. The differences in these concepts are discussed in the followings. Heavy dependence on operating reports of the enterprises, collective farms, and various organizations was another characteristic of the Soviet labor statistics. One of the most important tasks of the Soviet labor statistics was to quantify the potential labor force reserves that the government could mobilize further in addition to the labor force already allocated to the economy. It was vital for the Soviet government to know the available workforce reserve because the Soviet government needed to administratively allocate it: In the Soviet economy, labor market did not exist, and incentives to save labor hardly worked. This situation accounted for the reason why the enrolled workforce was the most important indicator of the Soviet labor statistics. The enrolled workforce was assumed to represent the part of the labor force that was already allocated to the economy and that the enterprises and farms were entitled to use. Given that the allocated workforce, that is, the number of enrolled workforce, was known, it was possible to quantify the additional workforce reserve if we know the potential total supply of labor. This logic led to another important concept of the Soviet labor statistics, the labor resource fund. The position of the labor resource fund concept in the Soviet labor statistics was comparable to that of the EAP concept in the standard labor statistics. The concepts of labor resource fund and EAP are, however, different. The enrolled workforce is defined as follows. For industrial enterprises, a person was defined as “enrolled” if the person worked for the enterprise more than the stipulated number of work days. The stipulated number of work day was one day if a person was engaged in core industrial-­productive (promyshlenno-proizvodstvennyi) jobs of the enterprise, and five days if a person was engaged in core but not industrial-productive jobs of the

4 LABOR 

113

enterprises. It was important if a person was an industrial-productive worker because some key performance indicators of the enterprises such as productivity were calculated based on the number of industrial-productive personnel. If the work day requirement was met, the employment status of the person did not matter. Anyone who cleared the requirement was counted in the number of enrolled workforce irrespective of whether the person’s employment contract was on a full-time, a temporary, a part-­ time, a seasonal, or a daily basis. Furthermore, persons who had not worked at the company for a certain period due to illness, leave, business trips, and so on were also included in the number of enrolments, if they cleared the minimum work day requirement and had been paid a part of their wages (Eremina and Marsharova 1979, pp.  38–39). On the other hand, persons who had performed non-core jobs of the enterprise on the one-off basis, who did not receive wages because he or she was on business trips paid by other enterprises, and who were on leaves without wage were not included in the enrolled workforce. In addition, persons who had jobs other than the job in the enterprise were excluded from the enrolled workforce even if they met the work day requirement and they received wages (Nazarov et al. 1981, p. 33). Note that the types of jobs that allowed the employees to hold other jobs were stipulated by law. The number of enrolled workforce was recorded daily, assuming that the number of the enrolled workforce on a holiday was the same as that on the day before the holiday. The sum of the daily numbers of the enrolled workforce for a certain period (e.g. a week, a month, a quarter, or a year) divided by the number of days in the period made the “average number of enrolled workforce”. For the collective farms, the number of the enrolled workforce was defined as head counts of workers of the farm considering the production methods and labor organizations specific to the primary industry; the number of working hours of a worker was irrelevant (Nazarov et al. 1981, p.  37). The enrolled workforce of a farm included “farm helpers” who were mobilized from other sectors to a collective farm. The number of farm helpers was defined as follows: First, the number of days that each farm helper worked for the farm was totaled for all farm helpers who worked for the farm. Second, the total of the work days in “person-day” was divided by the normative number of work days per person (290 days for arable farms, 298  days for livestock farms, and 300  days for state-­ owned farms). The number of the enrolled workforce of a farm was calculated monthly. The monthly figures were summed up for a year and, then,

114 

Y. SHIDA ET AL.

the total was divided by 12 to obtain the annual average number of enrolled workforce of a collective farm. 4.3.2  Labor Resource Fund and Economically Active Population The balance table of labor resources (balans trudovykh resursov) is convenient to show the differences between the concepts of the labor resource fund and the EAP. The balance table indicated the quantities of labor supplies by their sources and its usage at the destination. The table served as a basic framework to compile the Soviet labor statistics and was constructed as a part of the national economic plan. The balance table is still used to make labor statistics in new Russia; the contents of the table are, however, redefined so that the balance table fits to the EAP concept of the standard labor statistics (Goskomstat Rossii 1996b, 2003; Rosstat 2006; Pencheva 2012). This is one example in which a national labor statistics system tends to be influenced by factors specific to the country. Figure 4.2 indicates the conceptual framework of balance table of labor resources used in new Russia; Fig. 4.2 includes the items corresponding to the standard labor statistics methodology such as the EAP and “unemployed”. The Soviet balance table of labor resources appeared like Fig. 4.2; it, however, included neither the EAP nor “unemployed”. The balance table of labor resource in new Russia is structured as follows. The total population is first divided into the population younger and elder than the age limit of the working age. Then, the population elder than the age limit of working age is divided into the EAP (labor force) and economically inactive populations (EIAP) (not in labor force). The EAP consists of the following items: EAP = Population working and in the working age + Population working and receiving pensions + Population working and younger than the working age + Population unemployed and seeking jobs Population working and younger than the working age may exist and may be illegal. The part of the economically inactive population (EIAP) that is in the working age consists of people who are attending school, working as house keepers, and incapable of working. The people in the working age capable of working and unwilling to work are also included

4 LABOR 

A.

115

Population elder than the young-age limitation Supply

Use

EAP1 in the working age3 (Labor force) over the working age

Employed Employee Self-employed worker

(under the working age)3

Household worker Unemployed and seeking for a job4 EIAP2 in the working age (Not in labor force) over the working age B.

Attending school House keeping Incapable of working Others5 Pensioners and others

Population younger than the young-age limitation

A+B Total population

Fig. 4.2  Conceptual framework of labor resources balance. Notes: (1) Economically active population. (2) Economically inactive population. (3) The working age is usually 15–65 years; it, however, can vary country to country. It may be illegal that a person younger than the young-age limitation works. (4) In the Soviet period, the item of unemployed did not exist. (5) A person in the working age who is unemployed and not willing to work is included here. In the Soviet period, soldiers were also included here. Sources: Goskomstat Rossii (1996b), ILO (1990)

in the EIAP (in the item “Others” in Fig. 4.2). The item “Others” includes prisoners as well. The supply (resource) side of the Soviet balance table of labor resources was similar to that of Fig. 4.2. In the use side, the Soviet balance table of labor resource did not have an item of “unemployed”. In the Soviet period, the use side of the balance table was further divided into various categories such as production sectors, types of occupation, and types of ownership of the job place. Note that, by the Soviet definition, the military personnel were included not in the “employed”, but in the “others” those are capable of working and not working. This construction of the Soviet balance table of labor resources implied that military personnel were a part of potential labor resource which the government could mobilize to the national economy.

116 

Y. SHIDA ET AL.

The non-existence of the concept of unemployment means that the Soviet balance table lacked any item which was defined in relation with a person’s will to work. In contrast, the standard labor statistics methodology defines the EAP as the population capable of working and willing to work. The standard methodology classifies a person who is capable of working into the “economically inactive population” if the person is not willing to work. The Soviet labor statistics methodology assumed that everyone was willing to work, and a person who was willing to work could find a job. What is complicated is that persons who might be regarded as unemployed by the ILO definition existed in the Soviet Union, and it was unknown how well the Soviet labor statistics captured those people. Even in the Soviet economy, workers moved from one place to another because of their choices of residence and occupation. Thus, it was certain that some people were in a kind of frictional unemployment at a certain time point. Moreover, it was an economic problem in the Soviet Union that the labor turnover rate was too high (Otsu 1988, Ch. 6).7 New Russia generally follows the standard labor statistics methodology. Goskomstat Rossii (1996b, pp. 46–47) states that the definitions and classifications of the employment status, and the composition of the labor force, and the EAP and EIAP follow the definitions adopted at the International Conference of Labor Statisticians and the provisions of ILO recommendations. ILO defines the EAP as the portion of the population that continuously supplies sufficient labor for the production of goods and services. This ILO concept of EAP is equivalent to the “labor force” ­concept of the OECD (Organisation for Economic Co-operation and Development) that is defined as the portion of the population in the productive (capable of working) age (15–64 years) who are in the labor market (Blyton 1989). There are, however, minor differences reflecting factors specific to Russia. Russia defines the working age as 16–59 years for men and 16–54 years for women. It should be also noted that the “number of employed” in the balance table of labor resource of new Russia is still based on the “annual average number of employed persons”, which is basically equivalent to the Soviet-time concept of the enrolled workforce. The “annual average number of employed persons” is a concept different 7  Nakamura (1992, p. 132) reports that it was usual in East Germany that the old or new employer-enterprise treated the period from the time when a person left the old enterprise to the time when the person started to work for the new enterprise as an official leave from the enterprise. In this way, no unemployment was recorded.

4 LABOR 

117

from the survey-based statistics of “employed persons”. This is another example of the fact that elements specific to a country tend to survive long in the labor statistics. We see some differences in the Russian and standard definitions of concepts related with the concept of employment in more detail in the next sub-section. 4.3.3  Employed and Unemployed in the New-Russian Labor Statistics The definitions of “employed” and “unemployed” in the new Russian labor statistics include some elements specific to Russia, although new Russia basically follows the methodology of the ILO labor statistics. (1) Employed The statistics on employed persons are compiled being mainly based on the labor force survey; operational reports from companies and organizations, data from other surveys, and materials from tax agencies and immigration bureaus are additionally used. The labor force survey was conducted once in a year, at the end of October in 1992–1994, 1997, and 1998, and at the beginning of March in 1996. In 1995, the survey was conducted twice in a year, at the ends of March and October. From 1999 to August 2009, the surveys were performed every quarter. From September 2009, the survey is conducted monthly. An employed person is defined as an adult of 16 years and older or a youth under 16 who is an employee under an employment contract for certain hours, an entrepreneur or sole-proprietor, or a person who works for a family business on an unpaid basis. If a person receives payment for his/her work once during the survey period of one week, then the person is included in employed. A worker on leave (sick leave, annual leave, statutory leave for events such as childbirth) is included in the employed. Following the ILO standard, persons who registered as seeking work at Rostrud or who are receiving unemployment benefits are included also in the employed if they did any kind of work during the period concerned (ILO 1990, pp. 175, 344, 364; Chernyshev 1997, p. 130). Note that the registered unemployed persons performing paid community service arranged by Rostrud and students performing paid farm work in accordance with the policy of their educational institutions are not included in the employed.

118 

Y. SHIDA ET AL.

The length of workhours, “certain hours”, in the definition is related to the classification of the employed workers into the full or partial workhours workers. The Russian concepts of the full and partial workhours are slightly different from the ordinary terms of full- and part-time jobs used in most countries; New Russia rather strictly follows the ILO definition of “under-employment” (ILO 1990, p. 365). The Russian concept of “partial workhours” refers to a situation where an employed person works for fewer hours for unavoidable reasons and, thus, the person’s days worked or hours worked per week are less than the normative length that is legally prescribed. Moreover, the person must be actively seeking for a job or be willing to work for additional workhours if the parson is a partial workhours employed (Goskomstat Rossii 1996b, p. 49). In most countries, it is difficult to define the full-time (normative or standard) workhours for a job to distinguish “full-employment” from “under-employment” by ILO’s definitions. In contrast, Russia had the tradition to define “annual standard workhours” since the Soviet period; the clearly defined normative workhours were necessary to calculate the total planned supply of labor and allocate it to the economic sectors. “Workhours fund statistics”, a variation of the labor resource funds statistics, had been made in the Soviet time and are still made in new Russia. The “annual standard workhours” are used as the criteria for the classification between the full and the partial workhours employed. As noted, new Russia publishes the “annual average number of employed persons” series in addition to the employment series following the standard ILO concept. The “annual average number of employed persons” series are series basically equivalent to the enrolled workforce series of the Soviet time. Hereafter, the term “annual average number of employed (enrolled)” is used to distinguish it from the employment series based on the labor force survey. The annual average number of employed (enrolled) is calculated from monthly average numbers of the enrolled workforce of an enterprise or an organization (LER 2015, pp. 107–108). A person who is in the working age, a person who is able to work and not working, a person who is older than the productive age and working, and a foreign worker can be included in the annual average number of employed (enrolled). Workers who leave their jobs on maternity and child care leaves are not included in the annual average number of employed (enrolled), while workers who leave their jobs on unpaid official leave but still on the enrollment list and seasonal workers who are not working but still on the enrollment list are included in the annual average number of

4 LABOR 

119

employed (enrolled). Soldiers are excluded from the annual average number of employed (enrolled) (LER 2015, pp. 107–108). The two series, the “employed” series based on the labor force survey and the “annual average number of employed (enroll)” series, are different in their definitions. (2) Unemployment Both the statistical agency, Rosstat, and the labor administration agency, Rostrud, officially publish the unemployment series in new Russia. Rosstat’s unemployment statistics are usually used for economic analyses, while Rostrud’s unemployment statistics are not very convenient for economic analyses, mostly because they are basically statistics made from its operating materials. Rosstat defines an unemployed person as a person of 16 years or older who did not have a job, was actively seeking a job, and was willing to work during the period concerned. The unemployed persons are further classified into the persons who did not engage in labor activities, the persons who registered at Rostrud for a job, and the other persons who were certified as unemployed. Rosstat uses the labor force survey to estimate the number of unemployed, while Rostrud uses its operating materials and data on applicants and recipients of unemployment benefits to count the number of registered unemployed persons. In general, there are two main methods to make unemployment statistics: one uses labor force surveys, and the other uses operational and administrative data of unemployment registration. Japan, the USA, and Canada use the former method, and many European countries the latter (Iwai 1992; Ito et al. 1993). Russia officially publishes the two series made by the two methods. We need to be careful about which data are used when the number of unemployed is mentioned for Russia, the survey-based Rosstat figure or the operation materials-based Rostrud figure.

4.4   Long-Term Series of Labor Statistics This section explains the method to construct long-term labor statistics series consistent through the Soviet period to the new Russian period and discusses the results. Note that statistical publications of new Russia such as “Russian Statistical Yearbook” (RSY) show some labor statistics data of the Soviet period. However, these official figures often do not agree with each other. This is because of the following reasons. First, the concepts

120 

Y. SHIDA ET AL.

and methodologies of labor statistics differed in the Soviet and new Russian periods as we discussed. Second, the industry sector classification was changed from the Soviet-type classification to the International Standard Industrial Classification (ISIC) in 2003–2004. This disrupts the consistency of the time series even within the new Russian period. Third, labor statistics have been revised quite often for many reasons even during the new Russian period. The population censuses in 2002 and 2010 and changes in the ILO methodology of labor statistics compilation in 2013 also caused non-minor revisions of the labor statistics (RSY 2016, p. 108). The time series were revised retrospectively, yet partially. Fourth, problems such as that the Chechen Republic was not included in certain periods and the Crimea was added from the certain time point also cause non-negligible inconsistencies. All these make it necessary to employ hypothetical assumptions heavily to link the Soviet and new-Russian series. This section, however, gives priority to compiling historical time series of labor statistics as long as possible, not to the high accuracy of the linked series. 4.4.1  Economically Active Population and Employed Figure 4.3 shows the series of the EAP and the number of employed persons mainly from three sources: CISstat (2015) for 1980 to 2014, Rosstat web site (http://www.gks.ru/) for 1992 and 2000 to 2015, and RSY (2016) for 2000, 2005, and 2010 and after.8 Note that the series differed partially between the sources. The figures shown in Rosstat web site and RSY (2016) match for the years when the figures from two sources are available. According to RSY (2016), its figures are the ones revised based on the 2010 population census. CISstat (2015) seemed to mix the figures before and after the revision based on the 2010 population census. Moreover, the cross checks between the three sources strongly suggested that the number of employed persons that CISstat (2015) reported is probably “the annual average number of employed persons (enrolled)” for the period before 2002. Thus, we do not use the figures of both EAP and employed persons before 2000 in CISstat (2015).

8  RSYs indicate the “main occupation” of a person by sector and sex. Various issues of LER (Statistical Compendiums of Labor and Employment in Russia) also publish the data.

4 LABOR 

121

77,500 75,000 72,500 70,000 67,500 65,000 62,500 60,000 57,500

Employed_web

EAP_RSY (1997; 1999)

Employed_latest

Employed_Adjusted

EAP_CISstat

EAP_latest

Employed_CISstat

Employed_RSY (1997; 1999)

Fig. 4.3  Economically active population and employed persons in Russia, ­1980–2015 (1000 persons). Notes and Sources: (1) Employed_web: The latest figures from the Rosstat website (updated on April 4, 2017); EAP_CISstat and Employed_CISstat: CISstat (2015); EAP_latest and Employed_latest: the latest figures obtained from RSY (2000, 2001, 2006, 2011, 2013, 2016, 2017); ­ Employed_RSY (1997, 1999) and EAP_RSY (1997, 1999): RSY (1997, 1999); Employed_Adjusted: The figures are derived from adjusting CISstat data for ­1980–1991. (2) The figures for 1994–2006 do not include the Chechen Republic. The number of employed persons in Crimea is also not included in the entire period

The EAP and employed persons series by the ILO definition linking the Soviet and new-Russian periods were constructed in the following way: For the years of 1992 and 2000–2015, we can use the EAP and employed persons figures published in RSYs and in Rosstat web site. RSY (1997) and RSY (1999) show the employed persons for the years 1940, 1950, 1960, 1970, 1980, and 1985–1991. The RSYs issued earlier than 2013, however, show the not-latest figures of the EAP and the employed persons for 1992–1999; those figures may not be compatible with the latest figures revised being based on the 2010 population census. Thus, the earlier figures were adjusted in a simple way, which takes into account the differences between the post-revision and pre-revision figures for the years

122 

Y. SHIDA ET AL.

when both post- and pre-revision figures are available. Then, using the growth rates of the old figures, we interpolated the figures. Figure  4.3 shows the result. 4.4.2  Unemployed Persons As discussed in Sect. 4.3.3, there are two different types of unemployment series: the Rostrud series based on the registered number of unemployed and the Rosstat series based on the labor force surveys. Both RSYs (various years) and CISstat (2015) show the Rostrud unemployment series, although RSYs give only the end-of-year figures, while CISstat (2015) gives both start-of-year and end-of-year figures. The mean of the differences between the RSY and CISstat figures is −0.01% of the CISstat (2015) figures in the period from 1992 to 2014 except for −12.7% in 2002 and −5.2% in 2004. We use the CISstat (2015), which covers a longer period, although the causes of the large differences in 2002 and 2004 are completely unknown. Then, the figures corresponding to the survey-­ based unemployment series can be calculated for 1991–2014 because the number of unemployed is defined as the difference in the numbers of EAP and employed persons. For the Soviet period, we assume that the number of unemployed persons was zero. This assumption is questionable as discussed previously; there are, however, no data available so far to estimate the potential unemployment during the Soviet period. Appendix Table 4.1 shows the adjusted numbers of the EAP, employed persons, and registered and total unemployed persons. The series in Appendix Table 4.1 cover the new Russian period and serve as benchmarks to estimate the total employed persons and their breakdown figures by the industrial sector in the Soviet period in Sect. 4.4.3. Appendix Table 4.2 indicates the labor participation ratio, employment ratio, and unemployment ratio obtained from the Rosstat website and RSYs (various issues). 4.4.3  Employed Persons by Industrial Sector We constructed the number of employed persons by sector series consistent with the ISIC classification and the ILO definition. RSYs published in 2007 and after show the number of employed persons by ISIC sector for 2000, 2005, and 2010 and after, while RSYs (various years) show the series of annual average number of employed persons (enrolled) in the 15 Soviet-type sectors for 1970, 1975, 1980, 1985, 1990, and 1995–2015.

4 LABOR 

123

The industry classification was changed from the Soviet classification to the ISIC in 2003 to 2004. Because the differences between these two industry classifications are extensive and the availability of data is limited, it is nearly impossible to link the employment statistics series before and after the change. Moreover, RSY (2014) and the following issues publish the revised new-classification data for 2000, 2005, and 2010 and after. The number of employed persons in 2000 increased by 1.25 million or 15% of the old number for the agriculture, forestry, and fishing sectors of the old classification; decreased by 680,000 (4.1% of the old number) for the mining, manufacturing, electricity, gas, and water sectors; and decreased by 490,000 (5.2% of the old number) for the trade, hotels, and restaurants sectors. The number of employed persons for 2005 increased for agriculture, forestry, and fishing of the old classification by 3.8% of its old number (see Fig. 4.4). The causes for the revision probably included the changes in the ILO labor statistics methodology, the results of the 2010 population census, and other factors; the causes and outcomes of the revision were, however, little explained. CISstat (2015) shows the data on the annual average number of employed persons (enrolled) by 23 sectors for 1980–2014. The CISstat data, however, seem to have a number of problems: First, CISstat (2015) gave no explanation how they compiled the data for the Soviet time. Second, the mining sector, manufacturing sector, and electricity, gas, and water sector are integrated to a single manufacturing sector. Third, the data have many empty entries. Fourth, the sums of the sectoral figures sometimes do not agree with the corresponding totals. Any explanation for these problems is unavailable. Fifth, the CISstat (2015) data do not agree with the average numbers of employed persons (enrolled) in RSYs issued both before and after the introduction of ISIC and before and after the 2013 revision. Again, the explanation for this is unavailable. Table 4.1 shows the RSY series in the old and new industry classifications and the CISstat series for 2000–2004 when these three series overlap. A closer look at the years of 2000–2004 indicates that the period average of the annual average numbers of employed persons (enrolled) in the new industry classification increased by 0.4% of those in the old industry classification. The shares of agriculture and manufacturing increased in the period average by around 1%, and the share of construction decreased by 1%. On the other hand, the sectoral shares of the worker for 2000 are not significantly different between the CISstat (2015) series and the RSY series in the Soviet-type industry classification, despite that the average number of

124 

Y. SHIDA ET AL.

30 CISstat

25.1 24.1 22.6

25

RSY(Old Series) RSY(2016)

20 14.814.5 13.8

14.5 13.3 12.5

10.9

7.0 6.9 6.7

6.5 6.3

Health

Edu.

4.5

Public

Trade

4.5 4.5 4.6

T&C

Cons.

Min&Man.

Agr.

9.9

9.0 9.1 7.17.4

5.25.1

5 0

7.8

7.7

8.6 8.4

Bus.serv.

10

Others

15

Fig. 4.4  Composition of employed persons by economic activity in 2000 (%). Note: Agr.: Agriculture, hunting, forestry, and fishing; Min&Man: Mining and manufacturing; Cons.: Construction; T&C: Transport and communication; Trade: Trade, restaurants, and hotels; Bus. serv.: Finance, real estate, and business services; Public: Public administration; Education: Education; Health: Health, sports, and social security; Others: the residuals. See the text for the sector classification. Sources: CISstat: CISstat (2015); RSY (old series): RSY (2007–2013); RSY (2016, 2017)

enrolled workforce slightly differ between the two series by 190,000 or 0.3% of the total number in the old industry classification in 2000. As expected, the annual average number of the “total” employed persons (enrolled) for 2004 does not differ between the RSY series in both old and new classification, while the sectoral shares differed significantly between them. On the other hand, the sectoral shares of CISstat (2015) differ from those of the RSY series in the new industry classification for 2004 but agree with those of the RSY series in the old industry classification. The CISstat (2015) series of the annual average number of employed persons (enrolled) after 2003 may be confused with the number of employed persons by the ILO definition. It is improbable that CISstat continued to publish the figures in the old industry classification after 2003. From all these, it is difficult to use the CISstat (2015) as they are. We, nevertheless,

7543 (11.4%)

6731 (10.0%)

66,407 (100%)

67,319 (100%)

8607 (13.3%)

64,517 (100%)

7167 (10.8%)

9134 (14.2%)

64,517 (100%)

66,407 (100%)

8609 (13.4%)

64,327 (100%)

15,817 (23.5%)

14,775 (22.2%)

14,301 (21.5%)

14,599 (22.6%)

15,293 (23.7%)

14,543 (22.6%)

4130 (6.1%)

4743 (7.1%)

5216 (7.9%)

4971 (7.7%)

4325 (6.7%)

5002 (7.8%)

Agriculture, Mining and Construction hunting, manufacturing forestry, and fishing

11,313 (16.8%)

11,995 (18.1%)

11,431 (17.2%)

9571 (14.8%)

9754 (15.1%)

9421 (14.6%)

Trade and restaurants

6300 (9.4%)

5293 (8.0%)

5324 (8.0%)

5024 (7.8%)

5056 (7.8%)

5011 (7.8%)

6148 (9.1%)

6125 (9.2%)

7232 (10.9%)

7017 (10.9%)

5979 (9.3%)

7015 (10.9%)

Transport and Education, communication science, and culture

Notes: The figures in the parentheses indicate the component ratios. See the text for the sector classification

Sources: 2005 and earlier editions: RSYs issued before 2006; 2006 and later editions: RSY issued from 2007; CISstat: CISstat (2015)

Year 2004 2005 and earlier editions 2006 and later editions CISstat

Year 2000 2005 and earlier editions 2006 and later editions CISstat

Total

Table 4.1  Employment by economic activity (1000 persons, %)

5725 (8.5%)

4282 (6.4%)

4145 (6.2%)

3667 (5.7%)

3755 (5.8%)

3667 (5.7%)

4865 (7.2%)

4488 (6.8%)

4698 (7.1%)

4508 (7.0%)

4408 (6.8%)

4503 (7.0%)

Public Health, administration sports, and and finance social security

6290 (9.3%)

7163 (10.8%)

6893 (10.4%)

6552 (10.2%)

6813 (10.6%)

6556 (10.2%)

Others

4 LABOR 

125

126 

Y. SHIDA ET AL.

try to extract some useful information from the CISstat (2015) as explained in the following. The time series of employed persons by the ILO employment concept and by ISIC sector were estimated as follows. First, we use the total numbers of employed persons in Appendix Table 4.1 (see Sect. 4.4.1). Second, the sectoral shares of employed persons are estimated for 1980–2015. RSY (2017) gives the sectoral shares in the ISIC industry classification for 2000, 2005, and 2010–2015; the sectoral shares for 2001–2004 are interpolated from these data. CISstat (2015) gives the sectoral shares for ­2006–2009. For 2000 and earlier, the annual changes in the sectoral shares are calculated from CISstat (2015) as well. The numbers of employed parsons by the ILO definition and by ISIC sector are calculated using the total number of employed persons, the calculated shares for 2000, and the calculated changes in the shares for 1999 and earlier. Because of the limited availability of the data, the number of the sectors is reduced to ten: Agriculture, hunting, forestry, and fishing (A–B); Mining, manufacturing, electric power, gas, and water (C–E); Construction (F); Trade and maintenance, hotels and restaurants (G–H); Transport and communication (I); Finance, real estate, and business services (J–K); Government and defense (L); Education (M); Health and social services (N); and Other services (O). The alphabet symbols of A–O represent the ISIC codes. It should be noted that it is impossible to strictly match the Soviet industry classification before 2003 to the ISIC. Thus, the class O, other services, is calculated as the residual. Appendix Table 4.3 shows the results. It is difficult to extend the series of employed persons by ISIC sector to the period before 1980 because of the complete lack of the data. Instead, we estimate the longer series by a Soviet-type industry classification using the data on the annual average number of the enrolled workforce and employed persons (enrolled). Appendix Table 4.4 shows the Soviet official number of the enrolled workforce for 1913–1990. Appendix Table  4.5 also shows the annual average number of employed persons (enrolled) for 1970–2015. Figure  4.5 compares the Soviet enrolled workforce series with the estimated numbers of employed persons and the annual average number of total employed persons (enrolled). The Soviet enrolled workforce series and the annual average number of employed persons (enrolled) show relatively large differences between them in 1970, 1980, and 1990. The differences are 3.33 million (5.5% of the Soviet enrolled workforce figure), 2.82 million (4.0%), and 7.45 million (11.0%) in 1970, 1980, and 1990, respectively. The number of the enrolled workforce was smaller

4 LABOR 

127 (%) 100

80,000

90

70,000

80

60,000

70

50,000

60

40,000

50 40

30,000

30

20,000

20

10,000

10

0

0

A. Enrolled workforce C. Employed persons, annual average A/C (right axis)

B. Employed persons A/B (right axis)

Fig. 4.5  Employed persons and enrolled workforce, 1929–2015 (1000 persons, %). Note: Some missing figures of employed persons (B) after 1950 have been estimated by interpolation. Sources: Appendix Tables 4.1, 4.4–4.6

than the annual average number of employed persons (enrolled) by around 5% after the mid-1970s, excluding the last half of the 1980s. If we look at the sectoral number of employed persons, the differences are not so small: The differences are 0.75 million (6.4%), 0.19 million (1.7%), and 0.42 million (4.4%) in 1970, 1980, and 1990, respectively, for the agriculture sector and 1.0 million (5.0%), 1.07 million (4.7%), and 1.81 million (8.6%), respectively, for the manufacturing sector. Table 4.2 compares the sectoral shares of Soviet enrolled workforce and those of the annual average number of employed persons (enrolled) for 1970, 1980, and 1990. Note that the agriculture sector in the Soviet period is defined as the combined sector of the collective and state farm sectors. Some other sectors are also aggregated to one sector to make both the sectoral classifications comparable. Differences between the sectoral shares calculated from Soviet enrolled workforce and annual average number of employed persons (enrolled) turned out to be relatively small. The share of the manufacturing sector in the total enrolled workforce was

60,679 (100.0%) 70,453 (100.0%) 67,878 (100.0%)

1970

13,269 (20.7%) 11,677 (15.9%) 10,576 (14.0%)

Agriculture, hunting, forestry, fishing

11,752 (19.4%) 10,818 (15.4%) 9545 (14.1%)

5518 (9.1%) 7017 (10.0%) 5788 (8.5%)

Transport

5599 (8.7%) 7086 (9.7%) 5855 (7.8%)

Transport, communication

Agriculture, forestry, collective farmers

Note: The figures in parentheses are component ratios in %

Sources: Soviet data: Appendix Table 4.4; Revised data: RSY (2006, p. 149)

1990

1980

22,218 (34.7%) 24,944 (34.0%) 23,893 (31.7%)

1970

64,006 (100.0%) 73,275 (100.0%) 75,325 (100.0%)

Mining, manufacturing

20,206 (33.3%) 22,745 (32.3%) 20,998 (30.9%)

Mining, manufacturing

Revised Employed data persons, annual average

1990

1980

Enrolled workforce

Soviet data 4407 (7.3%) 5588 (7.9%) 5545 (8.2%)

2877 (4.7%) 3378 (4.8%) 3965 (5.8%)

Health, sports

4828 (7.5%) 6098 (8.3%) 7848 (10.4%)

4914 (7.7%) 6175 (8.4%) 5981 (7.9%)

2935 (4.6%) 3448 (4.7%) 4144 (5.5%)

Construction Trade, Health, restaurants sports, social security

5227 (8.6%) 6708 (9.5%) 7018 (10.3%)

Construction Trade

Table 4.2  Employment by sector in the Soviet period (1000 persons, %)

4212 (6.6%) 5130 (7.0%) 6161 (8.2%)

Education, science, culture

4483 (7.4%) 5530 (7.8%) 6595 (9.7%)

Education, culture

6674 (10.4%) 9126 (12.5%) 10,752 (14.3%)

Others

6209 (10.2%) 8669 (12.3%) 8424 (12.4%)

Others

128  Y. SHIDA ET AL.

4 LABOR 

129

33.3%, 32.3%, and 30.9% in 1970, 1980, and 1990, respectively, while that in the annual average number of total employed persons (enrolled) was 33.1%, 32.5%, and 30.3% in 1970, 1980, and 1990, respectively. The share of the agriculture sector in the total enrolled workforce was 19.4%, 15.4%, and 14.1% in 1970, 1980, and 1990, respectively, while that in the annual average number of total employed persons (enrolled) was 19.5%, 15.0%, and 13.2% in 1970, 1980, and 1990, respectively. Based on the similarity between the sectoral shares calculated from the two series, we assume that the ratio of the total number of Soviet enrolled workforce to the annual average number of total employed persons (enrolled) was applied to all sectors identically. Under this assumption, we estimate the annual average number of employed persons (enrolled) by sector back to 1913 (Appendix Table 4.6). The estimation procedure is as follows. For 2000 to 2015, we use the data of annual average number of employed persons (enrolled) by sector in RSY (2014, 2015, 2016) without any adjustment. For 1970, 1975, and 1980 to 1999, the annual growth rate of the annual average number of employed persons (enrolled) by sector are calculated from the CISstat (2015) and RSYs. From the growth rates and the annual average numbers of employed persons (enrolled) by sector published in RSY (2015, 2016) for 2000, we retrospectively calculate the numbers to 1970. Appendix Table  4.5 contains data for 1970–2015. For the years before 1970, we retrospectively calculate the numbers to 1913, using the annual growth rates calculated from the Soviet official data on the enrolled workforce by sector (Appendix Table 4.4) and the above calculated annual average numbers of employed persons (enrolled) for 1970. Appendix Table 4.7 shows the annual average number of the enrolled workforce by ownership calculated using the result of Appendix Table 4.6 for reference. 4.4.4  Trends in the Labor Force After World War II Figure 4.6 and Appendix Table 4.6 show the estimated average number of employed persons by sector for 1940 to 2015. They indicate that the average number of employed persons increased almost monotonously until the early 1980s, although it grew more slowly in the 1980s than earlier. With the collapse of the Soviet Union, it turned to decrease. It hit the bottom in 1998 when a global financial crisis occurred and, then, turned to increase again. After 1998, it shows an increasing trend, although the

130 

Y. SHIDA ET AL.

80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

Agriculture

Industry

Construction

Trade

Transport

Education

Health

Others

Fig. 4.6  Employed persons by sector in Russia, 1940–2015 (1000 persons). Note: Agriculture includes hunting, forestry, and fishing; Industry includes mining, electricity, gas, water supply; Trade includes repair, hotels, and restaurants; Transport includes storage and communication; Education includes sciences, culture, health, and social security. Source: Appendix Table 4.6

growth is much slower than before 1980 and seems to be decelerating with some minor ups and downs. Concerning the sectoral shares of employment, a noticeable feature is that the agricultural share has been decreasing with an almost linear trend for the entire period. About a half of the total employed persons worked in the agricultural sector in 1940. Then, in 2015, the share of the agricultural sector was less than 10%. The share of the manufacturing sector in the total employment increased from 23% in 1940 to 35% in 1970, then hovered around 35% until 1990. After the collapse of the Soviet Union, it shows a decreasing tendency: The share of the manufacturing sector in the total employment is 19% in 2015. In contrast, the combined share of the hotels and restaurants, health and social work, and other services (including the public sector) sectors increased its share remarkably. The combined share of these three sectors has increased from 14% in 1940 to 47% in 2015. The Russian economy has changed from an agrarian, through an industrial, to a service economy in the period.

4 LABOR 

131

Appendix Appendix Tables 4.1–4.7 are available in http://www.ier.hit-u.ac.jp/ histatdb/projects/view/2.

References Bairoch, P. (Ed.) (1968). The Working Population and its Structure. New  York: Gordon and Beach. Blyton, P. (1989). Working Population and Employment. In Bean, R. (Ed.), International Labour Statistics: A Handbook, Guide, and Recent Trends (pp. 125–143). London: Routledge. Chernyshev, I. (1997). Statistics for Emerging Labor Markets in Transition Economies. London: Macmillan Press. Eremina, N. M. and Marsharova, V. P. (1979). Statistika truda, 3rd ed. Moscow: Statistika. Gladkov, I. A. (Ed.) (1977). Sozdanie fundamenta sotsialisticheskoi ekonomiki v SSSR: 1926–1932 gg, Istoriia sotsialisticheskoi ekonomiki SSSR, Tom 3. Moscow: Nauka. Goskomstat Rossii (1996a). Rossiiskaia gosudarstvennaia statistika 1802–1996. Moscow: Goskomstat Rossii. Goskomstat Rossii (1996b). Metodologicheskie polozheniia po statistike, Vypusk 1. Moscow: Logos. Goskomstat Rossii (2003). Metodologicheskie polozheniia po statistike, Vypusk 4. Moscow: Goskomstat Rossii. International Labor Organization (ILO), (1990). Economically Active Population, Employment, Unemployment and Hours of Work (household surveys), Statistical Sources and Methods, Vol. 3, 2nd ed. Geneva: ILO. Interstate statistical committee of the Commonwealth of Independent States (CISstat), (2015). Official Statistics of the Countries of the Commonwealth of Independent States 2014, CD-ROM. Moscow: CISSTAT. Ito, Y., Iwai, H., and Fukushima, T. (Eds.) (1993). Roudou toukei no kokusai hikaku. Chiba: Azusa Syuppan. Iwai, H. (1992). Roudouryoku, koyou, situgyou toukei no kokusai hikaku. Chiba: Azusa Syuppan. LER (1995). Trud i zaniatost’ v Rossii: statisticheskii sbornik 1995 (Statistical Compendium of Labor and Employment in Russia. 1995). Moscow: Goskomstat Rossii. LER (1996). Trud i zaniatost’ v Rossii: statisticheskii sbornik 1996 (Statistical Compendium of Labor and Employment in Russia. 1996). Moscow: Goskomstat Rossii.

132 

Y. SHIDA ET AL.

LER (2015). Trud i zaniatost’ v Rossii: statisticheskii sbornik 2015 (Statistical Compendium of Labor and Employment in Russia. 2015). Moscow: Rosstat. Mochizuki, K. (1974). Soren no keizai toukei. Tokyo: Institute of Developing Economies. Nakamura, Y. (1992). Keikaku keizai no mikuro bunseki. Tokyo: Nippon Hyoron Sha. Nazarov, M. G., Parteshko, N. S. and Rumiantsev, V. N. (1981). Statistika truda: uchebnoe posobie dlia studentov ekonomichesikh spetsial’nykh vuzov. Moscow: Finansy i statistika. Otsu, S. (1988). Gendai soren no roudou shijyou. Tokyo: Nippon Hyoron Sha. Pencheva, S.  N. (2012). Balans trudovykh resursov: teoreticheskii aspect. Ekonomika APK, 11 (97), 95–99. Rosstat (2006). Metodologicheskie polozheniia po statistike, Vypusk 5. Moscow: Statistika Rossii. RSY (1997). Rossiiskii statisticheskii ezhegodnik 1996 (Russian Statistical Yearbook 1996). Moscow: Goskomstat Rossii. RSY (1999). Rossiiskii statisticheskii ezhegodnik 1998 (Russian Statistical Yearbook 1998). Moscow: Goskomstat Rossii. RSY (2000). Rossiiskii statisticheskii ezhegodnik 2000 (Russian Statistical Yearbook 2000). Moscow: Goskomstat Rossii. RSY (2001). Rossiiskii statisticheskii ezhegodnik 2001 (Russian Statistical Yearbook 2001). Moscow: Goskomstat Rossii. RSY (2006). Rossiiskii statisticheskii ezhegodnik 2005 (Russian Statistical Yearbook 2005). Moscow: Rosstat. RSY (2011). Rossiiskii statisticheskii ezhegodnik 2010 (Russian Statistical Yearbook 2010). Moscow: Rosstat. RSY (2013). Rossiiskii statisticheskii ezhegodnik 2012 (Russian Statistical Yearbook 2012). Moscow: Rosstat. RSY (2014). Rossiiskii statisticheskii ezhegodnik 2013 (Russian Statistical Yearbook 2013). Moscow: Rosstat. RSY (2015). Rossiiskii statisticheskii ezhegodnik 2014 (Russian Statistical Yearbook 2014). Moscow: Rosstat. RSY (2016). Rossiiskii statisticheskii ezhegodnik 2015 (Russian Statistical Yearbook 2015). Moscow: Rosstat. RSY (2017). Rossiiskii statisticheskii ezhegodnik 2016 (Russian Statistical Yearbook 2015). Moscow: Rosstat. Seliunin, V. I. and Khanin, G. I. (1987). Lukavaia tsifra. Novyi mir, (2), 181–201. Treml, V. G. and Hardt, J. P. (Eds.) (1972). Soviet Economic Statistics. Durham: Duke University Press. Troitskii, N. A. (Ed.) (1906). Chislennost’ i sostav rabochikh v Rossii na osnovanii dannykh pervoi vseobshchei perepisi naseleniia Rossiskoi Imperii 1897 g., Tom 1. Moscow: Ministerstvo finansov, torgovli i promyshlennosti.

CHAPTER 5

Agriculture Manabu Suhara

5.1   Introduction Imperial Russia was an overwhelmingly agrarian country in which the ratio of rural population to the total accounted for 82% (Goskomstat SSSR, 1987, p.  373), even in 1913, when industrialization had proceeded to some extent. In the subsequent century, Russia has witnessed various crucial events such as October Revolution, establishment of the Soviet Union, New Economic Policy (NEP), agricultural collectivization, formation of the Stalinist regime, World War II, Khrushchev reforms, Perestroika, and the collapse of the Soviet Union. During this long period, agriculture in Russia underwent a complete transformation, and its rural population ratio had decreased to a mere 26% by 2016 (Rosstat 2017, p. 84). However, Russian agriculture and related problems assumed an essential role in all these historic developments. This chapter clarifies the actual situation of Russian agriculture from a statistical point of view. Section 5.2 below introduces an overview of agricultural statistics in Imperial Russia and presents the results of calculations of agricultural production indices from these data. Sections 5.3 and 5.4 address agricultural M. Suhara (*) College of Economics, Nihon University, Tokyo, Japan e-mail: [email protected] © The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5_5

133

134 

M. SUHARA

statistics for the Russian Soviet Federative Socialist Republic (RSFSR) during the Soviet era. Section 5.3 briefly reflects on Soviet agriculture and considers the significance of agriculture in the economy of the Soviet Union. This is to deepen the understanding of the RSFSR’s agricultural statistics that is introduced in Sect. 5.4. Section 5.4 shows the main agricultural statistics released by the statistical authorities of the RSFSR in organized formats and indicates related issues. Specifically, the first part of Sect. 5.4 presents statistics related to agricultural production in the RSFSR, and the second part provides the problems with official statistics in the Soviet Union and the RSFSR as indicated by scholars particularly from the West. The third part addresses statistics related to the main forms of agricultural operations in the Soviet Union such as kolkhozy (collective farms) and sovkhozy (state farms). The fourth part summarizes agriculture’s labor-related statistics in the RSFSR. Section 5.5 presents an outline of the changes in Russian agriculture and its statistics after the collapse of the Soviet Union.

5.2   Agricultural Statistics in Imperial Russia The trigger for the establishment of official agricultural statistics in Imperial Russia was the Serf Emancipation Decree, which was enacted in 1861 (Kikuchi 1964, p.  97). Specifically, the formation of the “Central Statistical Committee” under the Ministry of Internal Affairs was decided in 1858 in preparation for the emancipation; following this central committee, regional statistical committees controlled by the governor of each province were subsequently established not only throughout European Russia but also throughout the various Provinces of Siberia. The activities of the Central Statistical Committee during this period were far from adequate and consisted mostly of reviewing existing materials. In practical terms, it was from the 1870s that the committee began proper operations; and even later, from 1888, that statistics relating to agriculture came to be released on a regular basis. Specifically in 1888, the Central Statistical Committee published the work “Average Harvest Yields in European Russia, 1883–1887” (Srednii urozhai v evropeiskoi Rossii: za piatiletie, 1883–1887 gg.) as a volume of their bulletin (Tsentral’nyi statisticheskii komitet Ministerstva Vnutrennikh Del 1888, Vol. 4), releasing data such as grain and potato yield quantities and area sown with seed in a retrospective manner. From 1888 onward, the Committee continued to release agricultural statistics for each year in largely the same format as the 1888

5 AGRICULTURE 

135

edition. From these annual collections of statistics, Appendix Tables 5.1 and 5.2 show the yield quantities (gross output quantities) and sown area figures, respectively. The Central Statistical Committee also sporadically released statistics such as yield quantities before 1888, and works by Soviet researchers such as Khromov (1950) and Nifontov (1974) displayed data which may be judged in the same vein as official statistics. Particularly, Appendix Table  5.1 is a collection of data taken from such supplementary sources.1 There are several details to note regarding Appendix Tables 5.1 and 5.2. First, there has been a long dispute inside and outside the Soviet Union regarding the reliability of agricultural data collected by the Central Statistical Committee. It may be said that a rough conclusion was offered by Stephen G. Wheatcroft (1974), according to whom the so-called “Ivantsov correction” (the contention that the Central Statistical Committee data has to be corrected upward by 9% for the crop yield per area sown, by 9% for the area sown, and consequently by 19% for the crop yield quantities [1.09 × 1.09≒1.19]) insisted by the famous Gosplan (State Planning Committee) statistician Strumilin and his followers in the mid-­1920s onward, was basically groundless. Rather, the theory that the crop yield data of the Central Statistical Committee contained some 6% underestimation (argued by Dubenetskii and others of the TsSU (Central Statistical Agency), who were in rivalry with Strumilin and others in the 1920s) was judged to be close to the truth (Wheatcroft 1974). Paul Gregory, who numerically examined agricultural production in the last period of Imperial Russia, accepted the view of Wheatcroft (Gregory 1982, p. 224). It should be thought that figures in Appendix Table 5.1 bear such a degree of underestimation for yield quantities in any event. The British economist Malcom Falkus considered it best to think of statistics, particularly on grain, as “rough estimates” rather than the results of exact calculations (Falkus 1968, p. 56). Second, “grains” in official statistics indicates the nine types of produce for which yield quantities are shown in the tables, namely wheat, rye, barley, oats, emmer, buckwheat, corn, peas, and millet. Yet, the definition of “grains” in official statistics was changed in 1904. Specifically, oats were 1  As for agricultural statistics for Imperial Russia, there also exist, other than data accumulated by the Central Statistical Committee mentioned in the text, statistics compiled by the Ministry of Agriculture and the so-called zemstvo statistics. However, both of the latter cover relatively small areas; hence, the Central Statistical Committee statistics are commonly used as the most comprehensive sources (Wheatcroft 1974, p. 158).

136 

M. SUHARA

excluded from the existing definition, and replaced by lentils and grain beans,2 resulting in the term “grains” to mean ten types of produce. However, in the “grains” column of Appendix Tables 5.1 and 5.2, the old definition is used unrevised, and the yield quantities for “grains” under the new definition are shown in the “grains (new definition)” column. According to the Ministry of Internal Affairs Central Statistical Committee, oats were excluded because they were produced mostly for use as feed, not for food (Tsentral’nyi statisticheskii komitet Ministerstva Vnutrennikh Del 1905, Vol. 59, [Urozhai 1904 goda, II. Iarovye khleba i kartofel’], p. I). Third, up until 1894, Russian official statistics showed agricultural produce yield quantities in “chetvert’,” a unit of volume. At the time, it was not only Russia which measured grain yields in volume units; in the United Kingdom, for instance, wheat yields were measured in bushels (1 bushel = 36.37 liters). The “koku” and “to” are also volume units used in Japan for measuring rice. From 1895, agricultural produce yield quantities in Russian official statistics started to be displayed in “pud” (1 pud = 16.38 kg). Since yield quantities in both chetvert’ and pud can be obtained from official statistics for the four years from 1890 through 1893, conversion rates in this chapter have been calculated from the averages over these four years for each type of produce, and all chetvert’ figures have been converted into pud.3 In Appendix Table 5.1, yield quantities are further changed into tons. Lastly, as time passed, the areas of Imperial Russia covered by official agricultural production statistics were gradually expanded. Chart (1) of Appendix Table  5.1 is of the 50 Provinces of European Russia within Imperial Russian territory; Chart (2) is of the 72 Provinces of Imperial Russia; and Chart (3) is of the 90 Provinces of Imperial Russia. Roughly speaking, the 50 Provinces of European Russia equate to an area which includes the present-day European portion of Russia, Ukraine, the three Baltic states, Bessarabia (now Moldova), and part of Belarus. The 72 Provinces of Imperial Russia equate to an area which includes ten Provinces of Poland (Vistula), three Provinces of southern Russia such as Kuban, the 2  This is the translation used here of the Russian “boby.” Considering Soviet-era statistics, the term likely refers to produce such as green beans and broad beans. Peas and lentils, though separately mentioned, are also grains, but in this case the term refers to types of grain beans that are neither peas nor lentils. 3  The conversion rates are as follows. Wheat, 1 chetvert’ (same below) = 9.40 pud; rye, 8.72 pud; oats, 5.65 pud; barley, 7.83 pud; emmer, 6.57 pud; buckwheat, 6.69 pud; corn, 9.58 pud; peas, 9.77 pud; millet, 9.44 pud; and potatoes, 9.25 pud.

5 AGRICULTURE 

137

South Caucasus Province of Chernomorsk, four Provinces of Siberia such as Tobol’sk, and four Provinces of central Asia such as Semipalatinsk, in addition to the 50 Provinces of European Russia. The 90 Provinces of Imperial Russia signify virtually the entire territory of Imperial Russia (excluding Finland), including the South Caucasus, Eastern Siberia, the Russian Far East, and Central Asia, in addition to the 72 Provinces of Imperial Russia. The following trends can be observed in crop yield quantities from Appendix Table 5.1. First, as a whole, there is a clear trend of increase in yield quantities. Specifically, a comparison of the averages from 1871 to 1875 and from 1909 to 1913 for individual main crops in the 50 Provinces of European Russia indicates increases by 3.2 times for wheat, 1.5 times for rye, 1.9 for oats, 3.8 for barley, and 4.1 for potatoes (used also as an ingredient in vodka production). Considered in combination with figures for area sown from Appendix Table 5.2, an increase in land productivity per unit of area sown is also noticeable: growth of production per 1 hectare for European Russia is estimated at 2.1 times for wheat from 1872 as compared to the 1909–1913 average, and 1.6 times for rye, 1.4 times for oats, 2.4 times for barley, and 1.3 times for potatoes during the same period. These trends are a result of certain advancements in agricultural methods, tools, and animals used for labor. As detailed above, among the main crops, the increases in wheat and barley production are particularly noticeable. This fact is related to Russia’s exports. Specifically, from the 1880s onward, the quantities of exported wheat and barley increased rapidly; approximately 30% to 40% of quantities produced were exported, compared with less than 10% of rye and oats. From the start of the twentieth century, wheat and barley ranked the number one and number two export goods, respectively. The export of Russian grain immediately brings to mind the concept of “starvation exports.” This term was coined from Finance Minister (1887–1892) Ivan Vyshnegradskii’s slogan “We ourselves shall not eat, but we shall export,” but Shoichi Tomioka claims that conditions fitting the term “starvation exports” were not necessarily present at any and all points in time, adding Paul Gregory’s assertion that grain consumption per person in Russia at the time was increasing (Tomioka 1998, pp. 28, 128). One characteristic of the state of agricultural production per region is the increase in production outside of European Russia. This may be easily calculated from Appendix Table  5.1. While the 1900–1913 increase in grain production is 1.44 times for the 50 Provinces of European Russia,

138 

M. SUHARA

there is a 1.55-times increase for the 72 Provinces. The 1909–1913 increase is 1.10 times for the 50 Euro-Russia Provinces but 1.15 times for the 72 Provinces and 1.14 times for the 90 Provinces. The increase in wheat production in the outskirts of Imperial Russia is particularly remarkable. Whilst 22 Provinces in the outskirts of Imperial Russia have a 24.5% share of wheat production in 1900, this share increased to 31.5% in 1913; the 30.6% share held by 40 outskirt Provinces in 1909 increased to 36.1% in 1913. However insufficiently strict the methodology may be, we attempt to estimate gross and net Russian crop-farming production indices for 1860– 1913 using data from Appendix Table 5.1.4 First, we calculate a production index for gross output. A gross output Laspeyres index can be obtained by multiplying yield quantity figures for individual products shown in Appendix Table 5.1 by their prices in the base year of the index and aggregating the resulting products. While various kinds of data are available on prices in Imperial Russia,5 we decided to employ Falkus’s (1968) data for 1913 (see Table 5.1) because they seem to be the only available source that offers prices for all crops displayed in Appendix Table 5.1. Thus, in spite of the disadvantage of these data for 1913, the final year in the estimation period, they have been chosen for use. As is clear from the table, output data for individual crops, apart from potatoes, are not available for the years before 1870 and 1881–1882; only yield quantities for grains as a whole (“total grains”) are known. We calculated the output values for these years, employing the weighted average price for nine grains using their outputs in 1913 (52.3 rubles per ton) and the price for potatoes in 1913 (16.5 rubles per ton) as weights. Additionally, production quantities for produce other than the individual items shown in Appendix Table 5.1, such as hemp, flax, tobacco, (sugar) beet, sunflowers, and so on, are presumed to have fluctuated to the same ratios as the representative produce. The index thus created for the 50 Provinces of European Russia is shown as the crop-farming sector gross production index in the first column of Table 5.2. 4  It is thought, as mentioned above, that statistics of the Central Statistical Committee contains a tendency of underestimation regarding yield quantities. However, Paul Gregory (1982, p. 224) states that “there is some consensus (among researchers) that they (Central Statistical Committee figures) capture intertemporal trends reasonably well.” 5  For example, prices for the four main grains can be obtained for each year from 1881 to 1913 with Liashchenko (1915, p. 11).

5 AGRICULTURE 

139

Table 5.1  Prices of agricultural produce (ruble/ton) and net production rates (%) in Russia in 1913 Winter wheat

Spring wheat

Wheat

Rye

Oats

Barley

66.8 87.4

64.1 83.9

64.8 84.8

50.7 87.8

44.0 80.0

48.2 85.9

Emmer

Buckwheat

Corn

Peas

Millet Potatoes

42.9 78.7

48.8 79.6

42.6 97.7

68.4 81.9

42.1 95.0

Price Net production rate

Price Net production rate

16.5 77.5

Source: Falkus (1968, p. 64).

Next, we calculate a net production index. Net production here indicates the total quantity produced minus the portions used for seeding or for feed. It could be regarded as an indicator of value added created in the crop-farming sector of Imperial Russia. Malcolm Falkus (1968) calculated the net production ratio (the ratio of net to gross production) for each individual product (using averages from 1909 to 1913) from Prokopovich’s estimated data (see Table  5.1). We may calculate yearly net production for each product relatively easily using gross output data shown in Appendix Table 5.1 and Falkus’s net output ratios and assuming that the ratios are constant over time. However, there is almost no possibility of the assumption being valid. An alternative is that we employ Paul Gregory’s data. Specifically, Gregory (1982, pp. 232–233) showed data on gross and net yield quantities for the four crops of wheat, rye, barley, and potatoes for 1885–1913  in the 63 Provinces of Imperial Russia and in the whole Empire as well. Here we assume that the yearly net output ratios calculated from Gregory’s data for the above-mentioned four agricultural products are valid for the 50 Provinces of European Russia as well, and also that results for these four crops are applicable to the entire range of crops. The output value for the four crops amounted to 77.8% of the total for nine grains and potatoes (4025  million rubles) in 1913. If we make these assumptions, we can easily find net output values for the four crops in 1885–1913. However, the task of finding the net output ratios for 1860–1884 remains. We estimate those values in the following manner.

1860 1861 1862 1863 1864 1865 1866 1867 1868 1869 1870 1871 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1882 1883

100.0 97.1 94.6 111.2 88.7 81.9 99.7 87.6 94.9 93.6 128.9 102.0 104.9 104.6 126.3 91.2 101.4 122.1 121.9 102.2 94.3 124.8 109.6 117.3

(a) Gross production index

71.9 70.0 80.6 67.8 69.2 80.8 76.0 75.2

Wheat

73.2 75.2 78.6 72.7 71.7 76.9 80.0 74.7

Rye

75.6 75.9 74.7 70.8 77.6 77.8 76.5 77.2

Barley

74.1 72.7 79.3 75.9 77.6

70.9 70.2 69.4 74.5 69.1 67.8 74.1 71.0 70.9 70.6 77.4 71.7 73.1

Three main products

(b) Net production ratio (%)

73.0 74.2 72.7 76.3 74.6 74.5 74.3 74.0 73.7 75.9 76.1 73.8 77.9 75.9 75.4 75.3 77.2 76.7 77.1 74.9 76.6 78.5 78.3 76.2

Potatoes

177,520 161,388 234,887 195,652 217,534

157,408 150,295 145,332 182,708 134,764 121,761 163,443 136,892 148,296 144,490 219,686 160,100 179,783

(1) Total grains, 1000 chetvert’s

(c) Net production

32,794 28,725 30,231 29,277 34,153

12,270 14,033 14,831 16,565 14,841 15,860 17,685 15,383 17,618 16,021 21,469 17,708 18,529

9822 8912 12,780 10,713 11,937

8433 8090 7843 9826 7291 6628 8837 7411 8044 7819 11,841 8663 9706

(2) Potatoes, (3) Net production 1000 chetvert’s value of the total of (1) and (2)

Table 5.2  Gross and net production index for Imperial Russian crop farming

(continued)

100.0 90.7 130.1 109.1 121.5

100.0 95.9 93.0 116.5 86.5 78.6 104.8 87.9 95.4 92.7 140.4 102.7 115.1

(4) Index of (3)

140  M. SUHARA

1884 1885 1886 1887 1888 1889 1890 1891 1892 1893 1894 1895 1896 1897 1898 1899 1900 1901 1902 1903 1904 1905 1906

129.2 108.1 118.0 142.2 147.2 103.6 123.3 96.6 119.5 168.6 169.7 153.3 154.7 130.5 166.2 170.7 167.4 147.9 200.3 188.9 218.4 176.9 147.1

(a) Gross production index

80.4 73.4 71.0 83.2 83.9 72.8 75.1 68.8 78.2 85.9 85.0 82.9 82.3 76.2 83.2 81.0 80.2 79.0 85.0 84.0 85.0 83.0 78.9

Wheat

Table 5.2 (continued)

78.6 79.6 78.4 80.6 79.6 74.0 77.6 70.0 76.8 81.2 83.1 81.6 80.9 76.5 80.1 82.9 82.9 79.0 83.0 82.0 85.0 81.0 79.0

Rye

80.2 71.9 78.6 82.1 81.0 74.0 79.9 77.4 78.4 87.6 85.1 83.2 82.2 81.4 84.9 79.3 82.9 78.9 86.1 86.0 85.0 84.0 80.0

Barley

78.9

Three main products

(b) Net production ratio (%)

78.1 77.4 79.1 80.1 76.2 77.3 76.9 71.7 78.1 80.7 78.5 80.6 79.5 78.7 79.0 79.0 83.0 79.0 80.0 80.0 80.0 81.0 79.0

Potatoes

231,736

(1) Total grains, 1000 chetvert’s 33,567

12,670

(2) Potatoes, (3) Net production 1000 chetvert’s value of the total of (1) and (2)

(c) Net production

(continued)

129.0

(4) Index of (3)

5 AGRICULTURE 

141

1860 1861 1862 1863 1864 1865 1866 1867 1868 1869 1870 1871

1907 1908 1909 1910 1911 1912 1913

166.6 172.5 225.9 217.8 167.4 218.9 250.8

(a) Gross production index

80.0 81.1 83.0 84.0 80.0 85.0 85.0

Rye

80.0 80.0 82.0 82.0 80.3 80.0 78.0

Potatoes

(7) Barley, million rubles

(c) Net production

(9) Total of (5), (6), (7), and (8)

(4) Index of (3)

(continued)

100.0 95.9 93.0 116.5 86.5 78.6 104.8 87.9 95.4 92.7 140.4 102.7

(e) Net production index

(2) Potatoes, (3) Net production 1000 chetvert’s value of the total of (1) and (2)

(8) Potatoes, million rubles

(1) Total grains, 1000 chetvert’s

(d) Net production value

Three main products

(6) Rye, million rubles

84.0 85.0 90.0 87.9 83.1 87.0 90.0

Barley

(b) Net production ratio (%)

(5) Wheat, million rubles

82.9 84.0 88.0 86.0 81.0 86.0 87.0

Wheat

Table 5.2 (continued)

142  M. SUHARA

1872 1873 1874 1875 1876 1877 1878 1879 1880 1881 1882 1883 1884 1885 1886 1887 1888 1889 1890 1891 1892 1893 1894 1895 1896

465,518 533,365 638,288 449,903 433,634 551,174 655,949 465,759

657,434 677,990 631,048 728,348 727,985 495,688 634,625 423,573 549,993 716,633 865,934 753,691 729,827

359,950 218,822 194,177 388,037 436,391 217,581 265,148 194,742 318,298 535,563 509,017 427,433 435,907

111,887 74,809 108,964 143,111 154,355 88,855 132,760 110,539 139,431 273,393 211,952 183,728 179,939

83,711 82,246 79,784 64,359 94,059 95,096 88,526 87,625

(7) Barley, million rubles

(d) Net production value (6) Rye, million rubles

181,371 170,434 321,275 153,267 168,968 320,170 226,008 194,401

(5) Wheat, million rubles

Table 5.2 (continued)

96,769 79,076 92,810 105,855 105,080 98,194 106,069 86,654 151,133 194,697 175,644 197,846 223,239

85,120 71,026 72,493 70,263 86,297 82,381 88,171 73,827

(8) Potatoes, million rubles

1,226,039 1,050,697 1,026,999 1,365,351 1,423,811 900,319 1,138,602 815,509 1,158,856 1,720,286 1,762,548 1,562,698 1,568,912

815,720 857,071 1,111,841 737,792 782,958 1,048,822 1,058,654 821,613

(9) Total of (5), (6), (7), and (8)

(continued)

115.1 120.9 156.9 104.1 110.5 148.0 149.4 115.9 105.2 150.8 126.4 140.9 149.5 128.2 125.3 166.5 173.7 109.8 138.9 99.5 141.3 209.8 215.0 190.6 191.4

(e) Net production index

5 AGRICULTURE 

143

1897 1898 1899 1900 1901 1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913

235,901 490,149 418,331 451,313 446,003 694,316 673,117 779,444 660,822 479,531 497,894 567,267 910,567 836,936 494,872 716,294 1,006,742

(5) Wheat, million rubles

Table 5.2 (continued)

578,578 828,107 911,427 884,142 691,973 865,721 847,577 977,600 656,307 564,958 713,823 702,856 836,667 811,408 661,365 993,965 954,910

(6) Rye, million rubles 173,921 227,129 149,778 163,066 157,038 248,566 261,610 259,656 247,162 205,056 245,096 265,830 361,227 340,589 279,909 323,963 413,643

(7) Barley, million rubles

(d) Net production value

207,506 221,194 232,054 230,978 200,944 259,623 242,359 253,068 249,456 223,306 249,458 244,951 281,382 330,556 306,427 332,201 305,767

(8) Potatoes, million rubles 1,195,906 1,766,579 1,711,591 1,729,499 1,495,959 2,068,226 2,024,662 2,269,768 1,813,747 1,472,851 1,706,271 1,780,904 2,389,843 2,319,489 1,742,572 2,366,423 2,681,062

(9) Total of (5), (6), (7), and (8)

(continued)

145.9 215.5 208.8 210.9 182.5 252.3 246.9 276.8 221.2 179.6 208.1 217.2 291.5 282.9 212.5 288.6 327.0

(e) Net production index

144  M. SUHARA

Notes and sources: Column (a) Gross production indices were calculated based on the annual yield quantities of nine individual types of grains, and potatoes for 50 Provinces of European Russia (in Appendix Table 5.1), and their prices for 1913 (Table 5.1). Note that for 1860–1871 and 1880–1883, index numbers were calculated from the yield quantities of grains as a whole, as well as potatoes, and the average price for total grains for 1913 (52.3 rubles per ton) and the price for potatoes for the same year (16.5 rubles), and that for 1871–1880 were calculated from the production values for the six products of wheat, rye, oats, barley, buckwheat, and potatoes Out of (b) Net production ratios, those for 1860–1884 were estimated using the regression equations shown in footnote 6 of the text, and those for 1885 onward were calculated based on Gregory (1982, pp. 232–233) Column (1) of (c) Net production indicates the net output of grains as a whole as calculated using the “total grains” gross output shown in Appendix Table 5.1 and the net output ratios for the “three main products” shown in the table above. In a similar vein, Column (2) indicates the net output for potatoes. Column (3) shows hypothetical total net output values of (1) and (2) evaluated by two kinds of prices of 52.3 rubles and 16.5 rubles, respectively. Column (4) is an indexation of Column (3). Columns (5) to (8) of (d) Net production value show estimated values of net output for wheat, rye, barley, and potatoes. They were calculated using the gross output for these products (Appendix Table 5.1), their net production ratios (in the table above (b) Net production ratio) and their prices (Table 5.1) Column (e) Net production index is calculated as follows. For 1860–1872, the index number for a year is merely transcribed from the (c) (4) column; for 1872–1879, it is calculated as the ratio of the value in the (d) (9) column for the year in relation to the value for the previous; for 1879–1884, as the ratio in the (c) (4) column; and for 1884–1913, as the ratio in the column (d) (9)

Table 5.2 (continued)

5 AGRICULTURE 

145

146 

M. SUHARA

(1) There appear to be two distinguishing features in the progress over the period from 1885 to 1913 of net output ratios for the four products. First, although in the case of potatoes, this trend may not be so definite, there is a clear upward tendency in ratios for other crops during this period (see Fig. 5.1). The general belief is that there existed a certain degree of improvement in productivity in Russian agriculture from the latter half of the nineteenth century to the early twentieth century. If this is true, we can quite easily conceive that the increase in output available for human beings as the food was larger than the growth in the portions for seeding and feed. Second, the net production ratio tended to decrease in poor harvest years. This tendency is also quite likely in view of the fact that a certain amount of farm produce for seed and forage had to be secured even in bad harvest years. (2) Hence, we can consider a regression equation for each crop in which its net production ratio in every year is explained by an 90

85

80

75

70

18 85 18 87 18 89 18 91 18 93 18 95 18 97 18 99 19 01 19 03 19 05 19 07 19 09 19 11 19 13

65

Fig. 5.1  Net production ratio for wheat (1885–1913, %). Note: The years 1886, 1889, 1891, 1897, 1901, 1906, and 1911 are thought to have been a year of poor harvest. Source: Gregory (1982, p. 232)

5 AGRICULTURE 

147

upward trend with a constant rate and by the harvest level in that year. This is provided by the following simple formula: ln ( NPR / (1− NPR ) ) = constant + α t + β ln ( Harvest Level ) .



Here, ln in the equation denotes a natural logarithm; NPR, net production ratio; and t, time. The harvest level for a certain year is measured as the divergence rate of the harvest in that year from the five-year (before and after that year) moving average harvest. The explained variable, namely NPR, is logit-transformed in the regression equation taking into consideration that the value of NPR varies within the range of 0 to 1. Results of the regression using data from 1885 to 1911 are shown in the footnote. (The number of samples is 27. The years 1912 and 1913 were excluded from the regression because we were not able to calculate the five-year averages for them.)6 We can say we have obtained tolerable results. (3) For potatoes, we can calculate the size of net output for every year of the period (1860–1884) with gross output data and estimated net output ratios. However, for the three main grains, there are some years for which the gross output data necessary for calculations

6

 Regression results are as follows (t-values are shown in parentheses):

[Case of wheat] (Adjusted R2 = 0.856). ln(NPR/(1 − NPR)) = −3.601 + 0.0197 × t + 1.048 × ln(Harvest Level) (−7.564) (6.846) (10.050) [Case of rye] (Adjusted R2 = 0.731) ln(NPR/(1 − NPR)) = −3.977 + 0.0135 × t + 1.131 × ln(Harvest Level) (−5.392) (5.480) (7.084) [Case of barley] (Adjusted R2 = 0.850) ln(NPR/(1 − NPR)) = −4.344 + 0.0204 × t +1.225 × ln(Harvest Level) (−6.958) (7.427) (8.966) [Case of the three main grains] (Adjusted R2 = 0.883) ln(NPR/(1 − NPR)) = −4.337 + 0.0170 × t + 1.210 × ln(Harvest Level) (−8.637) (9.006) (11.091) [Case of potatoes] (Adjusted R2 = 0.542) ln(NPR/(1 − NPR)) = −1.952 + 0.0082 × t + 0.692 × ln(Harvest Level). (−2.293) (3.820) (3.723) All t-values for coefficients except for the y-intercepts for potatoes are significant at the 1% level.

148 

M. SUHARA

are lacking (i.e. 1860–1872, 1880–1884). Concerning these years, we calculated net output ratios in the following manner.

a. We applied the estimated net production ratios for the three main grains (see footnote 6) to the gross output data of “total grains” to obtain net output volumes for the entire grain. b. Next, we calculated the weighted averages of the net output for “total grains” and net output for potatoes to calculate a net production index for crop farming as a whole. The weight is, as is in the case of the estimation of the gross production index, the ratio between the average price per ton for total grain in 1913 (52.3 rubles) and the price for potatoes in the same year (16.5 rubles). These procedures are shown in Table 5.2. As may be expected, the average annual growth rate of net production for 53 years is 2.1%, higher than the average rate for gross production (1.6%).7



Next, we turn to livestock production. Appendix Table  5.3 presents the numbers of livestock animals, which were purportedly measured each winter. It is thought that this was continued into the Soviet era and came to be the statistics detailing numbers of livestock animals at the beginning of January each year (see Appendix Table 5.9). The numbers shown in Appendix Table 5.3 are figures for the 50 Provinces of European Russia. We then create a net output index for livestock in the same manner as for the crop-farming sector. The Soviet economic statistician Vainshtein (1969, p.  62) introduced Prokopovich’s estimates for Russian national income, which were also cited in Falkus (1968). Vainshtein stated that Prokopovich estimated livestock output income (value added) in European Russia in 1900 and in 1913 as follows: horses, 10.8  million rubles (1900) and 20.9 million rubles (1913); beef and dairy, 610.0 million rubles and 1167.3  million rubles; pigs, 94.0  million rubles and 284.1 million rubles; and sheep, 116.7 million rubles and 257.4 million rubles. (Note that while it is thought that the majority of the horses kept at the time were livestock, Vainshtein annotated horse livestock income as “sales of horses and leather.”) Between these Prokopovich’s (1918) income estimates and the livestock counts shown in Appendix Table 5.3, it should be possible to expect a linear relation similar to, for instance, the 7

 These average annual growth rates are calculated using log-linear regressions.

5 AGRICULTURE 

149

capital coefficient, which often appears in economic literature. Specifically, value-added output figures would also increase in proportion to livestock count. Annual livestock income may be obtained by multiplying the income per head of four types of livestock (i.e. the income-livestock coefficient) by the annual livestock counts for each (“cattle” in Appendix Table 5.3 also includes oxen used for labor since statistics on cattle used as livestock are not available; however, this fact will be ignored). The index made from this should be the livestock net output (value-added output) index. In fact, largely the same index is obtained regardless of whether the calculation uses income-­ livestock coefficients from 1913 income or from 1900 income. Table  5.3 displays the livestock sector index using 1913 income-livestock coefficients. Finally, this section attempts the calculation of a net agricultural output index for the 50 Provinces of European Russia in Imperial Russia by combining the net crop-farming output and net livestock output indices estimated above. However, one issue is the weight for the two indices when constructing weighted averages. For this, we use the revised versions of the Prokopovich estimates found in Falkus (1968). Falkus estimated the gross national income for the 50 Provinces of European Russia in 1913 (including depreciation) as 13,723.5 million rubles, 6540.4 million rubles of which (47.7%) being agricultural sector income. The details of this agricultural sector income are: 4313.0 million rubles for crop farming; 1729.7  million rubles for livestock; and 497.7  million rubles for other types of agriculture (e.g. hay, straw, grapes, horticulture, and beekeeping) (Falkus 1968, pp. 65, 67). The ratio of crop-farming income to livestock sector income, ignoring the other types of agriculture, is used as the weight when averaging the two output indices. The specific process is as follows. First, revise the crop-farming sector and livestock sector indices taking, for instance, the 1913 index value as 100, and then calculate the geometric mean for this using a weight of 4313.0:1729.7. The result is an index for the entire agricultural sector. For years which do not have livestock sector index values, the crop-farming sector index values alone are used as the values for that year. In other words, the crop-farming sector index is used to create two indices (one before, one after) from the combined index values for the previous year and for the following year, and the geometric averages of these indices become the combined index for the year in question. The combined index in Table 5.3 is the net agricultural output index for Imperial Russia (50 Provinces of European Russia) calculated in this manner. Figure 5.2 is

1860 1861 1862 1863 1864 1865 1866 1867 1868 1869 1870 1871 1872 1873 1874 1875 1876 1877 1878 1879 1880 1881

112.8 109.5 106.7 125.4 100.0 92.4 112.4 98.7 107.0 105.6 145.4 115.0 118.3 117.9 142.4 102.8 114.3 137.7 137.5 115.3 106.3 140.7

Gross output

115.7 111.0 107.6 134.8 100.0 90.9 121.2 101.6 110.3 107.2 162.4 118.8 133.1 139.9 181.4 120.4 127.8 171.2 172.8 134.1 121.7 174.4

Net output

Crop farming

125.2

101.7

100.4

100.0

Net output

Livestock farming

115.7 111.0 107.6 134.8 100.0 88.5 114.9 92.5 100.4 97.6 142.0 106.2 119.0 125.1 162.2 107.7 114.3 156.5 158.7 123.1 111.7 160.2

Net output

Combined

100.0 95.9 93.0 116.5 86.5 76.5 99.3 80.0 86.8 84.4 122.8 91.9 102.9 108.1 140.3 93.1 98.8 135.3 137.2 106.5 96.6 138.5

1860 = 100

Combined net output

1887 1888 1889 1890 1891 1892 1893 1894 1895 1896 1897 1898 1899 1900 1901 1902 1903 1904 1905 1906 1907 1908

160.3 166.0 116.8 139.1 108.9 134.7 190.2 191.3 172.9 174.5 147.2 187.5 192.6 188.8 166.8 225.8 213.0 246.3 199.5 165.9 187.9 194.5

Gross output 192.6 200.8 127.0 160.6 115.0 163.5 242.7 248.6 220.4 221.3 168.7 249.2 241.4 244.0 211.0 291.8 285.6 320.2 255.9 207.8 240.7 251.2

Net output

Crop farming

105.1 107.5 133.2 135.7 133.0 134.0 137.8 134.5 139.1 137.1 138.2 134.8 131.8 128.2 127.5

115.2 111.3 106.2

111.1

Net output

Livestock farming

167.2 169.5 111.3 146.0 114.0 144.5 201.7 194.3 179.5 191.4 158.5 208.2 204.0 207.2 185.5 236.0 231.5 251.8 213.0 182.4 201.0 206.9

Net output

Combined

Table 5.3  Agricultural output indices for Imperial Russia (Index for 50 European Russia provinces)

(continued)

144.5 146.6 96.2 126.3 98.5 124.9 174.4 168.0 155.2 165.5 137.1 180.0 176.4 179.1 160.4 204.0 200.1 217.7 184.1 157.7 173.8 178.9

1860 = 100

Combined net output

150  M. SUHARA

123.6 132.3 145.7 121.9 133.1

146.2 162.9 172.9 148.2 144.9

Net output 110.3 109.5

Net output

Livestock farming

Source: See the text for the calculation methods

1882 1883 1884 1885 1886

Gross output

Crop farming

Table 5.3 (continued)

134.9 145.4 150.1 128.6 125.7

Net output

Combined

116.6 125.7 129.8 111.2 108.7

1860 = 100

Combined net output

1909 1910 1911 1912 1913

254.8 245.6 188.8 246.9 282.9

Gross output 337.1 327.2 245.8 333.8 378.2

Net output

Crop farming

129.7 133.7 133.7 133.3 138.7

Net output

Livestock farming

256.5 253.2 206.5 256.7 283.8

Net output

Combined

221.8 219.0 178.5 221.9 245.4

1860 = 100

Combined net output

5 AGRICULTURE 

151

152 

M. SUHARA

400 350 300 250 200 150 100 50

18 60 18 62 18 64 18 66 18 68 18 70 18 72 18 74 18 76 18 78 18 80 18 82 18 84 18 86 18 88 18 90 18 92 18 94 18 96 18 98 19 00 19 02 19 04 19 06 19 08 19 10 19 12

0

Crop Farming

Livestock Farming

Agriculture (Total)

Fig. 5.2  Production indices for Russian agriculture: 1860–1913 (index for 1864 = 100). Source: Table 5.3

a graph of the crop-farming, livestock, and combined indices. The average annual growth rate for agriculture is calculated to be 1.7% based on the log-linear regression.

5.3   Agriculture for the Soviet Union and the Russian Republic In this section, we reflect on the significance of agriculture in the economy of the Soviet Union as a preparatory step for the discussion on agricultural statistics for the RSFSR in the next section. As detailed above, agriculture was the most important production sector in Imperial Russia, even in 1913 after a certain degree of industrialization had taken place, a­ ccounting for about half of the national income. Similarly, in the Soviet era, agriculture continued to be an industry of significance for the economy as a whole. We trace the significance of agriculture in each period of the Soviet

5 AGRICULTURE 

153

Union, referring to agricultural output indices from official statistics.8 Agricultural production indices for the RSFSR are shown later, but since agricultural production indices for the RSFSR during the Stalin era unfortunately do not appear to have been released, they are substituted by production indices for the whole Soviet Union. This data is presented in Appendix Table 5.4 and in Fig. 5.3. According to the 1897 census, around 75% of the population of Imperial Russia was involved in agriculture; as such figures show, Russia was a striking agricultural nation. The joint 500 450 400 350 300 250 200 150 100 50

1913 1915 1917 1919 1921 1923 1925 1927 1929 1931 1933 1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989

0

Crop farming

Livestock farming

Agriculture (Total)

Fig. 5.3  Production indices for Soviet agriculture: 1913–1990 (index for 1913 = 100). Source: Appendix Table 5.4

8  In particular, Miyanabe (1967), Nakayama (1976, 1981), Sato (1975), and Shigemitsu (1979) were referenced for the accounts which follow in this section.

154 

M. SUHARA

Bolshevik-Socialist Revolutionary Party government borne from the 1917 revolution may basically be considered the power of urban laborers; yet, the leadership did show a position of closely following the interests of peasants by announcing the “Decree on Land” and choosing to “abolish entirely systems of private land holding, and grant to all citizens equal rights to use and to benefit from land.” However, due to the devastation of land following the subsequent civil war and the forced requisition of agricultural goods by the Bolshevik government, the nation’s agriculture itself approached a crisis of collapse. As shown in Fig.  5.3 (Appendix Table 5.4), 1921 was a year of great famine in which agricultural output was 60% of the 1913 figures. From the particularly high rate of decline in the crop-farming sector, it can be said that over 40% of the necessary food supply were lacking. Vladimir Lenin, sensing that previous policies had reached a deadlock amidst these conditions, announced a decree on food taxation in March 1921 and allowed peasants to deal with harvested goods freely after paying tax. He also established the RSFSR Land Code in October 1922, guaranteeing peasants the right to use and to benefit from land. Thus, the legal and structural frameworks of the market-oriented New Economic Policy (NEP) were established. Specifically, peasants acquired the rights to a stable use of land and to a complete control over harvested goods, as they had previously hoped. The effect of these measures was enormous, and as can be seen in Appendix Table 5.4 and Fig. 5.3, the agricultural output for 1928, when the economic performance of the NEP system reached its peak, surpassed 1913 levels by 24% and was over double that of 1921. Yet, for the government, grain procurement fell short of expectations. Increased procurement was necessary to fulfill the demand from growing urban populations, but peasants were dissatisfied with low procurement prices and were reluctant to sell to the government. Peasants began selling to private merchants or hoarding harvested grain. Procurement issues worried the government throughout the 1920s; and from 1927 to the beginning of 1928, there were conditions referred to as the “Grain Procurement Crisis.” At the 15th Party Congress (called the “Collectivization Congress”) in December 1927, Stalin, who had already come into power, asserted the limits of small-scale peasant management based on the NEP system and worked out a policy of collectivizing individual farming. He started to carry this out coercively in the latter half of 1929. Industrialization, accompanying collectivization, was strongly pushed ahead according to the first five-year plan (FYP) begun from October 1928.

5 AGRICULTURE 

155

Marx and Engels thought that the socialist revolution would spread in turn from developed nations to developing nations; therefore, they did not need to advocate industrialization. In other words, they saw it as adequate post-revolution to simply manage the economy in a planned manner without any intentional design of industrialization. Yet, for Russia’s revolutionaries, who recognized their own country as a developing nation surrounded by strong, capitalist, developed nations, it was necessary to achieve rapid industrialization at all costs. Lenin had already created GOELRO (a 10–15 years plan for electrification of Russia) in 1920, and in 1921, he established the State Planning Committee (Gosplan) and prepared to create plans for each single year. Generally, for the industrialization of developing nations, it is unavoidable for any kind of state to take out funds from the agricultural sector and invest them in the industrial sector. Perhaps, it was inevitable that Stalin, who felt a sense of crisis regarding the international environment of the Soviet Union, began collectivization to bring the agricultural sector under his own control. Alternatively, it could be said that it was inevitable that the Russian government, which was fundamentally an urban power, sought to put the agricultural community as a whole under its own management. Yet, Stalin carried this out in the most violent manner imaginable. Peasants put up resistance to forced collectivization by slaughtering large numbers of livestock, which is shown in the halved output in the livestock sector in the period from 1928 to 1933 as shown in Appendix Table  5.4  and in Fig. 5.3.9 As can also be seen in the same table and figure, it was in 1953 that livestock farming output returned to the pre-collectivization levels of 1928. However, note that this lateness of livestock revival was also largely influenced by the serious damage which followed World War II. This substantially hostile view of peasants by the Communist Party government began to ease after Stalin’s death in 1953, when Khrushchev came into power. In order to make clear the change from the Stalin era, Khrushchev enacted multiple reforms even only relating to agriculture. The first is the “Virgin Lands Campaign,” which was implemented from 1954 through 1956. According to official statistics, the total area sown for agriculture in the Soviet Union in 1953 was 157  million hectares, and in the period from then until Khrushchev’s fall from power in 1964,

9  Meanwhile, against expectations, no serious drop may be seen in crop farming. The negative image we have of collectivization may stem mainly from livestock farming.

156 

M. SUHARA

this area increased by 55 million hectares.10 Over half of the added land area was northern Kazakhstan, but considerable increases in sown land may also be seen in the RSFSR (see Appendix Table 5.8) such as in the Ural, Western Siberia, and Volga regions. Nearly half of the land added in the Khrushchev era was planted with corn for use as feed. This was aimed to increase the supply of livestock products, which saw explosive increases in demand at the time. The area sown and yield quantities for grains certainly increased following this “Virgin Lands Campaign,” but at the same time, agricultural production was also presented with a great problem. Originally, most of the agricultural land in the Soviet Union was situated toward the north, at latitude 45°–55° north. One decisive difference from Canada and Northern Europe, which are at the same latitude, is the low level of average rainfall. Generally, if annual rainfall is 500–1000 millimeters, it is possible to farm without irrigation. The cultivated land in Canada and Northern Europe fulfills this condition, but the normal rainfall for cultivated land in the Soviet Union is 200–600  millimeters. In other words, as a natural condition, the Soviet Union is a limited zone for agriculture, meaning that there are great fluctuations between good and bad harvests. Yet, the new cultivated land from Khrushchev’s “Virgin Lands Campaign” was generally in regions which had even less rain than existing cultivated land. Output certainly increased with the “Virgin Lands Campaign,” but farming in the Soviet Union took on even greater yearly fluctuations than before. This is discussed again in a later paragraph on grain imports by the Soviet Union. Khrushchev’s second agricultural reform was a policy of increasing sovkhozy. Soviet-era agriculture, subsequent to the collectivization, was conducted by sovkhozy (sovetskoe khoziaistvo: state-run farms) and kolkhozy (kollektivnoe khoziaistvo: collective farms). A sovkhoz was a “large-­ scale, state-run, highly-mechanized socialist agricultural enterprise,” and “all of the means of production and produce of the sovkhoz are property of the state.” In other words, a sovkhoz was a state-run enterprise, the same as an industrial enterprise. Before World War II, sovkhozy ­represented 10  Note that the actual increase in area sown during the campaign from 1954 through 1956 was about two thirds of 55 million hectares mentioned in the text. The remaining one third took place after 1960, which can be regarded as a year when the campaign had come to an end. The increase in area sown in the 1960s was due to the exploitation policy of land lying fallow by Khrushchev, who was in too much of a hurry to get results. For such defects in agricultural administration by Khrushchev, see Nobe (1990).

5 AGRICULTURE 

157

a small proportion of agricultural output and operated more as model farms for showing the superiority of mechanized socialist agriculture. In 1940, they were also limited in number, at about 4000 across the entire Soviet Union. Meanwhile, kolkhozy were, at least in theory, “cooperative organizations of peasants who have voluntarily gathered together in order to undertake large-scale, socialist agricultural production on the basis of social production means and collective labor,” and “large-scale agricultural enterprises which undertake social management (within the framework of a planned economy) of land which had been approved by the state for free and unrestricted use” (Nazarov et  al. 1981, pp.  105, 117). In practice, most collectivized peasants were organized into kolkhozy; and in 1940, the number of kolkhozy was at about 237,000 throughout the Soviet Union. Kolkhoz units were largely formed from traditional villages and cultivated crops by collectively owning land, livestock, and tools, among others. Generally, kolkhozy were considered to be lagging as operations compared with sovkhozy, and in practice, the incomes of kolkhozniki (kolkhoz members) were lower than those of sovkhoz workers. Khrushchev not only established most of the agricultural land newly created in the Virgin Lands Campaign mentioned above as sovkhozy but also merged several kolkhozy and reformed them into sovkhozy for the purposes of economies of scale. This substantially increased peasant income, and kolkhoz member income also increased as a result (see Appendix Table 5.14). Khrushchev’s third reform was an increase in state purchase prices of agricultural goods. Specifically, before the Khrushchev period, extremely low prices called “state procurement prices” for compulsory delivery of agricultural products had been imposed on kolkhozy, and to the portion exceeding the compulsory delivery, higher prices called “state purchase prices” had been applied. These prices were gradually raised under the Khrushchev agricultural administration to three times than before in terms of the average of two kinds of prices in 1958, when these prices were eventually unified to state purchase prices. Nonetheless, it is said that especially for livestock goods, newly established purchase prices were still lower than cost prices. Aside from these policies, Khrushchev also enacted other reforms such as the 1958 dissolution of the Machine and Tractor Station (MTS), which had until then become a pillar of farmer control by state power. MTS was essentially an organization which became a channel for collecting agricultural produce by the state, as well as offering kolkhozy services using machinery such as tractors and combined harvesters.

158 

M. SUHARA

Khrushchev’s measures transferred the machinery and machinists (e.g. engineers and drivers) previously held by MTS to neighboring kolkhozy and sovkhozy. Khrushchev’s agricultural reforms can be considered a part of a policy of harmony with peasants, generally converting Stalin’s policy of hostility toward peasants. It may also be said that they finally enabled the benefits of Stalin-era industrialization to be felt by peasants. Alternatively, they could be seen as a movement to bring agriculture and peasants under state (the Communist Party) control. This Khrushchev agricultural policy was taken over by succeeding administrations and also came to be strengthened in some parts. For instance, as shown in Appendix Table 5.14, wages for kolkhoz workers continued to approach those of sovkhoz workers from the Brezhnev era until the collapse of the Soviet Union. Also, the number of sovkhoz workers came to completely overtake the number of kolkhoz workers in the 1980s (see Appendix Table  5.12). Additionally, state purchase prices were further raised in the Brezhnev era. These agricultural reforms beginning in the Khrushchev era can, on the one hand, be seen as linked to increases in agricultural output, consequent advancements in the livelihoods of citizens, and improvements in the treatment of peasants. The average annual rate of output increase in total Soviet Union agricultural production per FYP period may be calculated from the output indices shown in Appendix Table 5.4 (using indices from the first and final years of the FYPs). This rate is, in the order from the fourth FYP (1946– 1950): 8.1%, 5.5%, 3.0%, 1.8%, 2.4%, 0.3%, 0.3%, 2.3%, and −0.1%; except for the final 12th FYP (1986–1990), the figures are positive. On the other hand, the reforms also brought new problems which did not previously exist. What follows is a simple account of the issues of responsibility for finances following policies to improve conditions in agricultural communities, and of grain imports, which became clear in the 1970s. Regarding the former, an increase in sovkhozy, which were more expensive for the state than kolkhozy (e.g. sovkhoz workers had to be paid higher wages than kolkhozniki), would inevitably incur a burden on state finances. What caused particular concern was the “negative margin” of consumer prices of agricultural goods caused by increases in state purchasing prices. In 1973, this amount had already reached 17.9  billion rubles, which was equivalent to the official amount of national defense spending (Sato 1975, pp. 77, 169). Considering that the annual state expenditure for the same year was 184.0 billion rubles and that the produced national income was 337.2  billion rubles, this figure is an astounding amount. Further, in

5 AGRICULTURE 

159

1976, the figure reached 19.0 billion through meat and milk price subsidies alone (Shigemitsu 1979, p. 211). It could be considered that these agricultural subsidies reduced investment in other sectors, subsequently hindering economic growth in the Soviet Union. Next, we turn to grain imports. Imperial Russia was originally a leading grain-exporting nation. In 1913, for instance, 9  million tons of grains were exported, which was 10.6% of the 86 million tons of grains produced in that year (Nakayama 1981, p. 146). However, there was the “starvation exports” side to this exportation, whereby even in famine years, citizens were left starving and exports were made in order to further industrialization. After the subsequent revolution, the Soviet Union continued grain exports, although they fell far short of the levels of the Imperial era. Particularly from when Eastern Europe was placed under the sphere of Soviet power following World War II, around 3–6 million tons of grains was exported annually to eastern European countries. It was 1964, the year following the poor harvest of 1963, in which the Soviet Union suddenly imported 7.3  million tons of grains. In fact, in 1964, the Soviet Union registered losses in grain trade for the first time. Later, there were large intermittent imports of grains in 1972 and 1973. There was an extremely poor harvest in 1975, necessitating imports of 15.91  million tons that year and 20.64 million tons in 1976. To prevent chaos in the global grain market caused by sudden actions by the Soviet Union, the US-Soviet Grain Agreement was signed in 1975, and the Soviet Union would thus import 6 million tons a year, regardless of harvest quantities. In 1984, the Soviet Union imported the largest amount of grain in history, at over 50 million tons, apparently requiring about 8 billion dollars in payment. If it were not for oil exports, grain imports would have surely caused greater problems for the Soviet Union. Most of this imported grain became feed for animals, not food for humans. As previously mentioned, from the end of the 1940s, demand for meat in the Soviet Union increased explosively (see Appendix Table 5.10), and there was a shortage of livestock feed for fulfilling this demand. In other words, the rise in income standards and the increase in urbanization were direct causes of these grain shortages. In the 1980s, the phrase “agriculture is the Achilles heel of the Soviet economy” came about from various issues such as those above, and it can be said that ultimately, the Soviet Union dissolved still nursing this “heel.”

160 

M. SUHARA

5.4   Agricultural Statistics of the Russian Republic This section gives an overview of the Russian Republic agricultural statistics. Generally, for statistics released in the Soviet Union and its constituent republics (not only for the agricultural sector but also for the whole economy), paucity, inaccuracy, and ambiguity of the information had been pointed out, especially by Western researchers. However, in Russia, after the collapse of the Soviet Union, disclosure of statistics (having been preserved as classified documents) continues. In this sense, it can be said that the disgrace mentioned above is being removed today. Unfortunately, we have to give notice to the readership in advance that we were not able to conduct a full investigation on newly declassified materials, and therefore, data shown below are limited to those based on official statistics published in the Soviet era. We expect a complete account on new materials at some future date. 5.4.1  Production Statistics First, we look at the main statistics for agricultural production as a whole. Appendix Table 5.5 shows gross agricultural output values collected from published documents such as Russian Republic Statistical Yearbook (various issues) and presents the data in a clear format. Gross agricultural output in the official statistics of the Soviet Union and RSFSR is defined as the gross output values of crop farming (zemledelie, rastenievodstvo) and livestock farming (zhivotnovodstvo) after monetary valuation using current (nominal) prices or comparative prices (sopostavimye tseny). Flour, grain ground in mortars (krupa), butter, and cheese or processed meat, animal fats, and fur, among others, are industrial products, not agricultural products. The “comparative prices” mentioned in the definition of gross agricultural output above means the prices in a base year when obtaining the real output values. According to the terminology explanations in the back of statistical yearbooks, comparative prices are the weighted average prices of commodity and non-commodity portions of gross agricultural product, with the commodity portion (i.e. agricultural products which are sold outside of the agricultural sector) being evaluated using state purchase prices (gosudarstvennye zakupochnye tseny) when sold to the state by residents of agricultural communities or kolkhozy, state delivery prices (gosudarstvennye sdatochnye tseny) for sovkhoz product supplies, and market prices when

5 AGRICULTURE 

161

sold on the kolkhoz market by residents or by a kolkhoz. For the non-­ commodity portion of products, for state-run sectors or kolkhozy, cost prices are used. Further, the non-commodity portion in inhabitants’ economy (namely a product which is consumed by the producer or used for agricultural production) is evaluated using average commodity prices. According to statistical yearbook accounts, until 1950, gross agricultural output and the index thereof were determined using 1926/27 prices. Later, 1951 prices were used from 1951 to 1956, 1956 prices from 1956 to 1958, 1958 prices from 1958 to 1965, 1965 prices from 1965 to 1975, 1973 prices from 1975 to 1985, and 1983 prices from 1986 onward (Goskomstat RSFSR 1990, p. 662).11 Next, we consider the extent to which the agricultural output of the Russian Republic accounts for the agricultural output of the entire Soviet Union. As shown in Appendix Table 5.5, while the gross agricultural output value in 1913 for the Russian Republic was 18.4 billion rubles, the calculation for the entire Soviet Union (the final Soviet territory) is 35.1 billion rubles (see e.g. TsSU SSSR 1977, the 60th anniversary of the Revolution issue, p. 272; both 1973 prices). Accordingly, Russia accounted for 52.4%. This proportion falls somewhat to 47.1% in 1940, but in 1960 it is 50.7% (both figures calculated using 1973 prices). Later, Russia’s share drops somewhat to about 45%–47% and goes largely unchanged. Note that Russia accounted for 46.7% of the agricultural output in 1990 (the final year for which data on the Soviet Union can be obtained), as calculated using 1983 prices. In short, the Russian Republic’s share of the entire Soviet Union’s agricultural production had been approximately half with a gradually diminishing tendency. Appendix Table  5.6 displays a continuous sequence of gross agricultural output indices from the above base-year index groupings obtained 11  Note that in the 1960–1965 editions of the Statistical Yearbook, the following statement is made about the first portion of the base-year changeovers mentioned above: “determined using 1951 prices from 1940 to 1956” (e.g. TsSU RSFSR 1966, p. 586). This was revised in later editions into the manner featured in the main text. Meanwhile, for the entire USSR, the 1959–1963 editions of the Statistical Yearbook (e.g. TsSU SSSR 1963, p. 672) state that gross agricultural output and the index thereof were determined using “1926/27 prices until 1932, and 1951 prices from 1932 to 1956 […]”; while editions from 1964 onward state that “1951 prices were used for determining 1940 until 1956” (e.g. TsSU SSSR 1965, p. 812). Later still, the method comes to be the same as that used for Russian Republic calculations as featured in the text. This ambiguity in records can be considered one factor which kindles external distrust of Soviet official statistics, making it unclear what manner of calculation methods were actually used.

162 

M. SUHARA

from statistical yearbooks for Russia. Specifically, the indices for the Russian Republic displayed here use 1973-price index values for 1913– 1940, 1965-price index values for 1940–1975, 1973-price index values for 1975–1985, and 1983-price index values for 1985–1990 and are proportionally calculated using the overlap years between each group and collated together as single indices (production indices for 1990 onward seen here are discussed later in Sect. 5.5). As stated above, the Russian Republic’s share of agricultural output for the entire Soviet Union largely did not change after World War II; accordingly, there is no great difference seen if the agricultural output growth rate is compared between the Russian Republic and the entire Soviet Union. Compared with the figures for the entire Soviet Union as seen in Sect. 5.3, the average annual rate of growth per FYP calculated from Appendix Table 5.6 (using index numbers from the first and final years of the FYPs, as in Sect. 5.3) shows no great disparity: the rate for the 5th FYP (1951–1955) is 5.9% (5.5% for the entire Soviet Union, same below), 3.0% (3.0%) for the 6th FYP, 1.2% (1.8%) for the 7th FYP, 2.7% (2.4%) for the 8th FYP, −0.1% (0.3%) for the 9th FYP, 0.1% (0.3%) for the 10th FYP, 2.9% (2.3%) for the 11th FYP, and 0.0% (−0.1%) for the 12th FYP. Appendix Tables 5.7 and 5.8 are statistics on gross yields and areas sown for agricultural produce. Here, agricultural produce has been divided into rough categories (grains, industrial crops, potatoes, and vegetables, produce used for feed, and fruit, and so forth), and gross yields and areas sown for these categories have been displayed. First, Appendix Table  5.7 shows the main crop gross yield (valovoi sbor). Statistics on gross yields of agricultural produce are likely the most important statistics in the crop-­farming agriculture sector; in simplified terms, gross yields multiplied by the comparative price of each type of produce produces gross output value. Gross yield in the official statistics of the Soviet Union, and the RSFSR was defined as “the size of the stored yield (ambarnyi urozhai; bunker weight) of a given crop actually harvested in the report year.” For 1939–1953, that is, the period under the rule by Stalin, in order to intentionally inflate yield quantities for grain, estimated yield before harvest, that is, “biological yield” (biologicheskii urozhai, urozhai na korniu), was used rather than bunker weight. Later, however, these gross yields were also revised into bunker weight in official statistics. Elements such as excess moisture are included in bunker weight, however, and at the end of the Soviet era measurements of grain started to be taken using weight after processing, which

5 AGRICULTURE 

163

removed these elements (ves posle dorabotki; termed “clean weight”). This is still the present approach. This is the “revised to clean weight” information in the third column from the left in Appendix Table  5.7. According to statistical yearbook accounts, clean weight measures are 9%–10% smaller than previous measures. As expressed above, from the end of the Soviet era, grain yield statistics were revised to be shown in clean weight; meanwhile, past grain yield amounts in clean weight since then have been gradually reported in a retrospective fashion. This is also shown in the third column of Appendix Table 5.7, but there is a somewhat peculiar occurrence here. As seen in the table, for all of the years from 1955, the grain yield amounts in clean weight are somewhat lower than the yield amounts in bunker weight. However, before 1954 (excluding years for which the author has calculated bunker weight yield amounts, i.e. 1928, 1932, and 1937), measurements using both weight methods show the same values. It is unclear as to what sort of causes led to this occurrence, but the numbers released in official statistics have been featured here unchanged. There were also two methods for corn in use in the Soviet Union (Russian Republic), namely one method which counted only mature-stage corn and another method which also counted milky-wax-stage (i.e. unripe and growth-stage) corn. It is said that the latter method was abolished in 1955, and from then, only the former method was used. However, at least until 1962, data including unripe corn was also released in the statistics. This is reflected in Appendix Table 5.7. As with the areas sown (detailed later), the sizes of gross agricultural produce yields for kolkhozy, and sovkhozy and other state-run operations have been calculated based on annual report data for the operations of these organizations. Meanwhile, gross agricultural produce yields for the private sector (personal subsidiary operations) of “workers and employees” in state sectors12 and kolkhozniki were to be calculated using data on the size of area sown for these operations and data on average harvest yield per 1 hectare of land sown with a given crop, which were determined based on sample survey materials concerning household budgets of kolkhozniki (for figures regarding 1991 onward in Appendix Table 5.7, we discuss this later in Sect. 5.5; this applies also for Appendix Tables 5.8, 5.9, and 5.10). 12  Workforce in state-run organizations was called “workers and employees” in the Soviet Union. For this, see discussions in Sect. 5.4.4.

164 

M. SUHARA

Appendix Table  5.8 shows statistics relating to area sown. In Soviet Union’s (Russian Republic) official statistics, area sown (posevnye ploshchadi) is based on spring production tables, namely the area of crop seeding conducted up until the time when spring seeding has finished. As seen in Appendix Table 5.8, total area sown indicates the sum of grains, industrial crops, potatoes/vegetables/gourds, and produce used for feed; it includes neither fallow land nor land used for fruits, berries, grapes, or tea. According to statistical yearbook accounts, the sizes of area sown for kolkhozy, and sovkhozy and other state-run agricultural enterprises were to be calculated from data in report papers that were required to be submitted by these organizations. In addition, the sizes of area sown for private operations by kolkhozniki and “workers and employees” of sovkhozy and other state-run enterprises were to be calculated from sample surveys or comprehensive surveys. However, concerning accuracy, statistics on area sown need to be handled with great care. Someone responsible for land use and yields in the state statistics bureau themselves declared in specialist journals, for instance, that “now and then some of the areas sown to this, that, or the other crop (cotton, flax, rice, and other crops) are concealed from the reports in order to raise the yields artificially” (Schinke 1972, p. 242). Appendix Table 5.9 shows livestock animal numbers at the beginning of each year, and Appendix Table 5.10 shows livestock output quantities. The definition for livestock sector output figures in the Soviet Union includes the sum of increases in weight resulting from the fattening of livestock animals and changes in inventory (i.e. increases in livestock raised within the year) in addition to sales of livestock animals and of animal produce (e.g. meat, milk, eggs, and wool). Appendix Table 5.10 shows weight statistics for the latter two elements. According to accounts in the Russian Republic Statistical Yearbook, the data for production of all types of meat by slaughter weight includes the secondary produce (detailed later). The data also includes the slaughter of livestock and poultry through industry or within farmhouses. The output weight of milk in the table includes all milk actually extracted (i.e. not only the volumes sold but also the milk used to raise calves, or for consumption within the farmhouses). Milk here includes not only cow milk, but also sheep milk, goat milk, and horse milk, among others. Similarly, wool includes camel and goat wool. It should be noted that the changes in the amounts in hand of main livestock animals (cattle, pigs, sheep, goats, horses, reindeer, and poultry) in Appendix Table  5.9 are based on report papers which were submitted obligatorily by each organization for kolkhozy, and sovkhozy and other

5 AGRICULTURE 

165

state-run enterprises and from farmhouse patrol surveys by special survey committees organized by kolkhozy and such for the private sector. However, it is thought that these survey methods were later simplified as described below. Note that the rate of output growth was generally more rapid for livestock produce than for crop-farming produce as seen in Appendix Table  5.5. The gross output values for the livestock sector, which were lower than gross output values for the crop-farming sector around 1950, increase to as much as nearly twice the crop-farming sector in 1990 as seen in Appendix Table 5.4. As noted in Sect. 5.2, the ratio of crop-farming to livestock output in 1913 was about 7:3. 5.4.2  Issues with Production Statistics The previous section gave an overview of the Russian Republic agricultural production statistics. These production statistics have been exposed to strong criticism from western researchers in particular. To summarize this criticism, one aspect is the small quantity of publicly available statistics; one other aspect is doubt concerning accuracy. This section will discuss these two issues in detail. First, the scarcity of statistics is clear from Appendix Tables 5.5 and 5.6. Specifically, many of the statistics for before and a little after World War II (i.e. the Stalin era) are left blank in these tables. This is a manifestation of the heightened secrecy around statistics furthered at the same time as the establishment of the Stalin regime and the lack in the thoroughness of anti-Stalin criticism in the post-Stalin era. The same phenomenon can also be observed across Soviet economic statistics (e.g. industrial statistics) as a whole. Yet, the disorder accompanying the forced collectivization started in the late 1920s or early 1930s was so severe that its trends can clearly be seen particularly in agricultural statistics. As described below, in the Khrushchev era, there were some constructive changes, but the remarkable tendency of Soviet leaders to use statistics as propaganda for the socialist system remained until the end of the Soviet Union. Accordingly, even now there are many blank parts in agricultural statistics for the 1930s and 1940s. However, it should be noted that after the collapse of the Soviet Union, a large portion of statistics previously kept secret has been declassified and made available as mentioned above. There are multiple aspects to the issue of scarcity in official production statistics in addition to the difficulties stated above. For instance, there are

166 

M. SUHARA

especially few statistics on produce used for seeding or feed, or on produce losses, and this point has caused dissatisfaction among western specialists. The Soviet Union and the RSFSR considered gross output indicators to be of utmost importance, but what matters for citizens is not the simple output quantity but rather how much of the product quantity can actually be consumed. In other words, the issue in the agricultural sector is not the gross output but the size of net output or value-added production. In order to know these figures, the quantity of output which is utilized in seeding or as feed and of output which is lost before reaching the consumer are extremely important matters. Yet, accurate data concerning these details was very scarce. The end of this section briefly explains a procedure used by the United States Central Intelligence Agency (CIA) to estimate the value-added production of agriculture in the Soviet Union. There are also issues with output of individual items. For instance, vegetable output statistics are only featured simply as “vegetables”; details of individual-item statistics were not released. Similarly, there is no individual-­ item output data for “fruits and berries.” This coarseness of data has also been subject to criticism from western specialists. The second issue is the accuracy. For instance, with official industrial output indices, there was great overestimation in output increase. This type of issue may exist for agriculture. Since we were able to acquire the 1965 comparative prices (Savitskii et al. 1974, pp. 462–464) that the statistics bureau used when calculating gross output (i.e. when constructing production indices), we conducted work to check this point. The results of this work are shown in Table  5.4. This table compares the indices, which we estimated in practice, against the official statistics’ output indices for the period during which the Russian Republic statistical bureau is believed to have been using 1965 base-year prices for calculating output indices (i.e. 1965–1975). The official gross output amounts using 1965 comparative prices from Appendix Table 5.5 were entered unchanged into Columns 1–3 of the table, and Column 4 contains a production index calculated directly from Column 3. This set (if calculated proportionally) matches the 1965–1975 portion of the official output indices featured in Appendix Table 5.6, which take 1940 as 100. Columns 5–7 contain the gross output amount values estimated from multiplying our gross yield volume data by 1965 comparative prices. The 1965 gross agricultural output value in the official statistics is 34.9 billion rubles; in comparison, our estimate is 32.2  billion rubles. In other words, our estimate has 92.3% coverage for this year. Comparing the official indices with our estimated

15.7 18.1 18.7 20.3 17.6 20.7 19.2 16.0 23.4 19.7 17.5

19.2 20.0 20.8 21.3 21.0 22.8 23.7 23.2 24.5 26.1 25.2

34.9 38.1 39.5 41.6 38.9 43.5 42.9 39.2 47.9 45.8 42.7

Gross agricultural output (in billion rubles)

Source: See the text for the calculation methods

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

Gross crop Gross livestock output (in output (in billion rubles) billion rubles)

Official statistics

100 109 113 119 111 125 123 112 137 131 122

Gross agricultural output index 14.6 16.6 17.3 19.1 16.4 19.5 18.0 14.8 21.7 18.4 16.5

17.6 18.6 19.9 20.2 20.1 20.9 22.3 22.6 22.7 24.5 24.7

32.2 35.2 37.2 39.3 36.5 40.4 40.4 37.4 44.4 42.9 41.2

Gross agricultural output (in billion rubles)

Our estimates Gross crop Gross livestock output (in output (in billion rubles) billion rubles)

Table 5.4  Checking official agricultural output indices (1965 prices)

100 109 115 122 113 125 125 116 138 133 128

Gross agricultural output index

5 AGRICULTURE 

167

168 

M. SUHARA

indices, the two indices do not display any great difference. Therefore, unlike industrial output indices, the agricultural output indices released by the statistics bureau may be considered as reliable. As shown in Suhara (2013) or Chap. 6 of this book, the main cause behind the upward bias in industrial production indices was the so-called “pseudo-new-products” issue. Meanwhile, in agriculture, since new products or pseudo-new products almost never appear, there is almost no divergence between the estimated and official indices. At least as far as agricultural production indices are concerned, it can be concluded that there were no great overestimation concerns with production indices released by the Soviet (RSFSR) statistical authorities. Generally, the main source of low accuracy in Soviet statistics is the ambiguity in definitions and in calculation methods. One example is grain output statistics in “biological” output weight, as mentioned above. Officially, from 1939 (actually from around 1933), biological yield quantities were introduced in official statistics. This is a system whereby yields predicted based on sample surveys prior to crop harvest are considered as official yields. Accordingly, output quantities increased by about 20% to 40% from previous bunker weight measures. The adoption of this measurement method was probably undertaken for the promotional effect to show the superiority of socialist production to the West. According to Naum Jasny (1947, pp. 302–303), who was known for fiercely criticizing such kinds of problems in Soviet official statistics, when the method was first adopted, the yield amounts would be announced before harvest with an estimated 10% loss at harvest; yet, at the end of the 1930s, the weight without taking this loss into account would be announced as the yield amount, and the biological measurement method came to be applied not only to grains but also to other crops. According to Rastiannikov and Deriugina (2005, p. 161), the difference between grain yield volume per unit of area for the two methods (biological and bunker weights) are as shown in Table 5.5. Table 5.5  Biological grain yield quantities (centner/hectare)

Biological yield quantity Bunker weight

1933

1934

1935

1936

1937

1938

1940

8.8 6.7

8.5 6.5

8.9 7.3

8.2 5.6

11.5 9.3

9.2 7.3

10.7 8.6

Source: Rastiannikov and Deriugina (2005, p. 161)

5 AGRICULTURE 

169

Biological yield volumes became symbolic of the Stalin regime, and immediately after Stalin himself died in 1954, it was decided to revise the volumes into the bunker weight system. However, it was 1958 when this was officially confirmed and output volumes for the 1950s were released in bunker weight. In addition to the disorderliness that accompanied this change in yield estimation method, as influenced by Khrushchev’s agricultural policy, output volumes for the 1950s are often viewed with suspicion by the West. According to the Central Intelligence Agency (CIA) in the United States, other examples of creating the impression of expanded output volumes through ambiguous definitions are the methods for verifying livestock animal numbers and meat production statistics. Specifically, the definition of meat in the Soviet Union statistics changes with the time period, and from the 1920s through to the 1940s, it came to encompass gradually more types of goods. Initially, meat was considered as beef and veal, pork, mutton, and lamb; however, it expanded to bird meat, rabbit meat, and fats of all sorts of animals. Also, before 1954, organs used for food (entrails) were added, and in 1956, meat from horses, camels, and other animals came to be considered “meat.” The example of livestock animal number verification refers to the change in methods for verifying livestock animal numbers using an animal census in 1965. As mentioned, previously, a census committee member would visit kolkhozy and verify numbers in the first week of January each year. However, this census was abolished in 1965, and livestock animal numbers became somewhat simply verified based on monthly or quarterly reports submitted by kolkhozy to the statistics bureau. One result was an increase in statistical inaccuracies (Joint Economic committee (JEC) 1982, p. 265). Lastly, this section touches upon the method used to calculate value-­ added output indices for the Soviet Union agriculture in 1950–1979 by the CIA (JEC 1982, pp. 245–316). The estimates made by the CIA define net output and value-added output in agriculture in the following ways. Net output = gross output − seeding − feed (including eggs used for hatching) − losses. Value added = net output − non-agricultural product input (e.g. fertilizer and fuel). The CIA went to great trouble to calculate each one of these elements; herewith we consider losses as an example. Using the resources of the US Military, the CIA calculates rainfall from detailed weather data for every

170 

M. SUHARA

state (oblast’) and region (krai) and, by relating this to the degrees by which agricultural products are prone to rot per region, estimates the size of agricultural produce losses for each area. In this manner, the CIA uses vast amounts of energy to calculate the value-added production figures for the Soviet Union agriculture. Of interest to us here is the extent to which these figures match the changes in the gross output figures released by the Soviet government, especially because in the case of industrial production, some Western scholars insisted that one of the main reasons for the overestimation of production increase in official statistics was that production growth was calculated based not on value-added produce but simply on gross output. Table 5.6 shows that the CIA value-added output indices for 1950–1979 are 0.2% lower in average annual increase rate than the official gross output indices. They are lower than the official gross output indices in 1950–1960 and 1970–1979 and higher in 1960–1970. Taken as a whole, it may be said that there is not much difference between the value-­ added production increase rate and the gross production increase rate. Note that for reference, official gross production indices for the RSFSR have been included in the table. Above is a somewhat detailed account of the calculation of value-added production for the Soviet Union agriculture by the CIA. This kind of effort was necessary to learn the size of and changes in value-added output. 5.4.3  Kolkhoz and Sovkhoz Statistics As summarized in Sect. 5.3, the main forms of agricultural operations in the Soviet Union and the RSFSR were kolkhozy and sovkhozy. Appendix Table 5.11 contains statistics which show the fundamental trends in kolkhozy and sovkhozy. Here we add brief explanations about kolkhozy and Table 5.6  Average annual production growth rate (%)

1950–1979 1950–1960 1960–1970 1970–1979

Official USSR gross output index

CIA estimated USSR gross output index

3.2 4.8 3.3 1.4

3.2 4.6 3.6 1.2

Source: JEC (1982, p. 278). Appendix Table 5.5

CIA estimated Official RSFSR USSR value-added gross output output index index 3.0 4.3 3.7 0.9

2.9 5.0 3.1 0.5

5 AGRICULTURE 

171

sovkhozy as we consider each item in this table. The character of kolkhozy before World War II was very different to that after the war. For instance, the number of kolkhozy in the Russian Republic in 1937 exceeded 170,000, while in 1980, it was a mere 12,000. From the Khrushchev era, as previously mentioned, kolkhoz mergers were undertaken with the aim of achieving economies of scale, and there were also kolkhozy being turned into sovkhozy. Calculated from Appendix Table 5.11, the number of participating farmhouses per kolkhoz in 1937 averages at 64 households; for 1960, it is 341 households. The seeded area per kolkhoz is 468 hectares for 1937 and 3486 hectares for 1960. From the fact that the increases in these figures from 1960 onward are not so great (375 households and 4633 hectares, respectively, in 1980), it is possible to understand the remarkable extent of kolkhoz’s scale expansion in the Khrushchev era. At the same time, as detailed below, the average monthly wage for a kolkhoz member was 30 rubles in 1960 and 124 rubles in 1980. The real income of farmers participating in kolkhozy is also thought to have increased (it is important, however, to note that in 1980, the average monthly wage for the entire Russian economy was 178 rubles and, thus, higher than for kolkhozy). Note that the “Gross income of kolkhozy” (also included in Appendix Table 5.11) indicates net production of kolkhozy, i.e. having subtracted output expenditure (e.g. seeding, feed, fuel, depreciation) from gross output of kolkhozy (Nazarov et al. 1981, p. 93). In other words, this may be considered the amount contributed by kolkhozy to the produced national income. Meanwhile, sovkhozy differed from kolkhozy, which continued to drop in number from the 1930s as shown in Appendix Table 5.11; excluding a few exceptional years, their numbers were increasing annually. The area sown per sovkhoz was already 3070 hectares in 1940 and 10,393 hectares in 1960 (i.e. three times the scale of kolkhozy). However, this period was the peak of sovkhoz scale expansion, and later, the area was reduced year by year, with the average area sown in 1980 at 5424 hectares. Nonetheless, agricultural policymakers did not necessarily lose their gigantomania, and in the late Brezhnev era, sovkhozy, along with kolkhozy, came to form agricultural-industrial complexes which also subsumed food-processing industry enterprises. Note that the “gross income of sovkhozy” in Appendix Table 5.11, in the same manner as “gross income of kolkhozy,” refers to sovkhoz contribution to produced national income. Also, the “numbers in basic production activities in sovkhozy” can be considered to indicate those among “total number of workforce” who are engaged in basic production activities (i.e. agricultural labor).

172 

M. SUHARA

These two types of operation organizations, kolkhozy and sovkhozy, handled a large portion of agricultural production in the Soviet Union (Russian Republic); yet, in practice, as seen in Table 5.7, the role played by personal subsidiary operations (i.e. the quasi-private sector) must not be overlooked. The term “personal subsidiary operations” refers to agriculture undertaken by kolkhozniki, along with their families or with sovkhoz “workers and employees” and their families, on garden plots belonging to their own households. In fact, Russian peasants had been cultivating potatoes, vegetables, and fruit trees, among others on their own household land since the Imperial era in addition to cultivating the land allocated by communities. Further, while the land would be periodically reallocated within communities, there was no reallocation of this household land, which would be passed down from one head of the family to the next. It is thus thought that considerably more intensive agriculture was conducted with this land than with allocated land. This tradition survived through collectivization, and throughout the Soviet era, peasants cultivated produce around their households. Additionally, in the latter half of the Soviet era, land in the outskirts of towns was also assigned to urban residents and came to be used for secondary agriculture. All of these factors count as personal subsidiary operations. As seen in Table 5.7, while crops such as grains, sugar beets, and sunflowers were mostly produced by kolkhozy or sovkhozy, personal subsidiary operations were accountable for a notable proportion in particular of crops such as potatoes and vegetables, as well as livestock produce such as meat and dairy. These agricultural products produced in the subsidiary economy would sometimes be consumed at home, but it was also possible to sell them at “kolkhoz markets.” There were “kolkhoz markets” in many cities in the Soviet Union, and these were the only true markets officially authorized by the socialist regime. Since high-quality goods would fetch high prices, sellers aimed to produce goods which would please buyers. This framework was also appreciated by buyers. Thus, personal subsidiary operations, which had been perceived negatively in terms of ideology until the Khrushchev era, instead came to be encouraged in the Brezhnev era. According to official statistics on sales of food products, in the 1970s, nearly 10% of these products were purchased in kolkhoz markets. However, one great problem for personal subsidiary operations was the issue of feed. Specifically, there was almost no feed material on household land, and it is thought that feed often had to be borrowed from kolkhozy or sovkhozy

5 AGRICULTURE 

173

Table 5.7  Agricultural production in Russia per form of management (%) 1940 Grains

Sugar beet

Sunflower seeds

Flax fiber

Potatoes

Vegetables

Meat

Milk

Eggs

Wool

Kolkhozy Sovkhozy and other state-run organizations Private sector Kolkhozy Sovkhozy and other state-run organizations Private sector Kolkhozy Sovkhozy and other state-run organizations Private sector Kolkhozy Sovkhozy and other state-run organizations Private sector Kolkhozy Sovkhozy and other state-run organizations Private sector Kolkhozy Sovkhozy and other state-run organizations Private sector Kolkhozy Sovkhozy and other state-run organizations Private sector Kolkhozy Sovkhozy and other state-run organizations Private sector Kolkhozy Sovkhozy and other state-run organizations Private sector Kolkhozy Sovkhozy and other state-run organizations Private sector

1960

1970

1980

1985

90 9

62 37

51.8 47.8

49.3 50.2

49.1 50.3

1 93 7

1 87 13

0.4 86 14

0.5 84 16

0.6 83 17

0 97 2

0 80 16

0 76 23

0 71 27

0 71 27

1 97 0

4 92 8

1 74 26

2 70 30

2 67 33

3 43 3

0 24 13

0 18 17

0 15 20

0 16 23

54 44 11

63 21 31

65 17 42

65 16 51

61 17 58

45 25 11

48 35 25

41 31 37

33 23 44

25 23 49

64 22 7

40 32 20

32 33 34

33 34 39

28 35 40

71 4.6 2

48 11 11

33 12 40

27 1.6 71

25 1.1 76

93.4 49 10

78 46 25

48 42 37

27.4 36 44

22.9 35 44

41

29

21

20

21

Source: Goskomstat RSFSR (1987, 70 years Anniversary edition, p. 157)

174 

M. SUHARA

out of necessity. In other words, personal subsidiary operations were not truly self-supporting operations; in some respects, they were also parasitic and dependent on socialist organizations. Moreover, in addition to kolkhozy, sovkhozy, and personal operations, agricultural production organizations called “intermediary operations enterprises and organizations (mezhkhoziaistvennye predpriiatiia i organizatsii)” were encouraged from the Brezhnev era (relevant statistics began to be featured from the 1974 edition of the Russian Republic Statistical Yearbook (TsSU RSFSR 1975). These were enterprises, financed and created by kolkhozy and sovkhozy, which engaged in agriculture-related work (particularly, construction). However, it is known that increasing numbers of these enterprises would undertake agricultural production, particularly in the livestock sector. 5.4.4  Labor Statistics Finally, this section discusses the agricultural sector labor statistics. Here, we consider how many people were engaged in agriculture in the Russian Republic. Almost no statistics were published on the size (worker numbers) of the agricultural sector labor force as a whole. This is because state-­ run sovkhozy and other state-run agricultural enterprises and kolkhoz cooperative organizations were statistically treated as separate entities, with their actual data also being featured separately in statistics. Specifically, workers employed in sovkhozy and other state-run agricultural organizations were broadly categorized in the same manner as industrial sector workers (i.e. as “workers (rabochie, blue-collar workers)” and “employees (sluzhashchie, white-collar workers)”) and were shown statistically as such in the agricultural sector. In other words, for the sovkhoz workforce, the same names were used for economic sectors other than agriculture. Meanwhile, kolkhoz workers were termed “kolkhozniki” in a manner removed from “worker and employee” statistics. It is for such reasons that average annual “workers and employees” and average annual kolkhozniki are displayed separately in Appendix Table 5.12, which shows the labor force in the agricultural sector in Russia. Therefore, roughly speaking, adding kolkhoz member numbers to the entire national economy’s “worker and employee” numbers provides the working population for the entire economy, and adding kolkhozniki to the agricultural sector’s “workers and employees” numbers provides approximate workers for the

5 AGRICULTURE 

175

agricultural sector.13 In the official Russian Republic statistics, several differing figures have been released for the same year’s average annual worker and employee numbers. Many of these are thought to be revisions of figures following changes to economic sector classifications. Appendix Table 5.12 features only the numbers considered to be the final set. Note that the gap between the numbers of “average annual workers and employees” and numbers of “average annual workers and employees in sovkhozy, intermediary operations enterprises, and other supplementary agricultural enterprises” is mainly of tractor and automobile machinists (i.e. engineers and drivers). One characteristic of the socialist economy was the large participation of women in production activity. Appendix Table 5.13 shows the size of female labor in the agricultural sector. The table reveals that although the share of the female workforce in the agricultural sector gradually fell from 50% in 1960, even in 1980, it remained at around 40%. Furthermore, Appendix Table 5.14 shows a progression which compares favorably with other sectors, whereby the average agricultural sector wage gradually increased after a period in which it was considerably lower than in other sectors. The average wage for kolkhozniki was considerably lower than for sovkhoz members, as described above, but it also showed gradual improvement. Calculated using numbers from Appendix Table 5.14, from 1960 to 1990, the nominal wages for “workers and employees” increased by an annual rate of 5.9%, and the nominal pay for kolkhozniki increased by an average annual rate of 7.5%. Since there was no significant inflation in the Soviet economy until the end of the 1980s, the agricultural sector wages can be considered to have substantially increased in real terms as well.

5.5   Agriculture and Agricultural Statistics in the Russian Federation This section provides an overview of agriculture and agricultural statistics in the Russian Federation after the collapse of the Soviet Union. The greatest change in agriculture in new Russia is probably the changes in the forms of agricultural operations which accompanied the shift to a market 13  Strictly speaking, statistically total workforce was classified into “family members of workers and employees engaged in personal subsidiary agricultural operations” and “other inhabitants (independent peasant farmers, and kustar’ artisans, among others),” as well as “workers and employees” and “kolkhozniki.”

176 

M. SUHARA

economy. As previously mentioned, in the Soviet era, kolkhozy, sovkhozy, and personal subsidiary operations were the three main forms of operations that sustained agriculture. However, from the market economy era, agricultural operations came to be divided into three forms, namely “agricultural organizations” (they had been called “agricultural enterprises” for some time after the collapse of the Soviet Union), “dweller-managed operations,” and “farmer-managed operations.” “Agricultural organizations” are the results of reorganizing Soviet-era kolkhozy, sovkhozy, and other organizations into joint-stock companies, production cooperatives, limited liability corporations, or supplementary operations run by various enterprises and organizations in sectors such as mining, manufacturing, transport, and scientific research. Next, “dweller-managed operations” may be considered as present-day versions of what was called “personal subsidiary operations” in the Soviet era. In other words, as with the Soviet era, the term indicates small-scale operations run by employees of the above-mentioned agricultural enterprises and by rural community residents on farming patches and vegetable gardens in the surroundings of their own households, as well as also indicating self-sufficient operations conducted by urban residents in outskirt areas. As stated above, this type of agricultural operation has been a tradition since the Imperial days. Next, “farmer-managed operations,” also called “farmer(s)” or “independent self-managed farmer(s),” refer to operations by individuals independent of agricultural organizations (including their families, relatives, and friends). The sum of the crop cultivation and livestock production undertaken by these three forms of operations provides agricultural output, and the output share for each of these forms is shown in Appendix Table  5.15. Immediately after the beginning of the shift to a market economy, it was expected that farmer-managed operations would support Russian agriculture, but even at present, when a quarter century has passed since the birth of new Russia, it would not be possible to say that these expectations have been realized. At present, data on agricultural organizations is collected within the framework of “annual structural corporate statistics” mentioned in Sect. 6.4. Since data on dweller-managed operations are considered difficult to collect, the size of their agricultural output, among others, are estimated based on sample surveys. As for farmer-managed operations, comprehensive surveys are conducted periodically, and for other years, sample surveys are used. In actuality, agricultural censuses were already conducted in 2006 and 2016. Moreover, for non-agricultural organizations, there are

5 AGRICULTURE 

177

methods in use that do not directly collect data; for instance, estimations of areas sown and yields from past data (Rosstat 2006b, pp. 105, 106). There are two issues to be aware of when using agricultural statistics currently released. The first issue is related to the 2006 Agricultural Census mentioned above. This census was conducted in order to clarify the state of agriculture at the time of July 1, 2006, and as a result of the census, the basic values used to calculate official statistics are thought to have been revised considerably. Therefore, there now exist, for example, both old index series which do not consider the 2006 Agricultural Census results and new index series which do so. Revisions of previously released old indices are thought to have been conducted retrospectively up to 1996. Rosstat (2009, p. 409) gives the following note: “statistical data for 1996 to 2007, which has taken into consideration the results of the 2006 nationwide agricultural census, should be published in Rosstat (2010) and Rosstat (2009b).” Yet, in practice, present data concerning 1996–1999 has not been released; it seems that what has been made clear is limited to data from 2000 onward. The indices featured in this chapter are also influenced by such circumstances. Specifically, among the statistics in this chapter, Appendix Tables 5.6–5.10 and 5.15 are a mixture of new and old indices; there is a possibility that this also applies to Appendix Tables 5.16 and 5.17. For particular details, please see the notes for each table. The second issue is related not only to agriculture but to all sectors of the economy: changes in the economic sector classification. As is well known, Russia already began to move toward the Russian Classification of Economic Activities (OKVED), which is in accordance with the EU classifications of forms of economic activity, and accordingly, the previous sector name “Agriculture” was revised to “Agriculture, Hunting, and Forestry.” There were changes in classification which covered not only naming but also particular details; as a result, both new and old indicator series also appear here. The statistics in this chapter that are directly related to this are Appendix Tables 5.16 and 5.17. In these tables, both indicator series are shown together, allowing for comparison between the two. Meanwhile, in terms of information disclosure, it may be said that agricultural statistics in present-day Russia have shown great advances in comparison to the Soviet era. One example is grain yields, for which the Perestroika-era methods have been passed on and reports are made with data in clean weight. Further, while Sect. 5.4 of this chapter described how the US CIA undertook estimations of grain losses from US Military weather data for each region of the Soviet Union, outlets such as the

178 

M. SUHARA

Russian Statistical Yearbook now release details about the sizes of losses, seeding, feed, and even of emergency stocks. Based on many other points, Russian agricultural statistics can be said to have improved in terms of information publication from the Soviet era. This chapter will close using this statistical information to briefly describe the present state of Russian agriculture.14 Appendix Table  5.6 shows agricultural output indices not only for the Soviet era but also from the start of present-day Russia. According to this information, excluding 1997, the production of agriculture as a whole continued to decline until 1998. If 1990 output is taken as 100, the index reaches 56 at the bottom year of 1998. The scale of this decline does not differ particularly from the slump in gross domestic product (GDP) for Russia as a whole, but due to the speed of the slump in the first half of the 1990s, the decline is greater than GDP in terms of square measure. Appendix Table 5.6 also shows a slump in agricultural output from 1913 to 1921 as well as a slump in output borne from Stalin’s collectivization of agriculture. However, the decrease in output from the collapse of the Soviet Union surpassed these difficulties and was probably the second greatest scale in history after the fall due to World War II. The grain output for the bottom year, 1998, is 41.0% of 1990 in yield amount (Appendix Table  5.7), and 80.4% of 1990  in area sown (Appendix Table  5.8). The size of the slump in yields per area unit reveals the progress of extensive farming in this period. Appendix Table 5.16 also shows that from 1990 to 1998, the number of agricultural employees decreased by only 10%. However, agricultural output decreased by 44%. From 1998, Russian agriculture showed recovery along with other sectors of the economy. The import substitution following the great collapse of the ruble in 1998, the acceleration in Russian economic recovery ­following the rise in crude oil prices, and the protective policies for agriculture implemented due to a fiscal surplus, all had positive effects on agricultural output. However, as shown in Appendix Table 5.6, this recovery in agriculture was mainly due to crop farming. Therefore, there has been an unsatisfactory recovery in livestock farming. Livestock products are losing ground to imports due to the rise in costs of domestic production. Meanwhile, the crop-farming sector can be considered to be  The following account draws upon Nobe (2007, 2016).

14

5 AGRICULTURE 

179

recovering. For example, with grains, not only have yield amounts increased (47.9  million tons in 1998, average 85.2  million tons from 2006 to 2010), but the improvement in yield amounts per area sown is remarkable (0.94 tons per 1 hectare of seeded area in 1998, average of 1.89 tons from 2006 to 2010). Area sown has continued to shrink, but it appears to have recently finally hit its bottom level. Taking into consideration the unstable production during the Soviet era, the cessation of crop-farming agriculture on cultivated land, which is limited due to climate, may actually bring about efficient agricultural production as this signifies the concentration of production toward land with favorable conditions. Improved efficiency in grain production can also be seen from other statistics. For instance, there is a noticeable drop in recent years in the rate of losses (losses-yields) which can be calculated from the grain supply and expenditure balance charts: the rate was 3.0% in 1980, but 1.2% in 2005 and 1.3% in 2013 (Goskomstat Rossii 2001, p. 422; Rosstat 2014, p. 391). Into the twenty-­first century, influenced also by the high value of the ruble, Russia is overwhelmingly in debt in its trade balance for “food and agricultural products” as a whole (i.e. 27.0 billion dollars in 2013 (Rosstat 2014, pp. 606, 607)). Nonetheless, exports for “food and agricultural products” are growing. Perhaps, these conditions show a slight turn for the better. However, these brighter sides of Russian agriculture seem to be supported only by agriculture in southern Russia or in outskirts of cities, which stand close to foreign countries or big markets. It can be said that the situation for agriculture for most other regions is becoming more and more grave. As can be seen in Appendix Table 17, average wages in the agricultural sector, which were close to the average wage for the Russian economy as a whole at the end of the Soviet era, have decreased rapidly since the collapse of the Soviet Union and reached about half the average for the entire economy these days. Furthermore, social infrastructure in rural districts such as schools and hospitals became obsolete, losing appeal to attract the youth. Into the twenty-first century, agricultural organizations came to be legally required to put their finances on a healthy footing, and some organizations which failed to do so have already disappeared, especially in remote areas under tough conditions. Such impoverishment in rural communities will become an increasingly serious social problem for entire Russia in the near future.

180 

M. SUHARA

Appendix Appendix Tables 5.1–5.17 are available in http://www.ier.hit-u.ac.jp/ histatdb/projects/view/2.

References Falkus, M.E. (1968). Russia’s National Income, 1913: A Revaluation. Economica, 35(137), 52–73. Goskomstat Rossii (2001). Rossiiskii statisticheskii ezhegodnik, 2001. Moscow: Goskomstat Rossii. Goskomstat RSFSR (1987–1991). Narodnoe khoziaistvo RSFSR. 1986–1990. Moscow: Finansy i statistika. Goskomstat SSSR (1987). Narodnoe khoziaistvo SSSR za 70 let. Moscow: Finansy i Statistika. Gregory, P. R. (1982). Russian National Income, 1885–1913, Cambridge, London, New York, New Rochelle, Melbourne, Sidney: Cambridge University Press. Jasny, Naum (1947). Intricacies of Russian National Income Indexes. Journal of Political Economy, 74(4), 299–322. Joint Economic Committee, Congress of the United States (JEC) (1982). USSR: Measures of Economic Growth and Development, 1950–80. Washington, D. C.: U.S. GPO. Khromov, P. A. (1950). Ekonomicheskoe razvitie Rossii v XIX–XX vekakh, 1800– 1917. Moscow: Gosudarstvennoe izdatel’stvo politicheskoi literatury. Kikuchi, M. (1964). A Study on the Serf Emancipation in Russia (in Japanese). Tokyo: Ochanomizu shobo. Liashchenko, P. I. (1915). Zernovoe khoziaistvo i khlebotorgovye otnosheniia Rossii i Germanii v sviazi s tomozhennym oblozheniem. Tip. redaktsii periodicheskikh izd. St. Petersburg: Ministerstva Finansov. Miyanabe, N. (1967). An Essay on Soviet Agricultural Prices (in Japanese). Tokyo: Iwanami shoten. Nakayama, H. (1976). Contemporary Soviet Agriculture (in Japanese). Tokyo: Tokyo U. P.. Nakayama, H. (1981). The Present Situation of Soviet Agriculture (in Japanese). Tokyo: NHK Publishing. Nazarov, M. G. et al. (Eds.) (1981). Sotsial’no-ekonomicheskaia statistika: Slovar’. Moscow: Finansy i statistika. Nifontov, A. S. (1974). Zernovoe proizvodstvo Rossii vo vtoroi polovine XIX veka: po materialam ezhegodnoi statistiki urozhaef evropeiskoi Rossii. Moscow: Izdatel’stvo Nauka.

5 AGRICULTURE 

181

Nobe, K. (1990). The Virgin Lands Campaign and Khrushchev’s Agrarian Administration: Kazakhstan 1957–1963 (in Japanese). Shakai Keizai Shigaku, 56(4), 480–510. Nobe, K (2007). Russian Agriculture at the Beginning of the 21 Century (in Japanese). Senshu Daigaku Shakaikagaku Nempo, 41, 217–236. Nobe, K (2016). The Progress of Differentiation in Russian Rural Districts: Disappearance of Outlying Villages (in Japanese). Senshu Keizaigaku Ronshu, 50(3), 103–115. Prokopovich, S.  N. (1918). Opyt ischisleniia narodnogo dokhoda 50 gubernii Evropeiskoi Russii. Moscow. Rastiannikov, B. G. and Deriugina, I. V. (2005). Ekonomicheskii rost v agrarnom sektore Rossii: Problemy XX Veka. Moscow: Statistika Rossii. Rosstat (2004–2017). Rossiiskii statisticheskii ezhegodnik. 2004–2017. Moscow: Rosstat. Rosstat (2006b). Metodologicheskie polozheniia po statistike, vypusk piatyi. Moscow: Rosstat. Rosstat (2009b). Sel’skoe khoziaistvo, okhota i lesovodstvo v Rossii. 2009. Moscow: Rosstat. Sato, T. (1975). Contemporary Socialist Economies (in Japanese). Tokyo: Iwanami shoten. Savitskii, F.  E., Kosynkin, A.  A. and Rusakov, G.  K. (1974). Spravochnik po planirovaniiu sel’skogo khoziaistva. Moscow: Kolos. Schinke, E. (1972). Soviet Agricultural Statistics. In Treml, V. G. and Hardt, J. P. (Eds.), Soviet Economic Statistics. Durham: Duke U. P.. Shigemitsu, A. (1979). A Statistical Study on Soviet Agriculture (in Japanese). Tokyo: The Japan Institute of International Affairs. Suhara, M. (2013). A Study of Soviet Industry (in Japanese). Tokyo: Ochanomizu shobo. Tomioka, S. (1998). A Study on Russian Economic History (in Japanse). Tokyo: Yuhikaku. Tsentral’nyi statisticheskii komitet Ministerstva Vnutrennikh Del (1888–1918). Statistika Rossiiskoi Imperii. St. Petersburg. TsSU RSFSR (1959–1986). Narodnoe khoziaistvo RSFSR, 1958–1985. Moscow: Gosstatizdat. TsSU SSSR (1957–1986). Narodnoe khoziaistvo SSSR. 1956–1985. Moscow: Gosstatizdat. Vainshtein, A.  L. (1969). Narodnyi dokhod Rossii i SSSR: istoriia, metodologiia ischisleniia, dinamika. Moscow: Nauka. Wheatcroft, S.  G. (1974). The Reliability of Russian Prewar Grain Output Statistics. Soviet Studies, 26(2), 157–180.

CHAPTER 6

Industry Manabu Suhara

6.1   Introduction Russia attained impressive economic development following the emancipation of Russian serfs and until approximately 1960, although growth was interrupted by the October Revolution, the Russian Civil War, and World War II. The catalyst to Russia’s advancement was industrial growth. The agrarian economy, for which the rural population accounted for approximately 85% of the total by the end of the nineteenth century, underwent a complete change in the economic structure. This Russian success, however, came to an end during the late 1950s and the early 1960s. The mining and manufacturing industries, which until then had led the economy, lost vigor, and the industrial economy as a whole ­withered. This deterioration led to the collapse of the Soviet Union by the end of the twentieth century and the start of systemic transformation to capitalism. In Chap. 6, we look back at the history of Russia from the standpoint of industrial statistics. We adopt a general view of industrial statistics in Russia under the Tsarist regime. We present and compare some production indices estimates for the industry of the Russian Empire. Then, we discuss production, labor, and capital statistics for the Russian industry M. Suhara (*) College of Economics, Nihon University, Tokyo, Japan e-mail: [email protected] © The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5_6

183

184 

M. SUHARA

in the Soviet era followed by a summary of the changes in the industrial statistics for Russia’s new era.

6.2   Industrial Statistics in the Russian Empire Efforts to compile official industrial statistics on the Russian Empire date back to the early eighteenth century (Rybakov 1976, p. 26).1 In 1719, the government of Peter the Great established two central offices—Berg-­ kollegiia and Manufaktur-kollegiia—for the purposes of developing and controlling industries, which had been emerging in many regions in Russia at the time. Thereafter, a 1724 decree stipulated that all factory owners engaged in manufacturing and mining be required to submit business reports twice a year to the Manufaktur-kollegiia and Berg-kollegiia, respectively. However, it is generally agreed that “the historical value of the so-­ called factory reports in the eighteenth century is not very high” (Arima 1973, p. 10) on the grounds that there were no consistent rules on the factories or workshops (zavedeniia) to be included in the survey. There were frequent changes to stipulations concerning items to be reported, and there was insufficient consideration given to the accuracy of the statements among other problems. In the early nineteenth century, attempts were made to achieve a full-­ scale improvement of Russia’s official industrial statistics. The Tsar government at that time clearly recognized the need to understand actual industry conditions across the Russian Empire stimulated by the development of the Industrial Revolution in the United Kingdom. In 1802, eight government ministries, including the Ministries of Foreign Affairs, Interior Affairs, and Finance, were founded. Along with this administrative reform, the Berg-kollegiia and Manufaktur-kollegiia were closed down, and manufacturing came under the control of the Interior Ministry, while mining came under the management of the Finance Ministry. In addition, in 1804, a special decree was issued on factory reports from the prefectural governors to the Interior Minister. This decree stipulated that factory reports, which factory owners previously had to submit directly to the government, had to be collected by the prefectural police, compiled by local administrations, and submitted to the central government under the name of the prefectural governor. Two copies of the reports were to be 1  The following descriptions of the history of industrial statistics were written based on Arima (1973), Rybakov (1976), and Tomioka (1998).

6 INDUSTRY 

185

prepared, one of which was to be retained by the prefectural governments for use in local administrations. The frequency of factory report preparation, which had been twice a year, was reduced to once a year and relieved the burden that had been placed on factory owners. While the initial destination of the manufacturing reports was the industry division of the State Economy Department (Otdelenie manufaktur ekspeditsii gosudarstvennogo khoziaistva) of the Interior Ministry, in 1811, after some changes to the administrative framework, the destination was changed to the Manufacturing and Interior Commerce Department (Departament manufaktur i vnutrennei torgovli) of the Interior Ministry. Moreover, in 1819, the latter department as a whole was moved to the Finance Ministry and, accordingly, the responsibility for compiling and managing manufacturing statistics fell to the Finance Ministry. Under the Finance Ministry, the department was renamed the Commerce and Manufacturing Department (Departament torgovli i manufaktur) in 1864. However, in 1900, the department was abolished and the responsibility for the control of manufacturing was passed to the Industry Bureau (Otdel promyshlennosti) of the Finance Ministry. In 1863, the Variable Amount Tax Collection Department (Departament neokladnykh sborov) was established within the Finance Ministry to manage the collection of indirect taxes and was assigned the task of gathering and managing statistics on products such as vodka, tobacco, sugar, matches, and kerosene. On the other hand, the responsibility for compiling mining statistics fell to the Mining Department (Gornyi departament, named the Mining and Salt Department during 1811 and 1863) of the Finance Ministry. In 1874, the Mining Department was transferred from the Finance Ministry to the State Property Ministry. Thus, manufacturing and mining during the Russian Empire were supervised by various authorities depending on the products. In other words, the Tsar government, unlike in Soviet times, had no intention of uniform control of industry as a whole and, therefore, industrial statistics were compiled by various authorities. What type of information did the Tsar government assemble on the Russian industry? Specific items in the factory reports in the early nineteenth century included the following: date of report; family name, first name, patronymic and status of factory owner; product types; factory location; self-ownership versus borrowings against estates and buildings; ­conditions of the buildings (stone or wood structures, number of floors in the buildings, and building size); names and shapes of products (width and length of fabric, weight of leatherwork); number of production i­nstruments;

186 

M. SUHARA

amount of annual output and sales (for domestic and foreign markets); year-end inventory; amount and source of raw materials; number of craftsmen, artisans, and apprentices; distinction between free-contract workers, serf workers, and additionally registered workers; and information on product inventions (Rybakov 1976, pp. 33–34). These data were maintained until the end of the nineteenth century, although the precise details of the questionnaires might have changed at different times. On an ad hoc basis, the authorities published industrial statistics by nationwide aggregate. Some of these publications became yearbooks of the late nineteenth century. Here, an issue of note concerns the disposal of factory reports by the central authorities. The Commerce and Manufacturing Department of the Finance Ministry, for example, appears to have disposed of a part of the factory reports sent from local authorities periodically “because of space in archives,” and this practice persisted until at least 1880. Hence, a substantial part of the original materials from the first part of the nineteenth century has been lost (Rybakov 1976, pp. 57–58). Statistics that were compiled and published by the central authorities are given the generic name “factory statistics” (fabrichno-zavodskaia statistika). It is well known that Vladimir Lenin (1954a) made active use of factory statistics to analyze the Russian industry in his book, The Development of Capitalism in Russia, particularly Chap. 7 on the development of the mechanical industry. At the same time, Lenin strongly criticized the factory statistics arguing that “we have no intention at all of defending our existing factory statistics system, which has existed from the days prior to the emancipation of the serfs and now is completely obsolete and inefficient in terms of quality as well as structure” (Lenin 1954b, p. 5). Examples of problems noted by Lenin were obscure definitions of terms such as “factory,” “worker,” and “value of production” and inefficient systemic design to guarantee the accuracy of the reports. These defects were almost identical to the deficiencies in the eighteenth-century factory reports mentioned earlier and, therefore, there was little progress in the Russian statistical system.2 However, at the end of the nineteenth century or beginning of the twentieth century, some appreciable improvements were introduced. For example, with regard to the “factory” being the object of the statistical survey, an 1895 notification by the Finance Ministry clearly defined a fac2  For details of criticism leveled against the factory statistics, see Tomioka (1998, Chap. 4, sections 1, 4).

6 INDUSTRY 

187

tory as having at least 15 (or 16) workers or as having mechanical motive force even if it had less than 15 workers, and this definition gradually prevailed.3 Around the same time, a new system was introduced for which the factory inspectors were required to examine the factory reports to improve their accuracy. In addition, in 1900, an All-Russian Industry Census was implemented. Its importance had been emphasized by Lenin as “a uniform survey throughout the country performed by special investigators” (Lenin 1954b, p. 36). A second industry census was carried out in 1908. These censuses undertook detailed investigations such as the distinction between workers within versus outside the establishment and the calculation of net production as the amount of production less the cost of materials. Lenin, who harshly criticized the factory statistics, on the one hand, stated that “although we regarded our factory statistics as extremely unsatisfactory, we have no intention of insisting that these existing sources do not deserve our attention and examination. Exactly the reverse is true.” (Lenin 1954b, p. 38). The main volumes of the nineteenth century and early-twentieth-­ century factory statistics were listed by Zaionchkovskii (1978, pp. 129– 132). Important statistical documents on the Imperial Russian industry, apart from sources shown by Zaionchkovskii, are as follows: Collection of Materials of the Factory Industry in Russia for 18xx (Svod dannykh o fabrichno-­zavodskoi promyshlennosti v Rossii), issued by the Commerce and Manufacturing Department of the Finance Ministry; Statistics of Excise-­ Paying Production Industries for 18xx (Statistika proizvodstv, oblagaemykh aktsizom), issued by the Variable Amount Tax Collection Department of the Finance Ministry; and Collected Statistical Information of Mining in Russia for 18xx (Sbornik statisticheskikh svedenii o gornozavodskoi promyshlennosti Rossii), issued by the Mining Scholarly Committee (Gornyi uchenyi komitet), an official civil committee, and so on. In addition to these so-called factory statistics, Groman et al. (1929, 1930), which is a three-volume book compiled by distinguished statisticians in the Soviet era, is an important statistical reference revealing the actual situation of industries in the Russian Empire. This book, whose nine editors were Bazarov, Varzar, Groman, Kafengauz, Mezhulauk, Rukhimovich, Sereda, 3  Categorization, based on the number of workers and the existence of mechanization, was used even after the October Revolution. In the USSR, for example, a large-scale industrial enterprise was defined as an entity with a labor force of 16 workers or more in the presence of mechanization or 30 workers or more without mechanization (TsUNKhU 1934, p. 25).

188 

M. SUHARA

Strumilin, and Shtern, was a product of work carried out in the late 1920s. The first volume (published in 1929) addresses 1900, when the first industrial census was implemented, whereas the second volume (also published in 1929) addresses the second census year of 1908. The third volume (published in 1930) looks at the years 1912, 1913, 1915, 1920, and 1925/1926. Dynamics of Russian and Soviet Industry by Groman et al. examines the official statistics at the time in detail and provides new statistical information by processing the available data. Thus, Dynamics of Russian and Soviet Industry is an extremely valuable resource for industrial statistics on the Russian Empire. Appendix Table 6.1 shows the annual output of Imperial Russia’s main industrial products since 1860, whereas Appendix Table 6.2 displays the numbers of workers in the industrial sectors in select years. These two tables are compiled using statistical data from the aforementioned literature. For the period when original statistics were published, there was no clearly defined method of classifying the industrial sectors, and the sector classification in the tables used the classification in the Soviet times with minor changes (Suhara 2013, p. 518). As a reference, we calculated the value of output in 1900 for each product shown in Appendix Table 6.1 using estimated wholesale prices for 1900 given in Suhara (2013) (see Table  6.1). Ordering products by the value of output, the first is flour (251.5  million rubles), followed by ginned cotton consumption (157.7  million rubles), steel (146.7  million rubles), woolen yarn (125.9 million rubles), and sugar (119.3 million rubles). These data suggest the importance of textiles, processed food, and ferrous metals in the Russian industry in 1900, and their importance is confirmed by the number of workers by industrial sector (Appendix Table 6.2).4 In what follows, we discuss the estimation of industrial production indices for the Russian Empire using the above-mentioned statistical data.5 There was no official industrial production index for the entire country as was the case during the Soviet times and later. Naturally, the government collected and held statistical information on individual products, among other things, as the factory statistics at that time show. However, the accumulation of information was not the goal itself but was primarily a means to control the industry and enable the smooth collection of tax. Hence, 4  Apart from the so-called factory industry, the household industry (often called kustar’ industry) also existed in the Russian Empire. This is discussed later in this section. 5  The following descriptions in this section are based on Suhara (2013, Chap. 8).

6 INDUSTRY 

189

Table 6.1  Estimated wholesale prices of industrial products in select years (rubles)

Нефть Уголь чугун железо сталь рельсы Медь Свинец Цинк Золото Фосфорные удобрение Серная кислота Кальцинированная сода White lead Свинцовые белила Zinc oxide Цинковые белила Matches Спички Cement Цемент Red bricks Кирпич Window glass Стекло оконное Cotton fiber Потребление (consumption) хлопка-волокна Woolen yarn Шерстяная пряжа Raw sugar Сахар-песок Refined sugar Сахар-рафинад Vegetable oil Масло растительное Flour Мука Starch and syrup Крахмал и патока Crude alcohol Спирт-сырец Beer Пиво Salt Соль Cigarettes Папиросы Low-grade Махорка tobacco

Crude oil Coal Pig iron Iron Steel Rails Copper Lead Zinc Gold Phosphate fertilizer Sulfuric acid Soda ash

Source: Suhara (2013, p. 519)

1890

1900

1908

1912

ton ton ton ton ton ton ton ton ton kg ton

1.83 3.05 42.7 97.7 73.4 98.1 739.2 145.5 258.8 1160.0 12.2

9.58 3.94 33.5 90.5 66.2 88.5 857.7 177.6 222.9 1236.0 9.82

13.6 4.73 26.6 93.5 58.4 61.4 798.4 185.5 231.0 1460.2 n.a.

ton ton

49.2 55.0

36.0 46.2

30.3 76.3

41.9 49.7

ton ton mill. ton thous. m2 ton

216.4 221.0 41.6 23.2 11.2 0.80 512.7

200.8 244.8 40.7 17.2 11.7 0.42 601.5

228.9 254.0 39.7 17.8 13.0 0.51 786.3

272.7 304.0 34.0 19.8 15.3 0.40 762.8

ton ton ton ton

1862.3 153.8 256.4 226.8

2292.7 142.4 253.4 296.0

2579.8 129.1 223.0 263.4

2728.0 134.3 189.2 300.9

ton ton kiloliter kiloliter ton thous. 20 kg-crate

65.4 32.5 122.0 n.a. 6.91 n.a. n.a.

67.8 108.2 112.2 70.7 4.12 n.a. n.a.

98.5 118.4 106.8 72.5 5.24 1.47 1.22

94.2 90.1 103.6 73.1 5.48 1.67 1.39

21.6 5.16 38.2 98.8 54.2 69.2 877.9 214.6 284.7 1625.9 28.1

190 

M. SUHARA

the  statistics were not comprehensive and systematic, and there was no official construction of production indices for the intensive r­ epresentation of industrial production. Thus, to accurately gauge the pace of Russian industry development and to compare it with that of other countries, the estimation of production indices came later as a point of academic interest. Table 6.2 shows some (it may be appropriate to state almost all) estimates of industrial production indices for Imperial Russia. All these indices are calculated based on the Laspeyres formula, for which the output series of representative products are multiplied by base year weights and summed to obtain an index for a year. We add brief explanations for the individual estimations in the order of the year of publication based on Table 6.2. The so-called Kondrat’ev index6 was probably the first attempt to estimate a production index for the Russian industry. At that time, Nikolai Table 6.2  Estimations of industrial production index for Imperial Russia Index Estimation (publication period year) Kondrat’ev (1929) Kafengauz (1929?, 1994)

Goldsmith (1961) Nutter (1962) Suhara (2013)

Covered area

Number Weight of items

1885–1913 Imperial Russia

21

1887–1913 Union of Soviet Social Republics (USSR) at the end of the 1920s 1860–1913 Imperial Russia

29

1860–1913 Imperial Russia (every 5 years) 1860–1913 Imperial Russia

20 26

31

Value added Labor force Gross output value Value added Value added Gross output value Labor force

Weight base Averaging year formula 1900 1887

Geometric mean Arithmetic mean

1887, Arithmetic 1900, 1908 mean 1913 Arithmetic mean 1887, Geometric 1890, mean 1900, 1908, 1912

Source: Suhara (2013, p. 481) 6  While this index is typically called the Kondrat’ev index after the name of the worldrenowned Soviet economist, the real author was, probably, Ia. P. Gerchuk, a researcher at the Conjuncture Institute (Suhara 2013, p. 482).

6 INDUSTRY 

191

Kondrat’ev was the director of the Conjuncture Institute, which we describe below. To calculate the index, which includes 21 items such as coal, crude oil, pig iron, steel, cotton yarn, cotton cloth, raw sugar, refined sugar, and tobacco, interestingly, surrogates were calculated for the value added in 1900 for every product and were used as weights for the aggregation. However, the estimation period of the index was short, that is, from 1885 to 1913. Unfortunately, details are not available on the Kafengauz’s estimates although his calculated growth rate of industrial production was the highest among the cited estimates (see Table 6.3). Kafengauz considered the production of industrial items related to railways (locomotives, passenger cars, and freight cars), which other estimations did not. This might have increased the growth rate of his index. Although the estimations were made in the late 1920s, the publication of Kafengauz’s book was withheld by the Stalinist regime, and his work remained in obscurity for a long time until the end of the twentieth century. The estimation by Goldsmith (1961) is an extended version of the Kondrat’ev index. While the estimation period of the latter was relatively short, Goldsmith recalculated the index going back to 1860. Partly because of this, the Goldsmith estimation is currently regarded as the final and most authoritative production index for the Russian industry in the Imperial times. However, as Goldsmith’s estimation methods have several unclear and ambiguous points, Suhara (2013) was dissatisfied with them and estimated a new production index for the Russian industry. Nutter’s (1962) estimates were calculated as an avocation of the original goal of his book, which was the estimation of a production index for the Soviet industry. In other words, Nutter (1962) applied his estimation methodology for the Soviet industry to the outputs of individual items in the Imperial times dating back to 1860. For that reason, he qualified his method as follows: “None of our discussion of industrial development in Table 6.3  Comparison of production indices (average annual growth rates, %)

1860–1888 1888–1913 1860–1913

Kondrat’ev

Kafengauz

Goldsmith

Nutter

Suhara

6.1

6.5

4.0 5.5 4.7

5.1 6.1 5.6

3.7 5.8 4.7

Source: Suhara (2013, p. 536)

192 

M. SUHARA

prerevolutionary Russia should be taken as definitive, since we have not undertaken an exhaustive study of this period” (Nutter 1962, p.  343). Certainly, although his estimation period was protracted from 1860 to 1913, it may not be desirable that the base year of weight for the index was 1913, the final year of the estimation. In addition, Nutter (1962) estimated indices only for every five years, 1860, 1865, 1870, and so on, and not for all the years of the estimation period. In Suhara’s estimation, the number of sample items increased relative to the existing indices. Suhara’s dissatisfaction with the Goldsmith index is based on the following five points. (1) Although the Goldsmith index is explained as a backwardly extended version of the Kondrat’ev index, the sources of output data for the extended period (1860–1885) are not specified in his paper and, even when sources were specified, it is not conceivable that the necessary data are available only from those mentioned sources. (2) How value added for each product is calculated in the three base years of 1887, 1900, and 1908 is not clearly explained. (3) The explanations are ambiguous as to how the three index series based on the three base years are connected. (4) How the reference base years (the year when the index number is fixed to 1 or 100) of the production indices for individual products are decided is not revealed. Finally, (5) because the three base years that are probably identical to the reference base years in Goldsmith (1961) are biased to the later part of the estimation period, the growth rate of the calculated production index using arithmetic averages is surely smaller than the index using geometric averages. Nevertheless, Goldsmith (1961) employed arithmetic averages, which would bring significant arbitrariness to the constructed index. In addition, there is a suspicion that Goldsmith made a mistake in calculating growth rates from estimated indices by himself,7 and this also seems to increase the obscurity of his statements. Although Suhara estimated his index due to his dissatisfaction with the Goldsmith index, which is said to be the definitive version, his calculation results did not differ substantially from Goldsmith’s (1961) estimates as is shown in Table 6.3 and Fig. 6.1. That is, the average annual growth rates 7  The growth rates actually calculated from production indices shown in Table  7  in Goldsmith (1961, pp.  462–463) are clearly different from the growth rates displayed in Table 8 (Goldsmith 1961, p. 465). While the average annual growth rate, for example, for the period 1860 to 1913 calculated from the linked production index (imputed weights) shown in Table 7 is calculated as 4.7%, Goldsmith calculated this rate as 5.3% in Table 8.

6 INDUSTRY 

193

550

500

450

400

350

300

250

200

150

100

50

1860 1862 1864 1866 1868 1870 1872 1874 1876 1878 1880 1882 1884 1886 1888 1890 1892 1894 1896 1898 1900 1902 1904 1906 1908 1910 1912

0

Kondratief Nutter

Kafengauz Suhara

Goldsmith

Fig. 6.1  Estimations of the industrial production index for Imperial Russia (1887 index = 100). Source: Appendix Table 6.3

194 

M. SUHARA

for the Russian industry from the two estimations are almost the same at 4.7%.8 When the estimation period is divided into two parts, Suhara’s estimates slightly emphasize the Russian industrial growth in the second half of the period from 1860 to 1913 as compared to those of Goldsmith. As Nutter’s estimates also display a similar tendency, Russia’s actual industrial growth seems to have displayed this tendency. From the foregoing discussion, it could be concluded that the index numbers of the Goldsmith or Suhara estimations are currently appropriate for the industrial production of the Russian Empire. However, this conclusion should be arrived at with caution. First, the estimated index numbers for the years before 1880 are much less reliable than those after 1880 with respect to both these estimations. This is due to the deficiency of data on industrial product outputs and on labor force or value added as weights. Further developments in research in this direction are required. Second, and more importantly, all the estimates shown in Table 6.3 are indices only for the so-called factory industry and not for the industry as a whole because they do not take into account the household industry (the kustar’ industry), which was extensive in Russia at that time. It may be difficult to define kustaria (the plural of kustar’) precisely, but here, we widely call people who were engaged in the household industry in both urban and rural areas as kustaria. Many of those who comprised kustaria were peasants who spent only a small part of the year making handicrafts. As stated earlier in this section, while industries that were due to be surveyed by the factory statistics system were typically relatively large-scale factories, the kustar’ industry made daily necessities by hand on a small scale, such as tableware, furniture, accessories, and clothes. To understand the total amount of industrial production in the Russian Empire, we have to assess the size of the kustar’ industry and its changes over time. That is certainly no easy task. Although there might be statistics that clarify the actual circumstances of the kustar’ industry in a prefecture or local district (most of these types of statistics were so-called zemstvo statistics), there are no nationwide statistics. The definition of kustar’ varied considerably in the statistics of every locality, and there were no time-series data. With regard to rough figures, Lenin, for example, estimated that the total number of kustar’ in 8  This figure of 4.7% is not the figure Goldsmith himself showed in Table 8 of his paper but was the figure calculated by the author of this chapter.

6 INDUSTRY 

195

Russia as a whole (probably around 1890) was “more than 4 million,” (Lenin 1954a, p. 470). When we recall that even in 1890, the number of factory industry workers was 1.43  million (as shown in Appendix Table  6.2), we understand that the kustar’ industry had considerable weight at that time even considering that peasants composed a substantial part of kustar’.9 Suhara (2013, p. 544) noted that M. N. Pokrovskii, a Russian historian, had calculated that the “national income” of small-­ scale industry was 600  million rubles in 1894, whereas the national income of industry as a whole was 1.853  billion rubles. According to Goldsmith (1961), S.  G. Strumilin, a Soviet statistician, estimated the increase in production of small-scale industry from 1887 to 1913 at an average annual growth rate of 3.75%, which was about two-thirds that of the factory industry. Goldsmith himself conjectured that “in the generation before World War I the value of output of small industry averaged approximately one-third of that of factory industry, declining from a proportion of almost one-half to not much over one-fifth” (Goldsmith 1961, p. 468). Unfortunately, Goldsmith did not clearly state the evidence of his estimation, but he hinted that he used the above-mentioned average annual growth rate of small-scale industry conjectured by Strumilin in his own estimation. It seems appropriate to obtain the average annual growth rate for the Russian industry as a whole, 0.5 to 1% must be deducted from the rates shown in Table 6.3, as Goldsmith purports, taking into consideration the fact that it is only the Strumilin estimates that we can use as concrete figures for the calculation of the tempo of production for the small-­scale industry. Despite this conclusion, there was a remarkable development in the industrial production in the Russian Empire from the latter half of the nineteenth century to the early twentieth century. Accepting the data in Table 6.3, the growth rates for Russia were higher than those for Japan and almost the same as those for the United States, which had the highest growth rate among Western advanced countries. In per capita terms, Russia achieved better results than the United States because population growth in the United States at that time was extraordinarily high (Suhara 2013, Chap. 9).

9  Note that since the boundary between the factory and kustar’ industry was ambiguous, factory statistics substantially included the production of the kustar’ industry as Lenin repeatedly noted in his book The Development of Capitalism in Russia. (see Lenin 1954a, Chap. 6).

196 

M. SUHARA

6.3   Industrial Statistics in Soviet Russia This section looks at the industrial statistics for the Russian Soviet Federative Socialist Republic (RSFSR). While the Central Statistical Agency of the Soviet Union (TsSU SSSR), affiliated with the Council of Ministers of the Soviet Union, published official statistics for the Soviet Union,10 the statistical authorities established in each constituent republic as part of the organization of TsSU SSSR (e.g. TsSU RSFSR) published the statistics of the republic. It is probable that TsSU RSFSR used the same methodologies to calculate their statistics as TsSU SSSR. Thus, we advance our discussion in this section by assuming that the statistics of the RSFSR had the same characteristics as the statistics of the Soviet Union. Since statistical information in the Soviet era was exclusively published by the central statistical authorities such as TsSU SSSR, it might be natural to consider that we have to rely solely on this type of information. However, it is not necessarily appropriate to state that there was no other numerical information except official statistics throughout the Soviet era. For example, in the 1920s, various statistics were published. Specifically, apart from TsSU, economic statistics were issued periodically by the VSNKh (Supreme Council of the National Economy), Gosplan (State Planning Commission), Narkomfin (Finance Ministry), Narkomsel’khoz (Agriculture Ministry), Tsentrosoiuz (Central Union), which was a civilian organization of consumer cooperatives, and Conjuncture Institute (affiliated to the Finance Ministry), which is referred to in the previous section. In contrast to the “golden age of statistics,” during the period from the second half of the 1930s to the first half of the 1950s, when the Stalinist regime was maintained, the Soviet central statistical authorities were almost completely silent. Instead, the sole source of statistical information on the Soviet economy was press reports on speeches by the leaders of the Communist Party or cabinet ministers on the results of Five-Year Plans (FYP) and the like. Prior to this period, TsSU was absorbed into Gosplan and was renamed TUNKhU (the Central Administration of Accounting of the National Economy) in 1930, which was symbolic of making statistics subservient to planning. The situation changed dramatically following the criticism of Stalin by Khrushchev in February 1956 and, shortly thereafter, the publication of a 10   TsSU was renamed several times. It was called the State Statistics Committee (Goskomstat) in the Gorbachev era.

6 INDUSTRY 

197

statistical book (TsSU SSSR 1956) entitled National Economy of the Soviet Union. Michael Kaser (1972, pp. 50–51) noted that a significant event in terms of the disclosure of statistical information was a summon requiring the statisticians to attend a special conference in 1954, the year following the death of Stalin. The conference was held on a large scale in response to the pressure from economists and economic bureaucrats who were disadvantaged by being unable to show their full abilities in analyzing the national economy because of the concealment of statistical data. As stated above, in 1956, a book entitled National Economy of the Soviet Union was issued with the subtitle Statistical Anthology. In 1957, the subtitle of the book was changed to Statistical Yearbook, and the series continued to be published until the 1990 edition (TsSU SSSR 1957–1986; Goskomstat SSSR 1987–1991). In addition, in 1957, TsSU RSFSR began to publish the statistical yearbook series on the national economy of the RSFSR (TsSU RSFSR 1957, 1959–1986; Goskomstat RSFSR 1987–1991).11 Although remarkable progress was made in this period with regard to the disclosure of statistical information, statistics from the early days of the Soviet Union to the Stalinist period have never been disclosed in detail, and meager information has been published only for benchmark years such as 1913, 1928, 1932, 1937, and 1940. In addition, the Soviet authorities were not eager to publicize information that seemed to be unfavorable where their own ends were concerned. For these reasons, only production, labor, and capital statistics concerning the Russian industry that are available serially for a relatively long time are discussed in this chapter. The definition of industry (promyshlennost’) in the Soviet Union was highly peculiar. According to a statistics glossary in the Soviet era, an industry was defined as “one sector of material production in which labor by men is done in order to obtain material goods that exist mainly in nature and cannot be reproduced artificially, or to process such goods or agricultural products” (Nazarov et al. 1981, p. 73). In this definition “one sector of material production … to process such goods or agricultural products” is thought to refer to so-called manufacturing, whereas in the first half of the definition, the expression “to obtain material goods that exist mainly in nature and cannot be reproduced artificially” could be interpreted as mining (extractive industry). What types of resources are 11  While this book was issued with the subtitle Statistical Anthology in 1957, it was altered in the year after next to a yearbook in just the same manner as the USSR edition.

198 

M. SUHARA

extracted for industry? A. Ezhov, a well-known Soviet economic statistician, specified these resources as “coal, crude oil, char coal, shale, natural gas, …, salt, fish, mineral water, timber” (Ezhov 1957, p. 40). It may be reasonable that underground resources such as coal and oil are mentioned, but the inclusion of such goods as fish and timber attracts our attention because fishing and forestry (or at least parts thereof) were included in the industry in the Soviet Union in addition to manufacturing and mining. In fact, items such as “fish catch (ulov ryby),” “firewood (drova),” and “timber hauled (vyvozka drevesiny)” were included in the Soviet industrial production statistics (see Appendix Table 6.4); the former was designated as a product of the food processing industry and the latter two as the products of the wood, pulp, and paper industry. Thus, while the industrial production index of the United States, published by the Federal Reserve Board, includes the concept of “total industry,” or the summation of manufacturing, mining, and utilities (electricity, gas, and water supply), in the case of the Soviet Union, the industry is defined using an even wider concept. Incidentally, even in Russia’s Imperial period, it was common practice for electricity and water supply to be included in the industry.12 We discuss such Soviet-style industrial statistics. It is thought that the Soviet Union inherited the definition of industry but also the sector classifications within the industry from Imperial Russia. In 1918, just after its foundation, TsSU SSSR decided to classify the industry into 29 branches after which the classification methodology was modified several times. However, most of the modifications were straightforward changes such as the integration of several branches into one and, conversely, the splintering of one branch into several. Therefore, the basic classification framework was maintained. In January 1976, the last classification modification of the Soviet era was made, and this classification continued to be in use until around 2005 even after the collapse of the Soviet Union. According to this classification method, industry was divided into 16 branches: electricity; fuels; ferrous metals; nonferrous metals; chemicals; machinery; wood, pulp, and paper; construction materials; glass and ceramics; light industry; food processing; microbial; milling, sawing, and compound feed; pharmaceuticals; printing; and others (Nazarov et  al. 1981, p. 56). However, both the Soviet Union and the RSFSR published output data practically on the first 10 branches except the glass and ceramic 12  It seems that there was no case in which “fish catch” or “timber hauled” was included in the industrial statistics of Imperial Russia.

6 INDUSTRY 

199

industry (TsSU SSSR 1956, 1957–1986; Goskomstat SSSR 1987–1991; TsSU RSFSR 1957, 1959–1986; Goskomstat RSFSR 1987–1991). For the other six branches, only fragmented information was published periodically, and systematic data concerning those branches were never disclosed.13 Hence, we discuss these 10 industrial branches. As is well known to the students of the Soviet and Russian economies, Soviet official statistics tended to overestimate the economic growth. Since statistics, naturally, form the basis of managing a planned economy, the Soviet leadership certainly would have desired the most accurate statistics possible. However, official statistics were particularly helpful as a propaganda tool for leaders to demonstrate the superiority of socialism. Therefore, there was no incentive for leaders to alter the compilation methods for statistical figures and to match reality (at least until the Perestroika period) even though the statistics lacked accuracy and showed a tendency to exaggerate the performance of the Soviet economy. In some cases, the statistical authorities, probably listening to the voice of conscience, improved the quality of statistical data, but it could be said that the improvements were restricted to within a certain range so as not to cause serious damage to the perceptions of the superiority of socialism. It seems, however, that there was hardly any case in which figures were rewritten outright in the official statistics. It seems to have been common to suspend the publication of data in the cases where statistics based on reports were judged unfavorable to the authorities rather than modifying the data. Naturally, this would have caused frustration to outside watchers who wanted to use the statistics to analyze and assess the situation of the Soviet economy. Official statistics were continually haunted by further ambiguity, such as ambiguity in the definitions and failure to give notice about altered definitions, which brought added complexity for statistics users.14 13  Although physical output data of individual products in the nonferrous metals branch were disclosed in the same way as products in other branches until the mid-1930s, thereafter, no output data for nonferrous metals were published, and this situation continues to the present. The reasons are conjectured to be that nonferrous metal products are related to military production, and the labor camps managed by the Gulag were a significant factor in the production of nonferrous metals. 14  G. Grossman called the attitude of statistical authorities that could mislead readers of statistics by intentional obscurity “descriptive distortion,” distinguishing it from “numerical distortion” in which figures were rewritten arbitrarily outright (Grossman 1960, p. 107). In addition to descriptive distortion, there was utterly unnecessary and meaningless conceal-

200 

M. SUHARA

The tendency to glorify the performance of the Soviet economy was prominent particularly in industrial production and industrial production index statistics. The industrial production index in the Soviet Union was an ordinary Laspeyres index, which was calculated by multiplying prices for individual products in a base year by the physical output of products in the current year and aggregating the results. However, as we discuss in detail later in this section, the industrial index had a history of being harshly accused of exaggerating economic growth. Because it might not be so useful to display these official production statistics as is, here, we show our own estimates of industrial production as well as the official indices (see Appendix Tables 6.5 and 6.6). Production indices published by Soviet statistical authorities were estimated by summing up gross production (valovaia produktsiia) of industrial enterprises calculated using the factory method (zavodskii metod). Gross production of an industrial enterprise based on the factory method was defined as a summation of two types of amounts. One was “the value of all finished products and semi-processed products produced in an industrial enterprise during a certain period minus the value of self-­ produced products spent in producing industrial products within the enterprise in the same period.” The other amount was the “value of work of industrial nature by commission from other enterprises or nonindustrial organizations within the enterprise” (TsSU SSSR 1960, p. 831). In calculating the gross production, a set of fixed prices (base year prices) were used. As the summation of the gross production of individual enterprises defined above was the gross production of industry as a whole, double counting within an enterprise was excluded in the gross production of enterprises, whereas the double counting of intermediate products among enterprises was not excluded. Hence, we can regard the gross production of industry not as an indicator of value added but as an indicator of gross output. In addition, we note that, unlike an ordinary production index, in the production indices of the Soviet Union, the objects of calculation were not sample products but all products produced; with this meaning, we could call the index a “global index.” How did the production index

ment of statistical data in Soviet statistics. For example, in various statistical yearbooks, approximate production indices for industry rounded off to the nearest whole numbers were listed one after another with changes only to the reference base years instead of showing the time series of real production values.

6 INDUSTRY 

201

c­ ompiled in this manner bring about serious overestimation of economic growth? We identify four main reasons. The first reason is the Gerschenkron effect, which refers to the weight base year in the production index. Generally, Laspeyres bias arises in a Laspeyres index. In the process of industrialization in developing countries, the bias becomes serious. That is, economic growth is exaggerated in a production index employing an older price system in which prices for industrial goods, such as machinery, are relatively high and prices for agricultural products are relatively low because the production of machinery and other industrial products grows more rapidly than that of agricultural products during industrialization. Actually, official Soviet statistics used 1926/1927 prices until the post-World War II period to 1950. This problem was noted by Gerschenkron (1951) himself and also by Krasnolobov (1940, p. 78), a Soviet statistician, who referred to this problem casually. The second reason is confusion in the initial days of planning. In the early days of the planned economy, the all-Union price list that was later called the 1926/1927 price list did not, in fact, exist. Actually, different price lists by enterprise and region were used to calculate gross production. In addition, individual prices were not necessarily 1926/1927 prices but were current or previous year prices. In forestry, for example, 1932 prices were used. This confusion, which continued at least until the price reform of 1936, is certain to have produced an upward bias in the industrial production index due particularly to inflation in early Soviet days. The largest differences between official growth rates for industry and growth rates estimated later by Suhara (2013, p.  334) were shown for the first FYP period from 1928 to 1932. The third reason is the evaluation of new products in a global index. The official production index in the Soviet Union was a global index in the aforementioned sense. If it was a global index, it should have been calculated using imaginary base year prices estimated by some method for new products that did not exist in the base year. However, in practice, this was an arduous process. Prices at the time of the introduction of new products are thought to have been used effectively in the Soviet Union from the time of its establishment to its collapse. Prices at the time of introduction caused an overestimation of production growth in two ways. First, prices tended to be comparatively high due to the small amount of production as well as the inclusion of development costs. Second, the early days of the  Soviet Union, particularly the 1930s, were a period of considerable

202 

M. SUHARA

i­nflation and, therefore, the later new products were introduced, the higher their nominal prices. The fourth reason involves pseudo new products, or new products with only superficially novel functions or designs. In the Soviet Union, where there was no competition, enterprises in effect had the power to decide prices for industrial products, and this tendency was highly noticeable for new products. The reason was that the price authorities, who were supposed to have the right to decide prices, were unable to discern the production methods of new products. Hence, enterprises recklessly manufactured pseudo new products and earned gains from doing so. In addition, the authorities were satisfied because they wanted innovation in enterprises. In 1955, the temporary prices system was introduced to further encourage innovation, and enterprises came to abuse this system to realize more gains. After the 1965 reform, as more weight was attached to profit in enterprises, this tendency became more salient. Since the first two reasons for the upward bias in official Soviet statistics were problematic during the Stalinist period, it can be considered that the overestimation of growth that continued in the post-Stalinist period was caused mainly by the last two reasons. Apart from these four main reasons, other reasons include the selection of gross output or value added as weights when averaging production indices for individual products; the coverage of the index, such as the change of territory (i.e. the Soviet Union gradually expanded its territory); and military production. Suhara (2013), considering these issues, constructed an independent production index for the Soviet industry. We estimate an industrial production index for the RSFSR using the output data of individual industrial products in Russia (see Appendix Table 6.4) and the same methodology as used by Suhara. As the methodology is explained in detail in Suhara (2013), we restrict ourselves to a brief description of its outline. The estimation method is composed of two steps. The first step is the calculation of production indices of 10 individual industrial branches, which are mentioned above, and the second is the aggregation of those branch indices to obtain an index for the entire industry. At the first stage of the estimation, where branch indices are calculated, prices for the sample products in a base year (see Appendix Table 6.4) are employed as weights from which physical output volumes of the products are aggregated by industrial branch, such as machinery and processed food. As a result, we obtain several indices with different base years for one industrial branch, and these indices are linked by weight base years to obtain a single branch ­production

6 INDUSTRY 

203

index. Although the estimation period extends for a long period from 1913 to 1990, the number of weight base years is limited to only three, namely 1928, 1955, and 1997, because of the lack of data.15 We use the prices estimated by Suhara, which are based on data for the entire Soviet Union, as they are because it is difficult to calculate prices for Russia alone. In the second stage of the estimation, branch indices are aggregated to obtain an index for the industry as a whole. The shares of value added generated in each branch in total value added in industry are employed as weights (see Table 6.4).16 Weight base years in this case, in other words, the years in which the shares of value added produced by each branch are calculated, are 1913, 1927, 1933, 1940, 1950, 1955, and every five years thereafter. Here, too, we use estimated value-added shares for Soviet industrial branches by Suhara, as they are, because of the difficulties in estimating the branch shares for the Russian industry. Production of other industrial branches other than the mentioned 10 branches is supposed to have grown at the same rate as the 10 branches as a whole. In addition, military production is considered as a component of the machinery branch, and the military production index for the Soviet Union, estimated by Suhara, is also supposed to be applicable to RSFSR. The estimation results are summarized in Appendix Tables 6.5 and 6.6. Appendix Table 6.5 displays the official production index and newly estimated indices for industry as a whole (two estimated indices for the entire industry and for the civil [non-military] industry only, and the latter is more reliable). As shown in the final row of Appendix Table 6.5, industrial production for the RSFSR is said to have increased around 215 times from 1913 to 1990, according to the official index, whereas our estimation indicates it was only around 33 times. Similarly, beginning in 1928 when the first FYP began, the official index showed the rate of increase as 159 times, while our index indicated it was only 28 times. If we divide the period from 1928 to 1990 into two (1928–1960 and 1960–1990), the average annual growth rate for the first period was 11.4% using the official index and 8.2% in our estimation. For the second period, the average annual growth rate was 5.5% using the official index and 2.7% in our estimation. That is, even based on our index, the Russian industry achieved a rapid growth in the first period but slumped in the second period. The 15  Concrete figures of wholesale prices for individual industrial products are shown with detailed explanations in Suhara (2013, Chap. 3). 16  The shares of value added for each industrial branch are estimated by Suhara (2013).

Source: Suhara (2013, p. 281)

Electricity Fuels Ferrous metals Nonferrous metals Chemicals Machinery Wood, pulp, and paper Construction materials Light industry Processed food Total of the 10 branches above Total industry

1.6 11.2 6.4 1.6 7.5 13.6 8.6 1.9 20.2 24.2 96.9 100.0

1913 1.2 9.2 3.6 0.3 2.1 9.5 11.2 1.6 26.1 27.2 92.1 100.0

1927 3.3 8.0 5.2 1.8 3.8 26.9 14.1 3.9 17.3 9.5 93.8 100.0

1933 3.4 8.9 5.8 2.1 4.7 30.9 10.9 2.9 15.6 9.8 95.0 100.0

1940 3.4 13.1 7.3 4.9 3.9 30.1 10.8 3.9 10.5 7.9 95.6 100.0

1950 5.9 13.9 7.5 4.2 27.6 9.0 6.0 9.0 7.9 91.0 100.0

3.9 29.1 10.3 4.8 10.1 7.9 91.7 100.0

1960

4.9 13.5 7.0

1955

Table 6.4  Shares of produced value added by industrial branch (%): 1913–1985

6.2 28.9 8.0 6.2 8.7 8.6 93.2 100.0

7.4 11.7 7.7

1965

6.9 30.1 7.2 6.1 8.8 7.9 93.4 100.0

9.0 10.0 7.4

1970

7.0 32.6 6.9 6.1 8.5 7.6 93.2 100.0

8.4 9.1 6.9

1975

7.1 35.2 6.3 5.7 8.6 7.1 93.2 100.0

7.6 9.2 6.4

1980

7.0 36.5 6.1 5.4 8.1 6.9 93.1 100.0

7.1 9.9 6.1

1985

204  M. SUHARA

6 INDUSTRY 

205

average annual growth rate, particularly for the last 15 years of the period (1975–1990), was a mere 0.7%. The discrepancy between the two indices was 3.2% for the first period and 2.8% for the second period. It cannot be said that the upward bias in the official statistics decreased in the second period taking the considerable decline in growth into account. Production indices for 10 industrial branches are shown in Appendix Table  6.6. Unfortunately, official indices by branch were not available until 1940, while the index for nonferrous metals has never been published. Average annual growth rates calculated from production indices for 1940–1990 are entered in the final row of the table. Considering these figures only allows us to understand how discrepancies between the official index and our estimated index differ across industrial branches. For example, the differences in the average annual growth rates of the two indices for electricity and fuels are minimal, and the differences are also small for the ferrous metals and food processing branches. By contrast, there is a large gap in the machinery branch. Hence, we can say that the upward bias in the official statistics is largest for this branch. The main reasons for the bias were new products, particularly pseudo new products. In the machinery branch, pseudo new products with superficially altered designs were the most easily manufactured. It is conceivable that the figures in Appendix Table 6.6 reflect this fact. To conclude our discussions on the production aspect of the Russian industry, we touch on the quantitative relationships between the entire Soviet Union and the RSFSR in terms of industrial production. How much weight did the Russian industry have in the Soviet Union? Table 6.5 shows gross values for the industrial output of the Soviet Union and the RSFSR in the 1980s in 1982 prices. Unfortunately, we could not find data on the gross value of industrial output for the RSFSR in TsSU RSFSR (1957, 1959–1986) and Goskomstat RSFSR (1987–1991) except for this Table 6.5  Gross value of industrial output: 1980–1990 (billion rubles, 1982 prices)

Soviet Union Russia Russia’s share (%)

1980

1985

1986

1987

1988

1989

1990

679 411 60.5

811 484 59.7

846 506 59.8

879 523 59.5

913 544 59.6

928 551 59.4

918 550 59.9

Source: Goskomstat SSSR (1991, p. 348). Goskomstat RSFSR (1991, p. 11)

206 

M. SUHARA

period. According to the data, industrial production in the RSFSR amounted to approximately 60% of the production in the Soviet Union. As the population in the RSFSR accounted for some 52% of the entire Soviet Union at that time, per capita industrial production in Russia was more or less above the average of the Soviet Union, as expected. Next, we briefly show the statistics on the two production factors–capital and labor. According to explanations in the Soviet Statistical Yearbooks, fixed capital was defined as physical valuables that were produced by social labor and in use for a long time, specifically, buildings, structures, transmission installations, machinery and equipment, transportation means, instruments, inventory, and livestock. TsSU RSFSR (1971, p.  65) indicates, as of the end of 1970, that fixed capital was composed of buildings (30.4%), structures (19.3%), transmission installations (9.0%), machinery and equipment (34.2%), measuring devices and experimental apparatuses (1.2%), and transportation means (4.7%). It is extremely difficult to obtain long-term statistics for fixed capital in the RSFSR, particularly for the period prior to World War II.  Appendix Tables 6.7 and 6.8 display the long-term changes in the volume of fixed capital in the Russian industry available from TsSU RSFSR (1957, 1959– 1986) and Goskomstat RSFSR (1987–1991). Appendix Table  6.7 shows the changes in the share of fixed capital for industrial branches to total industrial fixed capital in the RSFSR, whereas Appendix Table 6.8 shows the real growth for fixed capital in each branch. Appendix Table 6.7 is divided into three sections reflecting the fact that at least two reappraisals were held in 1960 and 1973 in the Soviet Union and the RSFSR. That is, while all data prior to 1957 in the table are obtained from TsSU RSFSR (1959, p. 52) and assessed at appraisal prices before 1960, the percentage share data after 1960 are calculated based on 1960 prices, and the data in the third section of the table are based on 1973 prices. For this reason, the table is divided into three parts. Similarly, in Appendix Table 6.8, the growth of fixed capital by industrial branch is measured using 1960 prices and 1973 prices. It was only indices rounded off to the nearest whole number, such as those displayed in Appendix Table  6.8, that statistical authorities published in their yearbooks on the growth of fixed capital, and they have never shown concrete estimation values of fixed capital nor detailed ­explanations of the evaluation methods in most cases.17 Usually in ­statistical 17  It was presumably in the 1989 edition of the RSFSR statistical yearbook (Goskomstat RSFSR 1990) that actual estimation values of fixed capital were revealed for the first time.

6 INDUSTRY 

207

yearbooks, statistics on the introduction (vvod v deistvie) and removal (vybytie) of fixed capital appeared in the form of introduction coefficients (ratios of the fixed capital newly invested in operation during a certain period [usually one year] to the whole fixed capital at the end of the period) and removal coefficients (ratios of the fixed capital removed during a certain period to the whole fixed capital at the beginning of the period) after statistics on growth of fixed capital. Here, removal of fixed capital is caused by physical and moral wear and tear, natural calamities, gratuitous conveyance to other enterprises, and so on (Nazarov et  al. 1981, pp. 43, 46). Hence, it is thought that such various removal types are also taken into consideration in the value evaluation of capital stock shown in Appendix Tables 6.7 and 6.8. If it is true that there was serious overestimation of growth in the industrial production statistics for the Soviet Union and the RSFSR, then it is conceivable that the real value of machinery and equipment, which accounted for at least one-third of the total fixed capital in 1970, and other fixed capital were also overestimated. Due attention must be given to the fact that the data in Appendix Table 6.8, said to be the official real growth rates, could be considerably inflated.18 With regard to labor statistics in the Soviet statistical methodology, people engaging in economic activities were classified into four categories: workers and employees (rabochie i sluzhashchie),19 who worked for state-­ r un enterprises, institutions, or organizations; kolkhozniki, who were engaged in public and subsidiary activities in collective farms; family members of workers and employees, who were engaged only in subsidiary agricultural activities; and others, who were peasants not belonging to collective farms and people engaged in personal economic activities. While all working people in the industry were rabochie i sluzhashchie, they were called industrial production personnel (promyshlennyi proizvodstvennyi personal, PPP). PPP were further divided into workers (rabochie), apprentices (ucheniki), junior service personnel (mladshii obsluzhivaiushchii personal),20 security guards (rabotniki okhrany), employees (sluzhashchie), engineers (inzhenerno-tekhnicheskie rabotniki), and managers 18  For a debate between US and UK scholars on the inflation of the value of fixed capital, see Suhara (1989). 19  “Workers” in this case referred to blue-collar workers, whereas “employees” referred to white-collar workers. 20  “Junior service personnel” refers to the people engaged in offering services to workers in an industrial enterprise such as cloakroom clerks or drivers of company automobiles.

208 

M. SUHARA

(rukovoditeli). Workers, apprentices, junior service personnel, and security guards were also collectively called “workers,” whereas employees, engineers, and managers were also collectively called “employees.” It follows that the terms workers (rabochie) and employees (sluzhashchie) had two meanings. The expression “workers and employees (rabochie i sluzhashchie),” which often appeared in the Soviet statistical books, referred to PPP as a whole and, in this case, workers and employees were used in a broad sense. When “workers” was used by itself, in most cases, it referred to the narrow sense of the word. When it was used by itself and in a broad sense, it was common for the following note to be attached: “including apprentices, junior service personnel, and security guards.” The same applied to “employees.” As this has a potential for confusion, care must be taken in the analysis. The concept of average annual number was commonly used in labor statistics in Soviet times. The average annual number of workers and employees, for example, was calculated by adding up the average monthly number of workers and employees for each month in one year and dividing the sum total by 12. The average monthly number was computed by summing the numbers of workers and employees for all days including holidays in one month based on the list of the enrolled workforce and dividing the total by the number of days in the month. In addition, there were many detailed provisions on the enrollment list such as the inclusion of people actually working and those absent from work because of illness, business trips, annual leave, and maternity or childcare leave (TsSU SSSR 1968b, pp. 327–328). Three series of average annual numbers of PPP appeared in both the USSR and RSFSR statistical yearbooks (see Table  6.6). The first series were the figures of PPP for the USSR and the RSFSR published in both yearbooks until the 1964 editions (TsSU SSSR 1965; TsSU RSFSR 1965). The second series appeared in TsSU SSSR (1966, 1968) and TsSU RSFSR (1966, 1968) (as well as a labor statistics collection, TsSU SSSR 1968b), and the last series were reported in TsSU SSSR (1969) and TsSU RSFSR (1969), and thereafter. These three series for 1928–1965 are displayed in Table  6.6, which shows that the second series differs considerably from the first, whereas the differences between the second and third are less marked for the USSR as well as for RSFSR. According to the explanation given in the statistical yearbooks as to why the second series differs from the first, two types of enterprises existed at the time. One type was state  enterprises, and the other was enterprises managed by p ­ roducers’

6 INDUSTRY 

209

Table 6.6  Three series of the average annual number of PPP in the USSR and RSFSR: 1928–1965 (thousands) USSR

1928 1932 1937 1940 1945 1950 1952 1953 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965

RSFSR

First series

Second series

Third series

3773 8000 10,112 10,967 9508 14,144 15,556 16,261 17,367 18,500 19,144 19,675 20,207 22,291 23,475 24,297 25,057 25,933

4339 9374 11,641 13,079 10,665 15,317 16,873 17,617 18,868 19,561 20,192 20,807 21,400 22,291 23,475 24,297 25,057 25,933 27,056

4339 9374 11,641 13,079 10,665 15,317 16,889 17,641 18,984 19,641 20,312 20,988 21,670 22,620 23,820 24,677 25,442 26,313 27,447

First series

7576 10,051 11,014 12,155 13,267 13,571 13,887 15,139 15,809 16,314 16,763 17,242

Second series

Third series

3126

3126

9025 8076 10,827

9025 8076 10,827

13,123

13,199

14,260 14,623 15,139 15,809 16,314 16,763 17,242 17,846

15,335 16,008 16,539 16,990 17,467 18,082

Source: TsSU SSSR (1957, p.  205; 1959, pp.  131, 658, 659; 1962, p.  181; 1963, p.  130; 1965, p. 135); TsSU SSSR (1968b, p. 81); Goskomstat SSSR (1988b, p. 47); Weitzman (1970, p. 687); TsSU RSFSR (1957, p. 65; 1959, p. 55; 1963, p. 48; 1965, p. 50); TsSU RSFSR (1966, p. 68); TsSU SSSR (1968b, pp. 42, 43); TsSU RSFSR (1969, p. 92); TsSU RSFSR (1973b, pp. 16, 17); and TsSU RSFSR (1985b, p. 29)

­cooperatives (promyslovaia kooperatsiia). These producer cooperative enterprises were twice subsumed by the state management system (in 1956 and 1960) and, as a result, they totally disappeared in 1960. The first series, which was published until the 1964 edition, included statistics that carefully discriminated between state enterprises and producer cooperative enterprises. In other words, workers in producer cooperatives were not regarded as PPP members until their enterprises entered the state management system. According to the RSFSR statistical yearbooks, approximately 300,000 workers were transferred to the state industrial enterprise ­system in 195621 and, in 1960, around 700,000 workers were transferred  The number of transferred workers was estimated based on the description “the number of members of producer cooperative enterprises was 1.1 million in 1955, whereas in 1956 21

210 

M. SUHARA

(TsSU RSFSR 1961, p. 78). As shown in Table 6.6, from 1955 to 1956 and from 1959 to 1960, the number of PPP in the first series increased abruptly, certainly for that reason. As opposed to the first series, the second series, which was disclosed in the 1965 and 1967 editions, recalculated the number of PPP based on the principle that the members of producer cooperative enterprises were considered PPP in the past. As a result, in every year before 1960, the number of PPP increased. It seems that differences between the second and third series, which appeared from the early 1950s, were not so significant; for example, the number of PPP in 1960 changed from 15,139,000 to 15,335,000 workers in RSFSR. A brief note (TsSU RSFSR 1969, p. 326, for instance) was added in the statistical yearbooks stating that the modification in the third series was caused by changes in sector classification methods across the industrial, agricultural, and construction sectors. Unfortunately, we do not know details of the changes in sector classification. As shown in Table 6.6 and Appendix Table 6.9, while we can collect average annual PPP data for the Soviet Union from official yearbooks for all years after 1950, for the RSFSR, we cannot obtain all the data of the third series for that period. The RSFSR’s share of PPP in the entire Soviet Union calculated using data in Appendix Table  6.9 decreased from 70.7% in 1950 to 59.5% in 1990. Hence, it can be said that the tempo of industrialization in the Soviet republics excluding the RSFSR was faster than that of the RSFSR.  Appendix Table  6.10 shows the number of PPP in the Soviet Union and RSFSR by industrial sector. It is noticeable that the share of PPP in machinery grew larger over time in both the Soviet Union and the RSFSR. In 1990, the share was 42.8% in the Soviet Union and as high as 46.0% in the RSFSR.  On the other hand, Russia’s share of PPP in the machinery branch in the Soviet Union gradually decreased as shown in the third block of Appendix Table 6.10. Hence, the tempo of the machinery sector growth in other Soviet republics as a whole can be thought to have exceeded that of the RSFSR.

the number decreased to 800,000” (TsSU RSFSR 1957, p. 265). It is thought that all, or the majority of, cooperative members transferred to the industry sector from the expression “members of producer cooperatives so far who changed to their jobs as workers and employees in relation to the transition of many producer cooperative enterprises to state-run industrial enterprises in 1956.”

6 INDUSTRY 

211

The average monthly wages of PPP are shown in Appendix Table 6.11, whereas the average monthly wages by industrial sector are displayed in Appendix Table  6.12. For average monthly wages also, there are three series in official statistics for the same reasons as the average annual numbers of PPP.  These tables show figures based on the third series of the number of PPP, that is, wages published in the statistical yearbooks for the 1968 edition and thereafter (TsSU SSSR 1969–1986), Goskomstat SSSR (1987–1991), TsSU RSFSR (1969–1986), and Goskomstat RSFSR (1987–1991). Wages data, thought to be based on the first and second series, are not displayed here. Regardless, caution is required when parsing Soviet labor statistics.

6.4   Industrial Statistics in the Russian Federation In this section, we take an overall view of industrial statistics in the Russian Federation. The chaos in the early days of the systemic transformation of the Russian economy naturally had a negative impact on the field of statistics. The statistical accuracy was severely marred by deficiencies in personnel and funding. It became impossible to conduct a complete inspection of enterprises in the Soviet era, and sampling survey came to be used instead as a matter of course. Hyperinflation immediately after the collapse of the Soviet Union made it noticeably difficult to gauge price indices accurately. Hence, there was a conspicuous increase in uncertainty concerning the measurement of real value in many sectors of statistics such as production and capital. On the other hand, there was a positive change in that the statistical authorities opened up to the external world. For example, by introducing the System of National Accounts instead of the former system of net material product, the Russian statistical authorities maintained technical exchange with foreign institutions and specialists to improve the quality of statistics. In addition, great progress was made in information disclosure. For example, in the nonferrous metals branch of the industrial sector, which had been heavily veiled in mystery since the old days, substantial information has been published although data on the physical output of nonferrous metals remains unavailable. By the 2000s, the confusion had gradually subsided, and a new branch classification method (the classification of economic activities) was introduced to Russian statistics. For some time after the birth of present-day Russia, the Soviet classification method known as the “All-Union Sector Classification of the National Economy” was used. For the industrial

212 

M. SUHARA

sector, statistics on the 10 main industrial branches based on this method were periodically published even in the new Russia. However, in the second half of the 1990s, preparations were steadily made for the introduction of a new method and, finally, in 2003, the Russian Classification of Economic Activities (Obshcherossiiskii klassifikator vidov ekonomicheskoi deiatel’nosti, OKVED) was introduced based on the European Union (EU) classification of economic activities. This classification method was initially used in the industrial statistics published by the Russian statistical authorities from around 2005. Appendix Tables 6.13 and 6.14 show production indices based on the old and new sector classification methods using 1991 as a reference base year. Here, we briefly survey how these two classification methods differ with regard to industry. The main differences in the new method are as follows.22 First, instead of the former “industry” (promyshlennost’), the three major groups of “mining and quarrying,” “manufacturing,” and “electricity, gas, and water supply” (more precisely, “production and allocation of electricity, gas, and running water”) are newly established (hereafter in this section, major groups are enclosed in quotation marks). Practically, the aggregate of the three groups can be considered as a new concept of industry. “Mining and quarrying” includes oil and gas mining from the former fuels branch (oil and gas refining was moved to “manufacturing”), the coal, shale, and peat industry, the mining of ore and non-ore materials for ferrous and nonferrous metals (e.g, iron ore and copper ore, which formerly belonged to ferrous and nonferrous metals, respectively), the mining of materials for cement, ceramics, lime, gypsum, glass, and so on, which formerly belonged to the construction materials branch, and the salt industry, which was formerly included in the food processing branch. Newly classified sectors in the “mining and quarrying” group are further divided into the two intermediate groups for the extraction of energy-­ ­ producing minerals and the extraction of minerals except for energy-­producing minerals (see Appendix Table 6.14). “Manufacturing” as a major group in the new classification contains 14 intermediate groups (see Appendix Table 6.14). Of the industrial sectors in the old classification, the following are included in “manufacturing”; the oil and gas refining industry; the ferrous and nonferrous metals 22  The following descriptions are based on the supplement of Rosstat (2004), Otdel’nye statisticheskie pokazateli deiatel’nosti organizatsii Rossiiskoi Federatsii po vidam ekonomicheskoi deiatel’nosti.

6 INDUSTRY 

213

branches excluding ore mining, the chemicals branch excluding domestic chemicals and rubber shoe-producing groups; most parts of the machinery branch excluding the repair group; the wood, pulp, and paper branch excluding wood provision; most parts of both the construction materials branch and the glass and ceramics branch excluding material mining groups; the entire light industry branch; the whole food processing branch except the salt industry and fishery; and all other industries based on the old classification except the mining of precious metals. The third major group of “electricity, gas, and water supply” is composed of the former electricity branch as well as the water supply group, which was included in “others” in the old classification. Of the various industrial sectors included in the old classification, the wood provision sector (which was included in the wood, pulp, and paper branch, hereafter the same meaning in parentheses), tea-leaf processing (food processing branch), and part of fishery (food processing branch) are classified into a major group in the new classification of “agriculture, hunting, and forestry”; part of fishery (food processing branch) is classified as “fishery”; rubber shoe production (chemicals branch), and many repair sectors in the former machinery and many repair groups in the former light industry branch are classified as “wholesale and retail trade and repair of transportation means and daily necessities”; domestic chemicals (chemicals branch), software production (machinery branch), and the repair and general service of computers (machinery branch) are classified as “trade in real estate, leasing, and provision of other services”; and the cleaning and dyeing of sheets and so on (others) is classified as “provision of other public and private services.” The above-mentioned points represent the main changes in the industry classification system. As stated earlier, the new industrial classification conforms to that of the EU and, therefore, necessary attention has been paid to consistency with worldwide standards of the International Standard Industrial Classification  (ISIC)  of all Economic Activities of the United Nations or the Central Product Classification of the United Nations. Russia has achieved an extensive improvement in its statistics in terms of international comparability. In the second half of the 1990s, that is, just before the change in industrial classification, a new corporate statistical system called “annual structural corporate statistics” was introduced gradually from the industrial sector to other sectors. Rosstat (2006) explains that the new corporate statistical system follows the EU method, and survey items are similar to EU standards. Specifically, an enterprise must answer detailed

214 

M. SUHARA

questions on the formation history of the enterprise, its organizational structure, production and shipment of products, and the cost of labor and services based on the survey system. This system was introduced in industry in 1998 to 1999 and was extended to construction and trade from 2000 to 2001 and, from 2002, was extended to all sectors except smallscale enterprises and financial institutions. Surveys were conducted particularly from 2002 to 2004 using both the old and new classification methods so that the results could be applied to the conversion between the two methods in other periods. In addition to this system, a new type of survey called “short-term corporate statistics” was introduced in large- and medium-scale enterprises from 1998 (Rosstat 2006, pp. 96–104). From a statistics user perspective, the switchover to the new industrial classification can cause an inconvenient loss of continuity with previous statistics. Hence, it would be indispensable for the industrial authorities to apply the new classification retrospectively. The extent of progress in the work seems to differ depending on sectors. That is, for industrial production, as observed in Appendix Tables 6.13 and 6.14, while production indices based on the old classification were published until 2004, production indices based on the new classification were also calculated retrospectively back to 1991. As is well known, Russian industry incurred devastating damage during the transition period to a market economy. According to Appendix Table 6.14, production in manufacturing decreased in 1998 to a mere 40.7% of production in 1991 when the Soviet Union collapsed. Even in 2013, after a lapse of more than 20 years since the breakup of the USSR, the production index for manufacturing was still at 88.7 (the index for 1991 = 100), which shows that the level of production in that year had not reached the 1991 level. On the other hand, the production in the energy sector has recovered its vitality as the index for 2013 for that sector indicates 123.9. Such a growing dependence on energy production by the Russian economy will become clearer if new statistics on the Soviet era based on the new classification method are published in the future. These production indices are statistics for which the new classification was applied retrospectively to the oldest year. For other fields of statistics, the retrospective work cannot delve as deeply into the past. For example, for capital statistics, we can obtain data based on the new classification only for 2003 and after, as observed in Appendix Table 6.16 (data based on the old classification are available up to 2005, see Appendix Table 6.15). On the other hand, for labor statistics, data based on the new classification exist only from 2000 as shown in Appendix Tables 6.18 and 6.20 (data based on

6 INDUSTRY 

215

the old classification are available up to 2004 as observed in Appendix Tables 6.17 and 6.19). Statistics on the number and wage cited here are not concerned with “persons employed (zaniatye),” which are explained in Chap. 4 as a key series, but with “working persons (rabotniki).” Concrete figures of these two series differ considerably. When we compare data for 2010, for example, the number of persons employed for industry as a whole is 14,349,000, whereas the average annual number of working persons for industry is only 10,547,000 (see Appendix Table 6.18). One of the main reasons for such incongruity is the difference in measurement methodology. While “persons employed” statistics, as explained in Chap. 4, are based on a sampling survey of the population over 15  years old, the average annual number of “working persons” is compiled using reports from enterprises. To measure the latter, the same prescriptions as the above-mentioned “average annual” concept in the Soviet era are applied (Rosstat, 2012, pp. 440–441). Only these average annual working person statistics are available currently as workforce data on intermediate groups in industries of the new classification method. Hence, these data are displayed here. Incidentally, by comparing Appendix Tables 6.17 and 6.18, we understand that the total number of employees in mining, manufacturing, and electricity, gas, and water supply exceeded the number of PPP based on the old classification by 6 to 7% in 2000 to 2004. Similarly, the volume of capital data based on the new classification was more than that based on the old classification by 11 to 12%. In summary, an evaluation of the current situation of Russian industrial statistics shows a gradual improvement in quality approaching international standards, although there are differences in the speed with which improvement has occurred depending on the field. Lastly, we conclude this chapter by reflecting again on the long history of the Russian industry extending from the Imperial era to the present. The Russian industry rapidly developed in the latter half of the nineteenth century and in the early twentieth century while peasants and workers assumed the growing burden of production. Generally, industrial production in the territory of Imperial Russia just prior to World War I, namely in 1913, is thought to have been some 15% of the industrial production in the United States at that time.23 Suhara (2013, pp. 549–559), on the 23  According to the League of Nations, for example, manufacturing production in Tsarist Russia in 1913 was 15.4% of that of the United States, whereas for USSR territory in times to come, manufacturing production was 12.3% of that of the United States (League of Nations 1983, pp. 296, 304; Suhara 2013, p. 550).

216 

M. SUHARA

assumption that the figure is tentatively 15%, estimated the progress of the ratio of the volume of Soviet industrial production to that of the United States for about a century from 1913 to 2005 using a production index for the Soviet industry that he compiled. When he did so, he employed a production index for the US industry published by the Federal Reserve Board of the United States to determine the changes in US industrial production and employed industrial production indices for 15 former Soviet constituent republics to determine the production trends after the collapse of the Soviet Union. The estimation result is shown in Fig. 6.2. According to Suhara’s calculations, industrial production in the Soviet Union reached nearly 40% of that of the United States in the latter half of the 1930s due to production stagnation in the United States % 45 40 35 30 25 20 15 10 5

2003

1999

1995

1991

1987

1983

1979

1975

1971

1967

1963

1959

1955

1951

1947

1943

1939

1935

1931

1913

0

Fig. 6.2  Ratio of the size of production for the Soviet industry to that of the US industry (%): 1913–2005. Note: The ratio of the size of production for the Soviet industry in 1913 is assumed to be 15% of that for the US industry. Source: Suhara (2013, p. 544)

6 INDUSTRY 

217

during the Great Depression and the rapidly advancing production in the Soviet Union based on Five-Year Plans (FYPs). The Soviet industry, however, suffered disastrous damage as a consequence of World War II, such as European Russia turning into a battlefield. Industrial output in the USSR plummeted to around 12% of that of the United States immediately after the end of the war in 1946. And yet  the Soviet industry nevertheless began to catch up with the United States and, in 1975, its production levels reached again nearly 40% of those of the United States. The ratio thereafter began to decline slightly although it remained around 30% just before the collapse of the Soviet Union in 1991. However, industrial production in the hypothetical Soviet Union surprisingly fell rapidly during the transition period and bottomed at a mere 10% of the United States’ industrial production in 1998. The magnitude of the decline in production in this period seems to have been roughly equal in severity to the damage caused by World War II. Although there has been a slight recovery, the ratio was still approximately 14% in 2005, which showed a return in the final analysis to the level of a century ago. Alexander Gerschenkron, when characterizing the economic development in Imperial Russia for several centuries since the days of Peter the Great or before that time, stated the following: As a result, the economic development in Russia at several important junctures assumed the form of a peculiar series of sequences: (1) Basic was the fact that the state, moved by its military interest, assumed the role of the primary agent propelling the economic progress in the country. (2) The fact that economic development thus became a function of military exigencies imparted a peculiarly jerky character to the course of that development; it proceeded fast whenever military necessities were pressing and subsided as the military pressures relaxed. (3) This mode of economic progress by fits and starts implied that, whenever a considerable upsurge of economic activities was required, a very formidable burden was placed on the shoulders of the generations whose lifespan happened to coincide with the period of intensified development. (4) In order to exact effectively the great sacrifices it required, the government had to subject the reluctant population to a number of severe measures of oppression lest the burdens imposed be evaded by escape to the frontier regions in the southeast and east. (5) Precisely because of the magnitude of the governmental exactions, a period of rapid development was very likely to give way to

218 

M. SUHARA

prolonged stagnation because the great effort had been pushed beyond the limits of physical endurance of the population and long periods of economic stagnation were the inevitable consequences (Gerschenkron 1976, p. 17). The above cited paragraph, which is concerned with the national economy of Imperial Russia, seems to hold for the history of the Russian industry thereafter. An easy advance in the industrial production before World War II in Russia and the Soviet Union as a whole, for example, can be interpreted as the manifestations of the characteristics of the Russian economy because the rapid industrialization under the strong leadership of the state showed preparedness against a forthcoming Russo-German war. It is conceivable that one of the mainstays of the harsh Stalinist regime was a sense of crisis among the population that was linked to economic success even after the end of the war until around 1960. On the other hand, the stagnation of production after 1960 was related to a gradual weakening in the sense of a military crisis among the population and the government. In a socialist economy where the profit incentive that tends to lead men to expand production is lacking, the disappearance of extra economic incentives such as a sense of military crisis can exert a negative impact on production. Thus, it is thought that the economic characteristics of Russia emphasized by Gerschenkron became more salient by the adoption of the socialist economic system. Today, Russia has extricated itself from socialism. Will Russia finally succeed in breaking away from the past patterns noted by Gerschenkron? There is no telling what the future course of economic development in Russia will resemble, particularly considering Russia’s recent dependence on the production of strategic natural resources such as oil and natural gas.

Appendix Appendix Tables 6.1 to 6.20 are available in http://www.ier.hit-u.ac.jp/ histatdb/projects/view/2.

References Arima, T. (1973). A Study of the History of Russian Industry (in Japanese). Tokyo: Tokyo U. P. Ezhov, A. I. (1957). Statistika promyshlennosti, Izdanie 3-e. Moscow: Gosstatizdat.

6 INDUSTRY 

219

Gerschenkron, A. (1951). A Dollar Index of Soviet Machinery Output, 1927–28 to 1937. Rand Corporation, R–197. Santa Monica: Rand Corporation. Gerschenkron, A. (1976). Economic Backwardness in Historical Perspective, The Third Printing. Cambridge, Massachusetts, & London, England: The Belknap Press of Harvard University Press. Goldsmith, R. W. (1961). The Economic Growth of Tsarist Russia 1860–1913. Economic Development and Cultural Change, 9(3), 441–475. Goskomstat RSFSR (1987–1991). Narodnoe khoziaistvo RSFSR. 1986–1990. Moscow: Finansy i statistika. Goskomstat SSSR (1987–1991). Narodnoe khoziaistvo SSSR. 1986–1990. Moscow: Finansy i statistika. Goskomstat SSSR (1988b). Trud v SSSR. Moscow: Finansy i statistika. Groman, B. G. et al. (1929, 1930). Dinamika rossiiskoi i sovetskoi promyshlennositi v sviazi s razvitiem narodnogo khoziaistva za sorok let (1887–1926 gg.), chast’ I, II, III. Moscow and Leningrad: Gosudarstvennoe izdatel’stvo. Grossman, G. (1960). Soviet Statistics of Physical Output of Industrial Commodities: Their Compilation and Quality. Princeton: Princeton U.P. Kaser, M. (1972). Publication of Soviet Statistics. In Treml, V. G. and Hardt, J. P. (Eds.), Soviet Economic Statistics. Durham: Duke U. P. Krasnolobov, I. M. (1940). Planirovanie i uchet narodnogo dokhoda. Moskva and Leningrad: Gosplanizdat. League of Nations (1983). Industrialization and Foreign Trade. Reprint. Originally published in Geneva, 1945. Lenin, V. I. U. (1954a). Collected Works of Lenin, Vol. 3, Translated into Japanese by the Institute of Marxism and Leninism. Tokyo: Otsuki shoten. Lenin, V. I. U. (1954b). Collected Works of Lenin, Vol. 4, Translated into Japanese by the Institute of Marxism and Leninism. Tokyo: Otsuki shoten. Nazarov, M. G. et al. (Eds.) (1981). Sotsial’no-ekonomicheskaia statistika, Slovar’. Moscow: Finansy i statistika. Nutter, G.  W. (1962). Growth of Industrial Production in the Soviet Union. Princeton: Princeton U. P. Rosstat (2004). Rossiiskii statisticheskii ezhegodnik. 2004. Moscow: Rosstat. Rosstat (2006). Metodologicheskie polozheniia po statistike, vypusk piatyi. Moscow: Rosstat. Rosstat (2012). Promyshlennost’ Rossii. 2012. Moscow: Rosstat. Rybakov, Iu, Ia. (1976). Promyshlennaia statistika Rossii XIX v. Moscow: Nauka. Suhara, M. (1989). The Vintage of Capital Stock in the Soviet Union (in Japanese). Keizai shushi, 58(4), 71–87. Suhara, M. (2013). A Study of Soviet Industry (in Japanese). Tokyo: Ochanomizu shobo. Tomioka, S. (1998). A Study of Russian Economic History (in Japanese). Tokyo: Yuhikaku.

220 

M. SUHARA

TsSU RSFSR (1957). Narodnoe khoziaistvo RSFSR. Moscow: Gosstatizdat. TsSU RSFSR (1959–1986). Narodnoe khoziaistvo RSFSR. 1958–1985. Moscow: Gosstatizdat. TsSU RSFSR (1973b). Trud v RSFSR. Moscow. TsSU RSFSR (1985b). Trud v RSFSR. Moscow. TsSU SSSR (1956). Narodnoe khoziaistvo SSSR. Statisticheskii sbornik. Moscow: Gosstatizdat. TsSU SSSR (1957–1986). Narodnoe khoziaistvo SSSR. 1956–1985. Moscow: Gosstatizdat. TsSU SSSR (1968b). Trud v SSSR. Moscow: Statistika. TsUNKhU (1934). Sotsialisticheskoe stroitel’stvo SSSR. Moscow: Soyuzorguchet. Weitzman, M.  L. (1970). Soviet Postwar Economic Growth and Capital-Labor Substitution. American Economic Review, 60(4), 676–692. Zaionchkovskii, P. A. (Ed.) (1978). Spravochniki po istorii dorevoliutsionnoi Rossii, 2nd edition. Moscow: Kniga.

CHAPTER 7

Money and Finance Yasushi Nakamura

7.1   Introduction The geographical scope of this chapter is the Imperial Russia, Soviet Union, and new Russian Federation (hereafter, I use the term, “new Russia,” to indicate the Russian Federation after the collapse of the Soviet Union for simplicity). It is difficult to adjust most of monetary and financial data to territorial changes because of their methodological properties and low availability of regional monetary and financial data. It is also difficult to compare them between the Russia Empire, the Soviet Union, and new Russia and as well as other countries, mainly because the monetary and financial system in the Soviet period was unique. The monetary and financial system in the Soviet Union and that in a market economy are fundamentally different. The core of the socialist ideology in the Soviet Union was disposition of money, capital, and market. There was little doubt that the Soviet administrative command economy or material planning was designed following the ideology. What the Soviet government actually did, however, was mostly limited to regulating market administratively and legally. It was a simple fact that they continued to Y. Nakamura (*) Graduate School of International Social Sciences, Yokohama National University, Yokohama, Japan e-mail: [email protected] © The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5_7

221

222 

Y. NAKAMURA

use money, and money used there was fiat money. On the other hand, it was very likely to be illegal to use money, capital, and market as they were as in a market economy. The problem arising here was how to manage fiat money in the conditions where market did not exist in legal and administrative terms and, thus, information generated by the market did not exist. In the retrospective, the problem was solved only when the Soviet economic system and the ideology constituting it were abandoned and the market economy revived. From this, we can see that the Soviet period imposes not only a quantitative problem of the scarcity of data but also a qualitative problem of what economic meaning the Soviet monetary and financial data had. We take “interest rate” for an example. The term and concept of “interest rate” existed in the Soviet economy and, thus, we can show the interest rates in the three periods of Russia (Fig. 7.1). Figure 7.1 indicates the bill discount

100

Discount rate Deposit rate A

Fig. 7.1  (Continued)

Policy rate Lending rate B

Lending rate A Deposit rate B

2017

2010

2000

1990

1980

1970

1960

1950

1940

1930

1910 1917 1920

1900

1890

1880

1860

1

1870

10

7  MONEY AND FINANCE 

223

rate of the Imperial Gosbank (state bank) that may be regarded as the central bank’s policy rate in the imperial period, the short-term lending rate of planned loans to state enterprises by the Soviet Gosbank and the interest rate of household deposit payable at sight in the Soviet period, and the rediscount rate (the key rate after 2016) of the Central Bank of Russia Federation (CBR), the average lending rate of loans to enterprises within one year, and the average rate of household deposits with the less than one year maturity in new Russia. Figure  7.1 shows well the characteristic of

Fig. 7.1  Interest rates in the three periods (annual, %). Notes: The vertical axis shows the annual rates in the log-scale. Discount rate: daily plots of the imperial Gosbank’s discount rate for bills the due dates of those are within 6 months before 1893, and within 3 months after 1893. Because the discount rates differed from region to region from 1893 to 1895, the rate in St. Petersburg was plotted; Policy rate: the refinance rate of the Central Bank of the Russian Federation (CBR) until the end of 2015. After 2016, the key rate is applied uniformly to more than one instrument. The rates at the end of quarter were plotted from 1992 to 2002, and the rates at the end of month, after 2002; Lending rate A: annual plot of lending rate of short-term loan to state-owned enterprises at the end of year during the Soviet time. When there were different lending rates for different loan items, their simple means were plotted. For 1922 to 1924, the lending rates of loans in Chervonets; Lending rate B: rending rate of short-term ruble loans to legal entities. For 1992–1994, the simple mean of lending rates of banks in the Moscow region. The timing of plot is the same as that of the policy rate. Deposit rate A: annual plot of household demand deposit rate of the state saving bureau at the end of year; Deposit rate B: household deposit rate of commercial banks. Until the end of 1994, the mean of deposit rates of banks in the Moscow region. From 1995 to 1996, the deposit rate for household time deposits of less than 300,000 rubles with monthly interest payment. From 1997, the weighted mean of interest rates for household deposits of the maturity of less than one year at all banks. The timing of plot is the same as that of the policy rate. Sources: The imperial period: Khromov (1950, pp.  541–544); the Soviet period: Homer and Sylla (2005, pp.  598–612); the Russian Federation period: International Monetary Funds (IMF), International Financial Statistics; The Central Bank of the Russian Federation, Banking Sector, Interest Rates and Structure of Loans and Deposits by Maturity, http://www.cbr. ru/statistics/Default.aspx?PrtId=int_rat; The Central Bank of the Russian Federation, Monetary Policy, Monetary Policy Instruments and Other Operations, http://www.cbr.ru/DKP/instruments_dkp/interest_rates/and Nakamura (1999, pp. 110–111). The latest possible data are used in the present Russian period, as the data are revised often

224 

Y. NAKAMURA

each period. The Imperial Gosbank changed the interest rate according to the changes in economic situation; the rate, however, fell in general within the range from 5% to 7%. That is, the Imperial Russian economy followed the economic development path that allows the Imperial Gosbank to keep its policy rate in the range. The interest rate in the Soviet period were the administratively set fixed rate uniformly applied to borrowers by category such as state enterprises, collective farms, households, and by the items of loans and credits. For example, the same interest rate was applied to any state enterprise when the state enterprises got credit within the upper limit approved by the economic plan using its finished products on delivery as the guarantee. Interest rates of lending which were not approved in advance by the economic plan were sometimes changed (mostly, upward); however, the interest rates of planned lending and deposit rates were scarcely changed and decreased if they were changed. At the end of the Soviet period, the rending rate to state enterprises approved by the economic plan in advance was reduced to the minimum level to cover the operating costs of financial institutions: the simple average of annual interest rates for some typical plan-approved lending items was around 1.5%. In new Russia, any kind of annual interest rates were well over 200% immediately after the transition to market. This indirectly suggested that the financial disequilibrium had developed during the Soviet period. After the end of the 1990s, the interest rates showed clear downward tendencies, although interest rates sharply increased during some financial crises. Then, the various interest rates have been still high, around 10%, after the 2014 Crimean crisis. Nevertheless, the spreads between various interest rates have been generally shrinking, and the order of the heights of the key rate, the rending rate, and the deposit rate has been showing the normal order. We can conclude that the monetary and financial economy has been going toward a monetary and financial economy ordinary for a market economy. By contrast, it is difficult to point out any feature of the monetary and financial economy observing the entire period covered in Fig. 7.1. The apparent reason for it is the difficulty to understand the economic meaning of the interest rates in the Soviet period (Wilczynski 1978, pp. 130–142). The interest rate did not play the role to allocate financial resources during the Soviet period. Because the money and capital markets did not exist in terms of legislation and institution, both credit and borrowing lines were allocated administratively in the same way as material goods and state budget funds were allocated. There is little

7  MONEY AND FINANCE 

225

information available regarding how the allocation was determined, how the economic performance of utilization of funds was evaluated, and how the evaluation was used as a feedback for the next allocation. We can give the money supply as another example. We can draw a chart of money supply in the three periods as shown later. It is again difficult to find any feature comparing the money supplies in the three periods or observing the money supply through the entire period, mostly because it is unclear how we should understand the changes in money supply in the Soviet period. For the Imperial and new Russia periods, it is acceptable to assume that prices increase as money supply increases, at least, for the first working hypothesis. On the other hand, we cannot transcendentally assume a positive relationship between price level and money supply in the Soviet economy; prices were administratively set fixed prices. If we would assume it, we need to be able to explain what kind of mechanism, what kind of behavior of the price controlling office, increased prices when money supply increased. Again, there is little information and data available to check the validity of such a hypothesis. The Soviet economic theory that asserted disposition of money, capital, and market naturally had no theory to explain the relation between price level and money supply. The rest of this chapter, therefore, keeps outlining the characteristics of the monetary and financial system and, then, explaining the monetary and financial statistics of each period in turn. We need to work further to construct the historical monetary and financial time series connecting the three periods and to interpret them.

7.2   Russian Empire 7.2.1  Monetary and Financial System in the Imperial Period We divide the development of the Imperial Russian monetary and financial system into the periods of “proto-modernization” and “modernization” before and after the establishment of private banks in 1864. The “proto-­ modernization” period can be divided into two sub-periods before and after the establishment of the two state banks in 1754; the “modernization” period also can be divided into two sub-periods before and after the two successive evens: the Imperial Gosbank’s assuming the standard functions of a central bank in 1894 and the introduction of the gold standard in 1897 (Table 7.1).

226 

Y. NAKAMURA

Table 7.1  Historical developments of monetary and financial system Regimes

Years

Periods and phases

Keywords

Imperial Russia

1754–1863 1864–1896

Proto-industrialization Industrialization, the first Industrialization, the second Non mono-bank, the confusing

State financial institutions Private banks, nonstandard central bank Gold standard, standard central bank Nationalization and consolidation, hyper-inflation, abolition of central bank Reintroduction of the gold standard, revival of central bank Forming the mono-bank, the Credit reform State budget financing, supplementary bank financing, war-time economy Expansion of bank financing, search for a way to manage money Quasi two-tire banking system, revival of private financial institutions Hyper-inflation, confusion in monetary and financial system and policy Standard monetary and financial system for a market economy

1897–1917 Soviet Union

1917–1922

1922–1926 1927–1932 1933–1953

1954–1987 1988–1991

New Russia

1992–1995

Non mono-bank, the NEP Mono-bank, the forming Mono-bank, the prime Mono-bank, the declining Mono-bank, the collapsed Transition, the confusing

1995–present Standard system Source: Compiled by the author

Corresponding to the economic backwardness of the Russian Empire relative to West European countries, the development of the Russian monetary and financial system was lagging to those in West European countries. However, the modern monetary and financial system started to form in the last half of the eighteenth century. In 1754, the State Noble Bank (Dvorianskii zaemnyi bank) and the State Marchant Bank (Kommercheskii bank dlia kupechestva) were established. After that, several state financial institutions were established; some were newly established from nothing and others were established through reforms of existing financial institutions.1 The establishment of the state financial institutions 1

 See Kulisher (2004, pp. 619–643) for the development of monetary system before 1754.

7  MONEY AND FINANCE 

227

suggested that the Russian imperial government recognized well the importance of upgrading the monetary system for economic development. At the same time, it indicated that the state heavily committed itself in the development of the monetary and financial system. The state financial institutions aimed to provide commercial credits to Russian companies which heavily depended on foreign financial institutions in their foreign trade finance and to finance business-oriented ­landlord nobles. The main financial sources of the financial institutions were treasury funds and issuances of paper money; they rarely accepted ordinary deposits. The Ministry of Finance exercised strong control over the state financial institutions: the ministry planned business activities of each state financial institution and allocated funds between them. The scope of business of the state financial institutions was strictly regulated; market competition virtually did not exist because of the strict control by the state over the state financial institutions. On the other hand, borrowers often neglected their debt obligations to the state financial institutions (Garvy 1972, p. 878). The monetary economy developed slow relative to West European countries even after 1754, despite the fact that the government of the Imperial Russia recognized the importance of development of the monetary and financial system for her modernization. The defeat in the Crimean war in 1856 intensified efforts of the Imperial government for modernization and industrialization. In 1860, one year before the emancipation of the Russian serfs, the Imperial Gosbank was established. The main function of the Imperial Gosbank was to provide the economy with state funds rather than to play a role of a central bank. More funds were needed to accelerate modernization and industrialization, while the existing state financial institutions were close to or in bankruptcy because of the financial crisis in 1857–1859 and foreign banks usually charged high interest rates such as 2% per month. Under this situation, permission to establish private banks was increasingly demanded. The first permission to open a private bank was granted in 1864, although the imperial government wanted to maintain the government monopoly in banking business. The permission of private banks was the starting point of forming a market-based monetary and financial system in the Imperial Russia. Private banks, communal banks, and other financial institutions increased in number rapidly after 1864, although the weight of private banks in banking business remained small relative to the Imperial Gosbank (Fig.  7.2). Crisp (1967) asserts that state funds and

228 

Y. NAKAMURA

Fig. 7.2  Financial institutions in Imperial Russia (million current ruble). Notes: (1) The sum of deposits and current accounts’ totals. The stock in million current rubles. (2) The “joint stock banks” and “burse banks” in the figure roughly correspond to the “joint stock and limited liability banks” in the text. It is unclear to what extend the “mutual credit associations” in the figure cover the “collective financial institutions” in the text. Source: Gindin (1948), pp. 410–411

foreign capital dominated the Russian monetary and financial economy until around 1890. The next landmark in the development of the modern Russian monetary and financial system was the reform of the Imperial Gosbank into a central bank in 1894 and the introduction of the gold standard in 1897. The government issued the ruble notes until 1897. The Imperial Gosbank became the issue bank in 1897 and the ruble notes became banknotes (Cameron 1967, p. 407). Since the start of the Russian modernization in the late 1850s, the Imperial Russian economy had been chronically inflationary; the reform of the Imperial Gosbank and the introduction of gold standard in 1897 finally brought stability in the value of money. Crisp (1967) wrote that the Russian modernization was achieved under the strict discipline of money issue, not by over-issuance of money accompanied with inflation, after that.

7  MONEY AND FINANCE 

229

The weights of funds supplied by the government and the Imperial Gosbank remained large even after the introduction of gold standard. Before the reform of the Imperial Gosbank in 1894, the Imperial Gosbank was virtually a commercial bank which gave loans to the economy through discounting short-term commercial bills. Even after 1894, the Imperial Gosbank continued to directly supply funds to certain economic sectors (Garvy 1972, p. 882). The Imperial Gosbank gave shortterm loans to the economy more than all private banks did until 1905–1906. The share of the Imperial Gosbank in the total loan and discount operations of all credit institutions was 15.4% in 1875; it increased to 25.8% in 1908, and it was still 20.2% at the beginning of 1914 (Garvy 1972, pp.  882–883). Despite the fact that the Imperial Gosbank stopped accepting deposits in 1899, it continued to give loans using balances of the current accounts that the Ministry of Finance and state enterprises had at the Imperial Gosbank. The deposits collected by Sberkassa (state saving bureau) also served as a financial source of the Imperial Gosbank’s lending operations. Sberkassa was under the jurisdiction of the Ministry of Finance and had 8,553 branch offices across the country in 1914. The dependence on the Ministry of Finance’s funds, however, was not unique to the Imperial Gosbank; state funds accounted for 20% of the financial source of the total banking system in 1914 (Garvy 1972, p. 884). The dominant role of the state in the monetary and financial system can be clearly observed in the Imperial Russia even in her late period of modernization; however, it was also probable that the monetary and financial system had been developing steadily toward the standard monetary and financial system of a market economy until the socialist revolution. Private banks had been growing in size through selection and consolidation: the top 12 banks in all 50 private banks held 79% of the assets of all private banks in 1914 at the time just before World War I (Garvy 1972, p. 880). The structure of the financial institutions by ownership was as follows in 1917 before the socialist revolution (Crisp 1967, 1976; Garvy 1972). 1. State banks The Imperial Gosbank played roles of both central and commercial bank. It provided loans directly to the economy. There were two other state mortgage banks, People’s Land Bank and Nobles’ Land Bank, which provided long-term loans on security of lands.

230 

Y. NAKAMURA

2. Private banks



a. Joint stock and limited liability banks There were 47 joint stock and limited liability banks in 1914. Ten in the 47 banks were mortgage financial corporations for agriculture. b. Other private financial institutions There were private financial institutions which gave loans and did financial transactions such as dealing stocks and commercial bills. 3. Municipal and collective financial institutions





a. Municipal banks These banks were under the jurisdiction of the regional offices of the Ministry of Finance. They counted 342 in 1916. b. Mutual credit unions They mainly served merchants. There were 1,108 unions, and their members were 643,355 persons in 1914. c. Credit associations Cooperative-style economic entities emerged in various spheres of the economy after 1887; they became a common managerial form of economic entity by 1906. There were 14,562 credit and saving associations in 1914. Moskovskii Narodonyi Bank established in 1912 played the role of the central organization of those associations. d. Other financial institutions including mutual aid societies, saving societies, and village banks. 4. Additionally, there was Sberkassa (saving bureau) under the jurisdiction of the Ministry of Finance. It has 8,553 branch offices and stations in 1914.

7.2.2  Monetary and Financial Statistics in the Imperial Period As the nation-wide monetary and financial system was still in the process of formation in the Imperial Russia, the availability of monetary and financial statistics covering the entire Russia is low. In the period before 1861, nation-wide monetary and financial statistics was basically unavailable. Gindin (1948) and Morozan (2004) collected monetary statistics of

7  MONEY AND FINANCE 

231

i­ndividual regions and individual financial institutions; their works are impressive but insufficient to draw a statistical picture of the whole monetary and financial system in the period. After 1861 when the Imperial Gosbank started operating, data on the main balance sheet items of the Imperial Gosbank are available in a systematic way (Gindin 1960; Appendix Table  7.1), although data on the balance sheet total are absent. Gindin (1960, 1997) and Salomatina (2004) collected data on private commercial banks after 1864. Aggregated data on financial institutions other than the Imperial Gosbank and private commercial banks seem unavailable, despite that materials on individual financial institutions might be preserved in the archives. The available data roughly show the developments of the monetary and financial economy after 1861, although it seems difficult to quantitatively analyze relationships between the developments of the real and monetary economies because of the scarcity of the comprehensive monetary and financial statistics. The money supply statistics (Fig. 7.3) are an example for it. Even if we focus on the period after the adoption of the gold standard in 1897, it is not straightforward to know what the money supply indicators were representing. The data on banknote issuance by the Imperial Gosbank are systematically available and they seemed reliable; however, it is uncertain how well they represent money supply. Gold and silver coins were issued other than ruble notes. Moreover, various money surrogates were also issued even after 1897. We also need to consider deposit money supply. The aggregated data on money surrogates and deposit money were little available both before and after the adoption of the gold standard, although it was probable that money surrogates circulated more before the adoption of the gold standard. Drummond (1976) showed how the picture on money supply changes according to the definitions of money supply or the completeness of the monetary statistics. If we look at the issuances of paper money of the Imperial Gosbank, the money supply sharply decreased after the adoption of the gold standard. In contrast, the money supply of the wider definitions estimated by Drummond (1976) indicated only small decrease in money supply. If more comprehensive data on deposits and money surrogates, the picture on the money supply may change. This example shows that we need to be careful about the representativeness of the data when we use the monetary and financial data in the imperial period. The low availability of nation-wide monetary and financial data reflecting the slow development of the Russian monetary and financial system is the main obstacle to constructing time series for the imperial period. The ­meaning

232 

Y. NAKAMURA

Fig. 7.3  Money supply in Imperial Russia (at the end of year, million current ruble). Notes: BN+CA: the sum of the stocks of banknotes and current account balances; BN: the stock of banknotes; Drummond: money supply adjusted by Drummond (1976). CA includes the balances of the accounts those the treasury held and the current accounts at Sberkassa. Drummond includes metallic coins in addition to banknotes and current accounts balances. Source: Appendix Table 7.1

of the low availability of the monetary and financial data in the imperial period is, however, different from that in the Soviet period. We are surely able to collect more monetary and financial data of individual region and individual institution, and it will give us deeper understanding on the monetary economy in the imperial period. On the other hand, the unavailability of monetary and financial data in the Soviet period involves fundamental lack of economically meaningful monetary and financial data as discussed in the next section.

7  MONEY AND FINANCE 

233

7.3   Soviet Union 7.3.1  Monetary and Financial System in the Soviet Period After the 1917 revolution, the Soviet government pursued the nationalization of existing financial institutions and their consolidation into the Peoples’ Bank (hereafter, the Soviet Gosbank for simplicity) reformed from the Imperial Gosbank. The government followed Lenin’s doctrines: (1) a single bank should execute all banking operations for the whole economy, and (2) the government should use the banking system as a tool for monitoring and auditing all economic activities in the country. The nationalization and consolidation were generally completed by 1919. Because nonfinancial enterprises were also nationalized, the weight of state budget funds in the total financing for the economy rapidly increased; however, the weight of funds supplied by banks was also significant because the fiscal base of the Soviet government was still weak at that time (see Fig. 7.4). The gold standard was already abandoned in the time of the Russian Empire in January 1914 to finance war efforts for World War I. Immediately after the socialist revolution, the socialist government lifted the guarantee requirement for loan supply of the ex-Imperial Gosbank. In May 1919 when the Russian Civil War intensified, all restrictions on banknote issuance of the Soviet Gosbank were removed; it was said that money must be issued according to demands from the economy. In January 1920, the Soviet Gosbank itself was abolished, and the Ministry of Finance assumed the function of money issuance. Formally, issuance of paper money by the Imperial Ministry of Finance before 1897 reappeared. In reality, the monetary and financial system and money itself did not function almost at all under the hyper-inflation that started in World War I, intensified after the socialist revolution, and came close to a catastrophe during the Russian Civil War (Alkhimov 1981, pp. 8–9). The value of ruble on July 1, 1920 decreased to 1/13,000 of that of the 1913 ruble; 93% of the total amount of wage were paid in kind, and taxes were collected also in kind. The economic policy was changed to the “New Economic Policy (NEP)” in 1921 when the Russian Civil War began to end in the victory of the Soviet government. The NEP intended to revive the economy by reintroducing market-oriented policies and institutions. The transition to the NEP needed the stability in the value of money and a functioning monetary and financial system because the NEP intended to use the

234 

Y. NAKAMURA

Fig. 7.4  State budget and bank loans in the Soviet Union. Notes: TTL: Gosbank’s balance sheet total; NPNI: nominal PNI (produced national income); CE: Gosbank’s credits to the economy; SBE: state budget expenditure on the economy; CC: cash in circulation. The top panel shows the rations in percentage of nominal PNI; the bottom panel shows the annual growth rates in percentage. Source: Appendix Table 7.2

­ arket mechanism. The Soviet Gosbank was re-established in October m 1921 (Alkhimov 1981, p. 9). Then, the monetary reform of 1922–1924 was executed to end the inflation. During the period of 1922–1924, measures to stabilize the value of money and to restore the financial discipline were executed, such as introduction of a gold-back currency, Chervonets,2 stopping issuances of paper money and various money surrogates, and exchanges of old-face banknotes with new-face banknotes in combination with re-denominations of currency and demonetization 2  25% of the issuance of Chervonets were backed by gold and gold-standard foreign currencies, and the rest was backed by commodities themselves and short-term commodity bills. The exchange rate of Chervonets to gold was fixed. Chervonets was widely traded in the world foreign exchange market (Atlas 1967, p. 215; Arnold 1937, Chaps. 7–9). Chervonets stopped being issued in 1924 and was demonetized in 1947 (Kravtsova 1983, p. 104).

7  MONEY AND FINANCE 

235

of old notes and monetary surrogates. In 1925, the authority of money issuance was transferred from the Ministry of Finance to the Soviet Gosbank: the Soviet Gosbank finally restored the position of the issuance bank, and ruble achieved full recognition as credit money again. The economy recovered under the NEP: the state budget balance and the international balance of payments turned to surplus in the period of 1925–1926. Thanks to the monetary reform and the economic recovery, the inflation finally ended. The financial sector expanded in size and diversified as well. Several state banks were newly created, and communal banks and mutual financial institutions were established in both urban and rural areas (Fig. 7.4). These market-oriented developments of the monetary and financial system ended as the policy course was changed again from the NEP to the Five-Year Plan that symbolizes managing the economy in the command-­ administrative way. In January 1927, the rule of “one enterprise—one bank office” was introduced. This rule required that one economic unit was served by one specific bank branch office and, thus, established an institutional premise for monitoring and controlling enterprises by the Soviet Gosbank. Then, “the 1930/32 credit reform” laid the foundation of the “mono-bank” system. The main properties of the mono-bank system were as follows: (1) State budget funds were allocated to state enterprises to meet their financial demands for capital investments including the standardized part of liquid assets. The enterprises did not need to pay the interests and repay the principals. There were some sectoral banks which gave long-term loans to finance investment projects; these long-term loans facilities were, however, auxiliary and supplemental measures for the peripheral spheres such as kolkhoz (collective farms), cooperatives, and housing construction. Moreover, the main financial sources of the sectoral banks were state budget funds; the sectoral banks were the institutions managing state budget funds for investments in the peripheral spheres rather than banks. (2) Any kind of financing between enterprises was banned.3 All demands for short-term financing were met with the Soviet Gosbank’s loans. Because state budget funds financed the 3  In reality, inter-enterprise loans in the form of accounts receivable and payable financed around 20% of all liquid assets of state enterprises throughout the Soviet period (Narkhoz

236 

Y. NAKAMURA

s­ tandardized part of liquid assets, the Soviet Gosbank’s loans covered only seasonal financial demands and financial demands difficult to foresee such as bridge financing during transportation and settlement. The Soviet Gosbank’s loans were given in a restricted manner. Enterprises needed to provide material guarantees and were allowed to use the funds loaned only for their purposes stipulated in advance. Bank loan financing was auxiliary and supplementary as state budget funds covered financial needs for main economic activities. (3) Each individual transaction between enterprises was settled by individual bank account transfer excluding offsets between enterprises belonging to the same regional or sectoral supervising organization. Using cash money for settlements was strictly prohibited in the enterprise sector excluding payments of wages and other monetary compensations to households and of small expenses such as purchases of stationery. This was also known as the principle of “the division between cash and non-cash money” as the most transactions were settled with non-cash medias in the enterprise sector.4 These basic properties of the mono-bank system little changed until the 1988 banking reform that introduced a quasi two-tire banking system (Table 7.2). This did not mean that the mono-bank system worked well during the period from 1930/1932 to 1987. The mono-bank system had an inherent problem of lack for a mechanism to regulate efficiency of fund use; there was no mechanism to collect information on fund-use efficiency and to regulate it because markets for money and funds were eliminated. What they had was only a naive belief: funds would be used efficiently because efficient use of funds would be planned, and the plan would be executed thanks to the command-administrative management of the economy. Consequently, fund-use efficiency was chronically low or even continued to deteriorate during the Soviet period. Low fund-use efficiency resulted in accumulation of nonperforming financial assets; in this sense, the value of ruble was not maintained well. 1968, p. 862; Narkhoz 1981, p. 511; Narkhoz 1991, p. 27). The Soviet government tacitly permitted them for smooth economic activities (Gregory 2004, pp. 226–231). 4  The enforcement of the division between cash and non-cash money was not very effective. See Gregory (2004, pp. 220–221) and Kim (2002).

7  MONEY AND FINANCE 

237

Table 7.2  Share of Soviet Gosbank in all bank loans (%) Year

1923–1924 1926–1927 1932 1940 1950 1960 1970 1980 1987 1990

Loans Short-term

All

67 57 97 99 94 96 92 85 91 1.3

66 48 65 91 89 95 89 80 88 0.1

Sources: Narkhoz (1988, p.  595) and Kashin and Mikov (2010, p.  75) for 1987. Kashin and Mikov (2010, p. 8) for all other years Notes: In stock at the end of year. 1923–1924 and 1926–1927 indicate the economic year starting in October and ending in September

This fundamental problem may be recognized more or less even in the early period of the mono-bank system. Recent literature shows that there were various reform proposals spanning from reintroduction of commercial bills to abolishment of material panning already in the end1930s and 1940s (Davies 2001, pp. 69–79; Zverev 2012, pp. 110–124). Those proposals were not realized in the confusion of Stalin’s Great Purge and World War II. The period from 1939 to the post-war monetary reform in 1947 was the period of the war-time economy that cash issuances financed over-­spending of budget funds. The monetary and financial economy did not work in an ordinary way again in this period. However, Soviet authorities recognized well risks of the disrupted monetary economy in this time and started projecting a post-war monetary reform during the war. The 1947 monetary reform aimed to remove households’ excess liquidities accumulated during the war so that the rationing of consumption goods that was inevitable but unpopular during the war could be abolished. The 1947 monetary reform under the reign of Stalin included authoritative measures such as partial confiscation of cash and deposits and partial default of government bond debts; the reform was, therefore, unpopular. The reform was, nevertheless, successful in eliminating excess

238 

Y. NAKAMURA

liquidities. The 1947 monetary reform brought the mono-bank system back; this meant that the problem of the mono-bank system was also reproduced. The mono-bank system was slightly changed after 1954 when the party and government adopted a resolution to expand bank loan financing: they hoped that bank loan financing which required payments of interests and repayments of principals would strengthen financial discipline and increase fund-use efficiency. The adoption of the resolution implied that one element of the mono-bank system, the restricted use of bank loan, was changed. Meanwhile, there was an important change in state budget financing as well: the government decided to reschedule its government bonds repayments and to abolish the subscription sales of government bonds entirely in 1958. The subscription sales of government bonds absorbed a dominant part of household saving; they financed about 5%–10% of the annual state budget revenue. The main reason for the abolishment was that the scheme brought little net revenue as the debt servicing costs became too large (Allakhverdian 1962, p. 323; Chetverikov 1972, p. 51). The subscription sales were generally unpopular among households because they were essentially forced saving. Moreover, government bonds repayments were rescheduled in 1938 for the sake of war preparation. Further, the 1947 monetary reform partially confiscated government bonds and rescheduled government bonds repayments to end the war-time inflation. There seemed to be reasons for the measures in 1938 and 1947; yet, social and political costs to repeat reschedules had been probably getting larger. There might be no other choice than abolishing the subscription sales. The subscription sales of government bonds were dead-ended (Nove 1992, p. 354). There was another change in the monetary and financial system in 1963: Sberkassa was transferred from the Ministry of Finance to the Soviet Gosbank (Fig. 7.5). The motivation of the transfer was unclear; this, nevertheless, changed the Soviet macroeconomic flow of funds. Before 1963, the Soviet Gosbank accepted household deposits only in exceptional cases of war participants; the weight of household deposits in the Soviet Gosbank’s financial sources was negligible. The weight of foreign financial sources was also small. As expected, the enterprise sector was net-­borrower from the Soviet Gosbank. Thus, the government was the only significant net-supplier of funds for the Soviet Gosbank before 1963 (see Appendix

7  MONEY AND FINANCE 

239

Fig. 7.5  Money supply in the Soviet Union (at the end of the year, million current ruble). Notes: (1) 1921–1922, 1924–1925, and 1929–1930 indicate the economic year (see the note of Appendix Table  7.2). (2) Household deposits are deposits at Sberkassa. Cash indicates the banknotes only. (3) The currency re-­ denomination accounts for most of the decrease in 1961; the measurement unit is current ruble. Source: Appendix Table 7.2

Table  7.1).5 Garvy (1972, 1977) saw the resemblance between the Imperial Gosbank and the Soviet Gosbank in here. By contrast, household deposits of Sberkassa became almost exclusive financial source of the Soviet Gosbank after 1963. Before 1963, it was the Ministry of Finance that absorbed almost all household saving directly through the subscription sales of government bonds and indirectly through sales of government bonds to Sberkassa. After the abolition of the subscription sales and

5  The net financial position of the enterprise sector against Gosbank can be observed as LE–CE in Appendix Table 7.2.

240 

Y. NAKAMURA

the transfer of Sberkassa, the Soviet government gave up the way to collect funds by bond sales and, thus, it became short of funds.6 The 1954 resolution to expand bank loan financing was completed in institutional terms with the transfer of Sberkassa to the Soviet Gosbank in 1963. After the transfer, the Soviet Gosbank bears the financial intermediation function to collect funds from households and to give loans to enterprises that are similar to a banking system in a market economy. The bank loan financing increased in its size as well (Fig. 7.4), although the increase was accounted for almost exclusively by the expansion of ­short-­term loans that was brought by the introduction of a short-term loan facility similar to “overdraft” in market economies. The 1954 resolution envisaged an expansion of long-term loans for investment financing. It was partially introduced after 1954; however, the weight of long-term loans in all investment financing of the state enterprises remained at around 5% until the end of the Soviet system. As discussed, the basic motive of the expansion of bank loan financing was to overcome the deterioration of fund-use efficiency. Bank loan financing which required payment of interests and repayment of principals was promoted in the hope of increasing fund-use efficiency. In reality, it was probable that fund-use efficiency did not increase but further decreased. The expansion of bank loan financing did not mean reintroduction of market for money and funds at all; bank loans were allocated unchangingly in an administrative manner. This meant that restrictions on bank loan supply were relaxed, while strict control over bank loan financing by market did not exist. Moreover, it was difficult to change the fundamental sociopolitical property of the Soviet economy that the financial relationships between the government, Soviet Gosbank, and state enterprises were the internal relationships within one single owner of the state: when enterprises failed to redeem debts obligations, the government and Soviet Gosbank must have accepted responsibility for it, fully or partially. The mono-bank system was finally dismantled by the 1988 banking reform when the Soviet monetary and financial economy was in crisis. The Soviet Gosbank stopped giving loans directly to nonfinancial enterprises and carried only the role of a central bank. Five sectoral state banks such as industry bank, construction bank, and agriculture bank were created to do credit operations for the economy. Establishment of private financial  Sales of government bonds such as lottery bonds continued in a small scale.

6

7  MONEY AND FINANCE 

241

institutions was also permitted. The 1988 banking reform, however, did not have a clear strategy how to reform the Soviet monetary and financial economy. If it had aimed to introduce completely independent management of enterprises and re-establishment of market for money and capital, it would undoubtedly lead to a market economy. Indeed, the history showed that the transition to market economy completed the reform of the mono-bank system. This brief review on the development of the Soviet monetary and financial system suggests that the Soviet system could not establish a functioning economic mechanism to evaluate and control the value of money and funds until its end. From the perspective of the history of money, the time of the socialist revolution was also the time of transition from the gold standard to the managed money. Any country in the world had not any clear idea how to manage fiat money at that time; it is known that many countries tried to return to the gold standard. The Soviet party and government also officially announced at the 11th party congress that one of the aims of the 1922–1924 monetary reform was to achieve monetary stability by re-establishing the gold standard (Nakamura 2017, pp. 13–14). Apart from the short period when Chervonets circulated, Soviet currency was never gold-backed in reality. Market economies have established a way to manage fiat money by using information generated by market and exercising monetary and financial policy measures in the market, although it is still an open question how successful they are as we can see it in the repeating world-wide financial crises. By contrast, the Soviet economy was unable to establish a market-based mechanism to manage fiat money because it eliminated market. It was ironical that an economy that claimed the eventual disposal of money and capital collapsed in the monetary and financial turmoil. The Soviet monetary and financial system had been in a contradictory situation: the Soviet system restricted market in conformity with the socialist ideology, while money, in particular, fiat money, was used in the actual economic life for practical reasons. 7.3.2  Monetary and Financial Statistics in the Soviet Period The monetary and financial statistics are more problematic in the Soviet period than in the Imperial Russia. The data availability is extremely low. Until 1937, the Soviet Gosbank’s balance sheets and the balance of payments tables were available. After 1937, those data were unavailable until

242 

Y. NAKAMURA

the end of the Soviet system. Kashin and Mikov (2010) published a collection of the Soviet Gosbank’s balance sheets for 1922–1990 compiled from archive materials. The publication of Kashin and Mikov (2010) is a great contribution to the Soviet monetary and financial statistics; it was Kashin and Mikov (2010) that made Soviet money supply data available for the first time. The availability of data on the Soviet monetary and financial system is, nevertheless, far from sufficient. As of May 2018, monetary and financial data such as balance sheets of financial institutions other than the Soviet Gosbank, money supply data by republic, and balance of payments tables are unavailable. Available data for a relatively long period are limited to the bank loan stocks by industry and by republic and the long-term bank loan stocks by destination (collective farm, cooperative, housing construction, and households). The usability of these data is low, firstly because the data are not very systematic and secondly because the data indicating overall financial position of a production sector, a republic, or an institutional sector are lacking. The only available comprehensive macroeconomic financial data are the archival materials of statistical collections of national economic balances for 1950, 1955–1957, 1961, and 1962 (RGAE F.1562, Op.33, D.310; F.1562, Op.33s, D.3108; F.1562, Op.33s, D.4925). The statistical collections include the “balance of production, distribution, and redistribution of the social products (financial balance)” for those years. From the balance tables, we can reconstruct the income-outlay balances of the institutional sectors of the material production (state enterprise) sector, the non-material production sector, the collective farms and cooperatives sector, and the government, financial, and social security sector despite some uncertainties. The uncertainties are related to firstly the fact that the accounting system of the national economic balances was not entirely completed. That is, there are funds coming from and going to unspecified places. Secondly, large transfer transactions between the sectors, that is, redistribution of funds between the sectors, existed. Moreover, large parts of those transfers were not always done by the government sector. So far as the gross amounts of those transfers remain unknown, we cannot identify the true sizes of the incoming and outgoing flows of a sector. The large redistribution of funds reflects the fact that all economic subjects excluding collective farms, cooperatives, and households were owned by the state. The more fundamental problem of the Soviet monetary and financial statistics is that they were not based on market, as discussed in the previous section. Even if detailed monetary and financial data were available, it

7  MONEY AND FINANCE 

243

would be difficult to understand what they mean in economic terms. This problem stems from the fact that the Soviet monetary and financial system was not based on the market mechanism. In market economies, we observe the relationships between the monetary and real economies using information generated by market such as price indices, interest rates, and exchange rate. By contrast, such information was fundamentally unavailable in the Soviet economy where market activities were restricted. Prices, interest rates, and exchange rate were set administratively in the Soviet economy; it is difficult for both Soviet and non-Soviet observers to understand their economic meanings.

7.4   New Russia 7.4.1  Monetary and Financial System in the New Russia Period The 1988 banking reform was the starting point of the monetary and financial system of new Russia. The act on cooperatives in 1988 permitting establishment of private financial institutions was also a landmark. In June 1990, the Central Bank of the Russian Federation (CBR) was created from the Russian Republic branch office of the Soviet Gosbank; Act on CBR was in effect in December 1991. Until the dismantle of the Soviet Union in December 1991, the Soviet Gosbank and CBR existed in parallel. A number of private banks were established in 1992 after the dismantle of the Soviet Union, while CBR’s regulation on the banking sector hardly worked in 1993 (Shiratori 1996, pp.  4–5). It was said that the “shock therapy,” the quick liberalization of administrative regulations on economy and privatization, started from the beginning of 1992. The shock therapy was, however, merely nominal in the financial sector. The Russian monetary and financial system start working, more or less, on logic of market and in market competition only in 1995 when the following three supply channels of inflation money was finally closed: (1) CBR’s giving credits automatically to the old republics of the Soviet Union, (2) CBR’s supplying loans to relief enterprises in the manner of administrative allocation of CBR loans, and (3) financing state budget deficits by CBR loans (Balino 1998; Edwards 1995, p. 70). Until the mid-1990s, the ruble was the only currency in the old Soviet republics; the relationships between the central banks of the ex-Soviet republics and CBR remained as same as the relationships between the

244 

Y. NAKAMURA

Soviet Gosbank’s headquarter in Moscow and its head branch offices of the Soviet republics. The central banks of the ex-Soviet republics could give loans in ruble (i.e. to issue deposit money) to their domestic government and enterprises independently from CBR, although they were not allowed to issue ruble banknotes. Neither CBR had effective measures to control loan supplies of those central banks, nor CBR was eager to control them until the mid-1990s. However, it was impossible to control inflation under this situation. To curb inflation, CBR issued new-face banknotes with demonetizing old-face banknotes in July 1993. This rather abruptly executed measure caused confusion in the Russian domestic economy; this, nevertheless, made the central banks of the old Soviet republics sign correspondent contracts with CBR. The contracts gave CBR an effective measure to control ruble loan supply by the central banks of the ex-Soviet republics (Nakamura 1999; Balino 1998). Afterward, the ex-Soviet republics began to switch from ruble to their own currencies because there were few merits to continue to use ruble currency. CBR continued to supply “soft loans” to help enterprises in financial difficulties after 1992. In May 1993, CBR and the Mistry of Finance officially announced that they obtained loans of the International Monetary Funds (IMF) and would change to a tight monetary policy. However, the domestic politics itself was still unstable.7 It was not easy to execute a strict monetary policy which was certainly unpopular among Russian people. CBR continued to allocate CBR loans with low or even negative real interest rates in an administrative manner (Rudnick 1994, p. 157). In February 1994, CBR started distributing a part of CBR loans at auction; the auction required that the lowest bidding interest rate should have been higher than the inter-bank rate. The auction was not widely used; however, this was the first step to moving from the administrative allocation of the central bank loans to the capital market and monetary management using it. In the latter half of 1994, the administrative allocation of CBR loans was completely stopped and the real interest rate of the CBR loans became positive (OECD 1995, p.  38). Afterward, various monetary policy instruments of market economy have been introduced on a trial and error basis (Balino et al. 1997; Balino 1998; Kamin et al. 1998). 7  Note that the coup d’état led by the conservative fraction occurred in July 1993. It was after the failed coup that the transition to a market economy became the policy strategy more or less established.

7  MONEY AND FINANCE 

245

In 1992, all state budget deficit of the consolidated government in the size of 14.2% of gross domestic product (GDP) were financed by loans from CBR. The state budget deficits of the consolidated government were 7.3% and 10.3% of GDP in 1993 and 1994, respectively; 86% and 70.5% of those deficits were financed by loans from CBR in 1993 and 1994, respectively.8 Financing state budget deficits by CBR loans was prohibited by law from 1995; issuance of government bonds and borrowing from abroad should finance state budget deficits. After these developments, a monetary and financial system like that in a market economy finally started functioning in the Russian Federation around 1995 (Edwards 1995, p. 70; Balino 1998). The CBR law enforced in 1990 was replaced with the new CBR law in April 1995; the new CBR law established legal and institutional foundation for financial supervising and monetary policies implementation common in market economies.9 After the mid-1995, the inflation rate finally started decreasing and real lending rates turned positive. However, the banking sector consisted of well over 2000 relatively small banks, the business base of which was weak. They did not have nation-wide network of branch offices excluding Sberbank (ex-Sberkassa) and the ex-agriculture bank. Financial supervising authorities were inexperienced, too. The 1998 financial crisis triggered by the default of government bonds led many financial institutions to bankruptcy. The Russian economy recovered, mainly thanks to high oil price after around 1999; under the favorable economic situation, reforming the financial sector and refining monetary and financial policy were pursued to establish efficient capital market. However, the 2008 Lehman shock and the low oil price after 2015 showed that Russia is still on the way to establishing an efficient capital market. 7.4.2  Monetary and Financial Statistics in the New Russia Period The Russian Federation has been making efforts to establish a standard system of monetary and financial statistics for a market economy (see Fig. 7.6). For example, IMF’s International Financial Statistics have published Russian data including price indices, interest rates, exchange rates, and the balance of payments table since the end of 1991, although they showed the  These figures slightly vary by sources. See Nakamura (1999, p. 125) for details.  The present CBR law was enforced in October 2002 (www.cbr.ru/today/bankstatus/. Accessed on 23 July 2019). 8 9

246 

Y. NAKAMURA

monetary survey only until 1994. After 1994, they published the monetary and financial data in the standard format of the monetary authority, deposit money banks (DMB), and monetary survey, although the published data in the period were often changed and corrected later. Since 2006, the financial survey including financial institutions other than deposit money banks has

Fig. 7.6  Money supply in the Russian Federation (at the end of year, million current ruble). Note: “Reserve money” and “Monetary base” slightly differ from each other by definitions. Sources: IMF (2005, pp.  501–503) and IMF (2015, pp. 678–683)

7  MONEY AND FINANCE 

247

been published in addition to the banking survey. As of October 2016, the monetary and financial data still unavailable in the Russian Federation seems to be only the detailed table of flow of funds. The Russian national accounting, nevertheless, has included the financial transactions table of the capital finance accounts by the five institutional sectors since 2012. From the perspective of monetary and financial statistics, the Russian transition to market meant to reintroduce market for money and capital and, thus, to resolve the deficiency of information generated by market and necessary to manage fiat money.

Appendix Appendix Tables 7.1 and 7.2 are available at www.ier.hit-u.ac.jp/histatdb/ projects/view/2.

References Alkhimov, V. S. (Ed.) (1981). Gosbank SSSR i ego rol’ v razvitii ekonomiki strany 1921–1981. Moscow: Finansy i statistika. Allakhverdian, D. A. (Ed.) (1962). Finansy SSSR. Moscow: Gosfinizdat. Arnold, A. (1937). Banks, Credit, and Money in Soviet Russia. New  York: Columbia U.P. Atlas, M.S. (1967). Razvitie bankovskikh sistem stran sotsializma. Moskva: Finansy. Balino, T. J. T., Hoelscher, D. S., and Horder, J. (1997). Evolution of Monetary Policy Instruments in Russia, IMF Working Paper, WP/97/180. Washington, DC: International Monetary Fund. Balino, T.  J. T. (1998). Monetary Policy in Russia. Finance and Development, 35(4), https://www.imf.org/external/pubs/ft/fandd/1998/12/balino.htm. Accessed 19 September 2018. Cameron, R. (Ed.) (1967). Banking in the Early Stages of Industrialization: A Study in Comparative Economic History. London: Oxford U.P. Chetverikov, P. A. (Ed.) (1972). Sberegatel’nye kassy SSSR za 50 let. Moscow: Finansy. Crisp, O. (1967). Russia 1860–1914. In Cameron, R. (Ed.), Banking in the Early Stages of Industrialization: A Study in Comparative Economic History (pp. 10–25). London: Oxford U.P. Crisp, O. (1976). Studies in the Russian Economy before 1914. London: Macmillan. Davies, R. W. (2001). Making Economic Policy. In Gregory, P. (Ed.), Behind the Façade of Stalin’s Command Economy: Evidence from the State and Party Archives (pp. 61–80). Stanford: Hoover Institution Press. Drummond, I. (1976). The Russian Gold Standard, 1897–1914. The Journal of Economic History, 36(3), 663–688.

248 

Y. NAKAMURA

Edwards, B. (1995). Can Yeltsin keep his nerve? Euromoney, (4), 68–76. Garvy, G. (1972). Banking under the Tsars and the Soviets. The Journal of Economic History, 32(4), 869–893. Garvy, G. (1977). Money, Financial Flows, and Credit in the Soviet Union. Cambridge: Ballinger. Gindin, I. F. (1948). Russkie kommercheskie banki: iz istorii finansovogo kapitala v Rossii. Moscow: Gosfinizdat. Gindin, I.  F. (1960). Gosudarstvennyi bank i ekonomicheskaia politika tsarskogo pravitel’stva, 1861–1892 gody. Moscow: Gosfinizdat. Gindin, I.  F. (1997). Banki i ekonomicheskaia politika v Rossii (XIX–XX v.): isbrannoe: ocherki istorii i tipologii russkikh bankov. Moscow: Nauka. Goskomstat SSSR (Narkhoz) (1968, 1961, 1988). Narodnoe khoziaistvo SSSR v 19XX godu. Moscow: Gosudarstvennoe statisticheskoe izdatel’stvo. Goskomstat SSSR (Narkhoz). (1968). Narodnoe khoziaistvo SSSR v 1967 godu. Moscow: Statistika. Goskomstat SSSR (Narkhoz). (1981). Narodnoe khoziaistvo SSSR v 1980 godu. Moscow: Finansy i statistika. Goskomstat SSSR (Narkhoz). (1987). Narodnoe khoziaistvo SSSR v 1986 godu. Moscow: Finansy i statistika. Goskomstat SSSR (Narkhoz). (1991). Narodnoe khoziaistvo SSSR v 1990 godu. Moscow: Finansy i statistika. Gregory, P.R. (2004). The Political Economy of Stalinism. Cambridge: Cambridge U.P. Homer, S. and Sylla, R. (2005). A History of Interest Rates, 4th ed. Hoboken: John Wiley & Sons. International Monetary Fund (IMF) (2005). International Financial Statistical Yearbook, 2005. Washington, DC: IMF. International Monetary Fund (IMF) (2015). International Financial Statistical Yearbook, 2015. Washington, DC: IMF. Kamin, S., Turner, P., and Van’t Dack, J. (1998). The Transmission Mechanism of Monetary Policy in Emerging Market Economies. BIS Policy Papers, (3), 5–64, Basle, Bank for International Settlements. Kashin, Iu. I. and Mikov, V. V. (Eds.) (2010). Balansy gosudarstvennogo banka SSSR, 1922–1990 gg., Po stranitsam arkhivnykh fondov Tsentral’nogo banka Rossiiskoi Federatsii, vypusk 9. Moscow: CBR. Khromov, P.  A. (1950). Ekonomicheskoe razvitie Rossii v XIX–XX vekakh, ­1800–1917. Moscow: Gosudarstvennoe izdatel’stvo politicheskoi literatury. Kim, B.-Y. (2002). Causes of repressed inflation in the Soviet consumer market, 1965–1989: retail price subsidies, the siphoning effect, and the budget deficit. Economic History Review, 55(1), 105–127. Kravtsova, G.  I. (Ed.) (1983). Denezhnoe obrashchenie i kredit. Minsk: Vysheishaia shkola.

7  MONEY AND FINANCE 

249

Kulisher, I. M. (2004). Istoriia russkogo narodonogo khoziaistva. Moscow: Nauka. Morozan, V. V. (2004). Istoriia bankovskogo delo v Rossii: vtoraia polovina XVII pervaia – polovina XIX v. Sankt-Petersburg: Kringa. Nakamura, Y. (1999). Financial sector and flow of funds. In Kuboniwa, M. and Tabata, S. (Eds.), Russian Economy in Transformation: Transition to Market Economy and Statistical System (In Japanese) (pp.  105–125). Tokyo: Aoki Shyoten. Nakamura, Y. (2017). Monetary Policy in the Soviet Union: Empirical Analyses of Monetary Aspects of Soviet economic Development. New  York: Palgrave Macmillan. Organisation for Economic Co-operation and Development (OECD) (1995). OECD Economic Surveys: The Russian Federation 1995. Paris: OECD Publications. Rudnick, D. (1994). First sort out the banks. Euromoney, (3), 157–163. Salomatina, S.  A. (2004). Kommercheskie banki v Rossii: dinamika I struktura operatsii 1864–1917 gg. Moscow: ROSSPEN. Shiratori, M. (1996). Study on the Banking System in the Russian Federation: ­1992–1996 (in Japanese). Tokyo: Nihon Hyoron Shya. Wilczynski, J. (1978). Comparative Monetary Economics. London: Macmillan. Zverev, A. G. (2012). Stalin i den’gi. Moscow: Algolitom.

CHAPTER 8

State Budget Shinichiro Tabata and Tomoko Tabata

8.1   Introduction This chapter deals with the state budget statistics in the Russian Empire, the Soviet Union, and the Russian Federation. We collected data in the period 1803–1914 for the Russian Empire, those in 1918–1990 for the Soviet Union, and those in 1992–2015 for the Russian Federation. These data in three periods differ significantly from each other in the following two points. The first is the difference of their territories. While the difference between the Russian Empire and the Soviet Union may be tolerated, that between the Soviet Union and contemporary Russia is considerable. With respect to the period of the Soviet Union, budget statistics of Russia (Russian Soviet Federative Socialist Republic [RSFSR]) existed as one of the constituent republics of the Soviet Union. They do not, however, include such important and sizable items as defense expenses, revenues from foreign economic activities, or revenues and expenses of enterprises under federal jurisdiction, which implies that they are not comparable with those in the Russian Empire and the Russian Federation. Therefore, we collect and analyze the budget statistics of the Soviet Union in this chapter.

S. Tabata (*) • T. Tabata Slavic-Eurasian Research Center, Hokkaido University, Sapporo, Japan e-mail: [email protected] © The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5_8

251

252 

S. TABATA AND T. TABATA

Second, while the state budget statistics of the Russian Empire that we analyze here do not include budgets of regions, that of the latter two ­periods does include them. This is because, in the period of the Russian Empire, it is difficult to systematically obtain the regional budget data, as is explained in the next section. It should be noted that if we add the expenditures of the regional governments that were estimated by Gregory (1982, p. 263) to those of the central government, state budget expenditures increase by 15–19 percent. On the other hand, the state budgets of the Soviet Union and contemporary Russia do include the budgets of regions and municipalities. Transfers between budgets are properly taken into account so that we may consider that there is no duplication of accounting. One of the common features of these three periods lies in the fact that these state budgets are in fact those of the general government that includes funds for social securities. However, as we see in Sect. 8.5.6, there were few expenditures for social securities in the budget statistics of the Russian Empire. The state budget of the Soviet Union was regarded to be the general government budget that includes social security, because there was an item called “resources for state social insurance,” in revenues and an item called “expenditures by resources for state social insurance” that were included in “social security” in expenditures.1 As for contemporary Russia, since the state budget statistics became general government budget statistics in 2005, we estimated the latter for the period from 1992 to 2004, as is explained in Sect. 8.4. Sections 8.2, 8.3, and 8.4 explain the budget statistics in the Russian Empire, the Soviet Union, and the Russian Federation, respectively. Section 8.5 makes some preliminary analyses of the consolidated state budget data of these three periods. While the data analyzed in this section are obtained basically from the official statistics of these three periods, we made original estimates in the following: Revenues in the period 1900–1914 (estimation of revenues in the old classification from those in the new classification); Revenues and expenditures in the period 1992–2004 (estimation of those of the general government budget); and 1  IMF et al. (1991, p. 239) regard the state budget of the USSR to include state social security accounts as well.

8  STATE BUDGET 

253

Revenues and expenditures in a unified classification in the period 1805–2014. The methods of estimation are explained in Notes 8.1, 8.2, and 8.3  in Appendix, respectively. Throughout these three periods, the financial year is from January to December in Russia, except for the period 1922–1929, when the financial year is from October to September. We collected financial data according to this financial year.2

8.2   Budget Statistics in the Russian Empire (1803–1914) 8.2.1   Outline and Sources of the Budget Statistics (1) State Budget Statistics Budget statistics in the Russian Empire includes statistics of the state and regions. According to Sasaki (1974, p. 283), “the state budget statistics was allowed to be publicized after the emancipation of the serfs for the first time.” In fact, the Report of the state inspector of the implementation of state budget and financial estimates (Otchety Gosudarstvennogo kontrolia po ispolneniiu gosudarstvennoi rospisi i finansovykh smet) has been compiled since 1868 (1867 in its title) and its substance has been published in the Yearbook of the Ministry of Finance (EMF, Ezhegodnik Ministerstva finansov) since 1869 (1869  in its title).3 These budget data have been published 2  This means that data for 1922 were from October 1922 to September 1923, data for 1929 were from October 1929 to September 1930, and data for 1930 were from October 1930 to December 1930. We did not collect data for January 1922 to September 1922 that were published in some budget statistics. 3  The Yearbook of the Ministry of Finance was published nearly every year from Vol. 1 in 1869 to Vol. 13 in 1883, and Vols. 14 to 17 were published in 1888 and 1889. In Vol. 17, budget data until 1885 were published. After a break, its volume entitled “1898” was published in 1899 (budget data until 1896 were reported). Thereafter, this yearbook was published annually until 1915. According to Shebaldin (1959, p. 164), while in the Report there was a detailed analysis of all major items of revenues and expenditures, in the Yearbook, general information concerning the budget was provided. According to Shebaldin (1959, p. 166), as more detailed and classified (polusekretnyi) data, there was the Loyal report of the

254 

S. TABATA AND T. TABATA

annually in the comprehensive statistical handbook, the Yearbook of Russia (Ezhegodnik Rossii), since 1905 (1904 in its title), which was renamed the Statistical Yearbook of Russia (Statisticheskii ezhegodnik Rossii) in 1912. Data before the 1860s were included in Vol. 1 of Ministerstvo finansov (1902), which was referred to in much of the literature including Khromov (1950).4 This volume covered the period 1803–1880. Its sources were reported to be the General Report of the Dispatch Office of State Revenues and Department of the State Treasury (general’nye otchety Ekspeditsii gosudarstvennykh dokhodov i Departamenta Gosudarstvennogo Kaznacheistva) for the period 1803–1825, a report to the State Council (Gosudarstvennyi Sovet) for the periods 1826–1830 and 1863–1865, and a report from the Ministry of Finance to the state inspector (Gosudarstvennyi Kontroler) for the period 1831–1862. Sources of the budget data after 1866 were the Report of the state inspector of the implementation of state budget and financial estimates, including the data published in Vol. 2 of Ministerstvo finansov (1902), which covered the period 1881–1902.5 (2) Regional Budget Statistics According to Shebaldin (1959, p.  165), while the ratio of the state budget revenues to GDP was 20.9 percent in 2013, it reached 24.4 percent if we add the regional budget revenues. Concerning the regional budget statistics, “It was only fragmentally released in government statistics. According to TsSK (1886, pp. II–III), this was due to the fact that forms of budget statistics were different among zemstvos and there was a lag in its compilation in some regions and because zemstvos did not want to open their budget to the Central Government due to their strong autonomy” (Sasaki 1974, p. 283). Gregory (1982, pp. 259–264) made state inspector (Vsepoddanneishii otchet gos. Kontrolera), which was widely used in Shebaldin (1959). 4  In Khromov (1950), data in the period 1803–1914 were published. Its sources were Ministerstvo finansov (1902) for the period 1803–1899 and TsSK (1911, pp. 640–649) and TsSK (1916, pp. 6–15) for the period 1900–1914. While Khromov published the original data basically without any corrections, there were some omissions of data and notes as well as some misprints. He did not publish data in the period 1900–1902 reported in Ministerstvo finansov (1902). 5  Data in the period 1901–1902 published in Vol. 2 of Ministerstvo finansov (1902) were provisional. Ministerstvo finansov (1913) included data in the long period, but it did not publish any breakdown other than the total amount.

8  STATE BUDGET 

255

estimates of regional budget statistics for specific years in order to use them in his estimation of national income. In this chapter, we did not ­collect the regional budget statistics, because doing this for several decades requires tremendous effort that is beyond our ability. 8.2.2  Revenues of the State Budget (1) Total Revenue There are four distinctions in total revenue: ordinary, circulating, extraordinary, and emergent revenues. Since emergent revenue is in fact an item of the financing of budget deficits, as is explained below, this revenue is not included in the revenues of the state budget here. In this chapter, total revenue is defined as the sum of ordinary, circulating, and extraordinary revenues. Among these revenues, a breakdown is available only in ordinary revenues (or ordinary (constant) revenues, obyknovennye (postoiannye) dokhody), as is described below. Circulating revenues (oborotnye dokhody) did not include any items, but data in the period 1803–1891 were available. It was noted under the name of this item in the period 1803–1825 that this item included two sub-­ items: (1) revenues from various sources (za chet raznykh mest); and (2) returns from various expenditures of the coffers of the state (vozvrat, proizvedennyi iz kazny za schet raznykh mest raskhodov). Circulating revenues accounted for 35.9 percent of the total revenue, but this share decreased from 1883, and since 1892 no data were released. Extraordinary revenues, which in fact were written as “extraordinary revenues and receipts for compensation for military expenses (edinovremennye dokhody i postupleniia v vozmeshchenie voennykh izderzhek),” and their breakdown were published in Ministerstvo finansov (1902). Data in the period 1805–1854 were available. Extraordinary revenues accounted for 19.2 percent of total revenue in 1813. (2) Breakdown Concerning the breakdown of revenues, its new classification was introduced by an imperial ordinance dated June 14, 1891, and put into

256 

S. TABATA AND T. TABATA

effect from 1892,6 which means that there is a problem of continuity of data. Below, we call the classification prior to 1891 the old one,7 and that after 1892 the new one. The old and new classifications are shown in Tables 8.1 and 8.2, respectively, which show a considerable difference between them. The new classification began to be applied for data included in the Report of the state inspector of the implementation of state budget and financial estimates for 1892, published in 1893, and data in the period 1884–1893 were released in the Explanatory note for the report (Ob”iasnitel’naia zapiska k otchetu), published in 1893.8 In the Yearbook of the Ministry of Finance, which was not published in 1890– 1898, the classification of revenues changed after its publication resumed in 1899 (Yearbook of the Ministry of Finance for 1896). The Yearbook of Russia, which began to be published in 1905, adopted the new classification. Thus, data in the new classification were available from 1884. Since all data published in Ministerstvo finansov (1902) were in the old classification, data in this classification were available until 1900.9 One of the largest differences between the old and the new classifications of ordinary revenues was that, while in the old classification, revenue items were simply enumerated in parallel, in the new one, there were nine groups or sections (otdel) such as direct and indirect taxes. In this chapter, we collected data unified in the old classification in the whole period 1805–1914, based on the estimation of the correspondence between two classifications from the data in the period 1884–1900, when data in both classifications were available. The method of this estimation is summarized in Note 1 in Appendix.  Gosudarstvennaia kantseliariia 1894, pp. 441–442.  A breakdown of ordinary revenues in 1803–1804 was not available. 8  On p. 5 of this note, the abovementioned imperial ordinance was referred to. We have not found any other literature in which the change in classification is described. It should be noted that data in the Explanatory note for the report, published in 1890, were in the old classification, and we have not obtained this note released in 1891 and 1892. 9  Since data in the period 1901–1902 included in Ministerstvo finansov (1902) were provisional, we did not use them. Although the Report of the state inspector of the implementation of state budget and financial estimates was cited as sources of data in the old classification for the period 1892–1900, published in Vol. 2 of Ministerstvo finansov (1902), it seems that there are no data in the old classification in this report. Therefore, we assume that newclassification data in this volume were transformed from old-classification data. 6 7

8  STATE BUDGET 

257

Table 8.1  Classification of state budget revenue and compensation for deficit of the Russian Empire (old classification: 1805–1900) Code

Name

1+2+3 1+2 1  101  102  103  104  105  1051  106  107  108  109  110  111 2 3 4  401  402  403  4031  404  405  406  407  408  409  410  411  412  418

Total revenue Ordinary and circulating revenue Ordinary revenue Poll tax and personal income tax Commercial rights tax Liquor tax Salt tax Other goods tax: tobacco, sugar, oil, match Tobacco and sugar tax Customs duties Forestry income Payment of state-owned railway and railway association National liquor sales income Redemption dues Other revenue Circulating revenue Extraordinary revenue Emergent revenue From issue bank From credit institutions State bond External debt Treasury notes Credit banknotes remaining after exchange of assignat Various external capital (bank, economic, etc.) State capital (purchase of indefinite debt, war debt, etc.) Issuance of credit banknotes Special resources for railway and port construction Return of railway expenditure and balance of railway capital Revenue of special capital and other sources War reparations Miscellaneous revenue

Source: See Appendix Table 8.1

258 

S. TABATA AND T. TABATA

Table 8.2  Classification of state budget revenue and compensation for deficit of the Russian Empire (new classification: 1884–1914) Code

Name

1  101  1011  1012  1013  102  1021  1022  1023  1024  1025  1026  1027  103  1031  1032  1033  1034  1035  1036  1037  104  1041  1042  1043  1044  1045  105  1051  1052  1053  1054  1055  1056  106  107  1071  1072  1073  108  1081

Ordinary revenue  Direct tax  Land tax, real estate tax, poll tax  State business tax  Revenue from money capital  Indirect tax  Alcohol tax  Tobacco tax  Cigarette paper tax  Sugar tax  Oil tax  Match tax  Customs duty  Duty and commission  Stamp duty  Inheritance asset income  Revenues from port products and vessels  Revenues from railway passengers and cargo  Revenues from asset fire insurance  Passport revenue  Other duty and commission  Government project  Mine income  Mint income  Postal income  Telegraph and telephone income  State-owned alcohol beverage industry income  State-owned assets and capital  Leased assets  Forestry income  State-owned railway  State-owned factory, technical institute, and warehouse  Profit of state-owned capital and banking business  Profit from participation in private railway income  Sale of state-owned assets: revenue from sale of real estate assets  Redemption due  Former farmers of landowner  Former farmers of appanage land  Former farmers of state-owned land  Reimbursement of expenditure of the Treasury  Mandatory payment by railway association (continued)

8  STATE BUDGET 

259

Table 8.2 (continued) Code

Name

 1082  1083  1084  109 4  403  413  414  415  416  417  418

 Repayment of loans and other expenses  Assistance from external sources to the Treasury  War reparations  Miscellaneous revenue Emergent revenue  State bond  Long-term deposit of the State Bank  Repayment of loans and expenses from the railway association  Special capital released to the Treasury resources  Balance of railway construction capital  Repayment of loans for the increase in food resources  Miscellaneous revenue

Source: See Appendix Table 8.2

8.2.3  Expenditures of the State Budget (1) Total Expenditure There are three distinctions in total expenditure: ordinary, circulating, and emergent expenditures. In this chapter, the total expenditure is defined as the sum of them. Among these expenditures, a breakdown is available in ordinary expenditures (obyknovennye raskhody), as is described below. There was no breakdown in circulating revenues (oborotnye raskhody), but data in the period 1826–1865 were available. There were a few breakdowns in emergent expenditures (chrezvychainye raskhody) and data in the period after 1866 were obtained. Since data on circulating expenditures were released until 1865 and data on emergent ones were published after 1866, we may suppose that there was a continuity between these data. (2) Breakdown With respect to expenditures, there are no significant differences in data before and after around 2000, unlike the case in the revenue data. Table  8.3 shows the classification of expenditures.10 One of the major characteristics was that expenditures were classified by ministries and  There were no breakdowns in 1803.

10

260 

S. TABATA AND T. TABATA

Table 8.3  Classification of state budget expenditure of the Russian Empire (1803–1914) Code

Name

1+2+3 1+2 1  101  1011  102  1021  1022  103  1031  1032  104  105  106  107  1071  1072  10721  10722  108  109  110  1101  11011  11012  1102  111  1111  1112  112  113  1131  114  115  116  117  118  119  120 2 3  301

Total expenditure Ordinary and circulating expenditure Ordinary expenditure  State credit system  Railroad debt  Imperial Household Agency and supreme state organizations  Supreme state organizations  Imperial Household Agency  Religious Agency and Ministry of National Education  Religious Agency  Ministry of National Education  Ministry of Foreign Affairs  Ministry of Army  Ministry of Navy  Ministry of Finance  Assistance to railroad association and other railroad-related expenditure  Expenditure on state sales of alcohol  Preparation for the introduction and dissemination of alcohol monopoly  Operational expenditure  Department of Commerce  General Directorate of Land Management and Agriculture  Ministry of the Interior and Department of Postal Service  Ministry of the Interior and Ministry of Police  Ministry of the Interior  Ministry of Police  General Directorate of Postal Service  Ministry of Railroad  State-owned railroad operation  Railroad improvement and expansion  Ministry of Justice  State Inspection  Maintaining railroad inspection  General Directorate of State Horse Breeding  Civilian Office of Transcaucasian Krai  General Directorate of Commercial Navigation and Port  Ministry of Commerce and Industry  Fund for countermeasures against rising military food and feed prices  Reserve fund  Other expenditure Circulating expenditure Emergent expenditure  Construction, acquisition, and renovation of railroad and port (continued)

8  STATE BUDGET 

261

Table 8.3 (continued) Code

Name

 3011  30111  30112  3012

 Railroad construction and acquisition of private railroads  Railroad construction  Railroad acquisition  Construction of new ports and large-scale renovation of existing ports (related to Ministry of Commerce and Industry)  Loans to railroad associations  Repayment of state bonds  Increase of exchange fund and repayment of interest-free debt  Compensation for abolition of alcohol production and sales right  Assistance to residents damaged by bad harvest  Military needs  Expenditure related to China’s incident  Expenditure related to the war against Japan and its outcome  Enhancement of empire’s food resources  Miscellaneous expenditure

 302  303  304  305  306  307  308  309  310  311

Source: See Appendix Table 8.3

departments. Concerning data in 1884–1900, as was the case in revenues, they were obtained from both Ministerstvo finansov (1902) and the Yearbook of Russia, and there were slight differences between these two sources. For example, there were discrepancies in total ordinary and emergent expenditures, except for the total emergent expenditures in 1899. In addition, there were differences (significant ones in some years) in the expenditures of the Ministry of the Army, Ministry of the Interior, Ministry of Railroad, and Ministry of Justice. It should also be noted that in the data of the Yearbook of Russia, railroad debt was added as one of the items of the state credit system. We follow the principle of collecting data published in later years, if there are any discrepancies between different sources. 8.2.4  Emergent Revenues of the State Budget (Financing of Budget Deficits) (1) Total The name of emergent revenues changed as follows11: 11  Khromov (1950) used exactly the same names of the total and its breakdown as was published in Ministerstvo finansov (1902).

262 

S. TABATA AND T. TABATA

1803–1825: loans and sum obtained from credit and other institutions for the support of the State Treasury (zaimy i summy, poluchennye iz ­kreditnykh ustanovlenii i drugikh mest na podkreplenie Gosudarstvennogo kaznacheistva); 1826–1854: loans (zaimy); 1855–1880: emergent resources (chrezvychainye resursy); and 1881–1914: emergent revenues (chrezvychainye dokhody). Since this is the item for covering budget deficits, as is apparent from the breakdown explained below, we do not include this in total revenues (cf. Sect. 8.5.2). (2) Breakdown Except for state bonds, there are various items included in emergent revenues both in the old classification (1805–1900, Table 8.1) and in the new one (1884–1914, Table  8.2) and their contents and relationships with other items were not clear. Although we numbered the items of emergent revenues in a unified way in Tables 8.1 and 8.2, only state bonds (403) and miscellaneous revenue (418) are common in these two tables.

8.3   Budget Statistics in the Soviet Union (1918–1990) 8.3.1  Outline and Problems of Budget Statistics As explained in the Introduction, we collected the state budget data of the Soviet Union, not those of the RSFSR, for the period of the Soviet Union. In the period 1918–1920, however, only the budget data of the RSFSR were available. In addition, since in that period there was no report of budget execution, collected data were those of the budget plan (GBS 1938, p. 1; GBS 1955a, pp. 3–4, 7–14, 194). There were some significant changes in the budget statistics in 1938 (GBS 1955a, pp. 4–6; Nakamura 2017, p. 208). In particular, until 1938, the budgets of local governments (mestnyi biudzhet) had not been included. In addition, until 1938, the state budget data had not included those of funds for social securities. This source (GBS 1955a), however, indicated that the data published in it were revised to include those of

8  STATE BUDGET 

263

social security funds from 1924. This chapter collected the data published in this source. This implies that the data in 1918–1923 did not include social security funds. Items of revenues are shown in Table 8.4. We can point out some distinct features of them: • Revenues were divided into those from socialist organizations and population in the statistical handbooks released after the 1960s; • There were no corporate taxes. Instead, there were items like payments from profits of enterprises; and • As indirect taxes, there were only turnover taxes (cf. Sect. 8.5.5). Items of expenditures are shown in Table  8.5. Their features are as follows: • There were specific items like “expenditures for the national economy,” a term exclusively used in the Soviet Union; and • There was another unique item called “socio-cultural measures,” which included expenditures for education, science, culture, health care, and social securities. As was the case in Imperial Russia, deficit financing items such as revenues from bond sales were included in the revenues of the state budget in the Soviet period. It follows from this that there were no budget deficits in almost all years. Although, in this chapter, we excluded those revenues like bond sales from the state budget revenues, it was revealed in the second half of the 1980s that there were other items such as loans for the compensation of budget deficits. We have not obtained these data for before the first half of the 1980s (cf. Sect. 8.5.2). With respect to revenues from foreign economic activities, there was the problem that data in the period 1970–1984 were not available (cf. Sect. 8.5.7). In addition, it should be noted as one of the problems that defense expenses were included not only in “National defense”  in Table 8.5, but also other items such as expenditures for the national economy (cf. Sect. 8.5.4). In this chapter, taking into consideration denominations by 10,000 in 1922 and by 10 on January 1, 1961, we divided reported data in 1918– 1921 by 100,000 and data in 1922–1960 by 10.

264 

S. TABATA AND T. TABATA

Table 8.4  Classification of state budget revenue and compensation for deficit of the Soviet Union (1918–1990) Code

Name

Code

Name

1 101 102 103

Total revenue Turnover tax Excise Collection from consumer goods not subject to excise Stamp duty Railroad passenger and cargo tax Other collection Forestry income Underground resource revenue Payment from profits of state-owned enterprises and organizations   Production fixed capital and standard liquidity usage fee   Payment of remaining profit   Fixed (rent) payment

109033 10904 10905 10906

  River transport  Communication   Housing and public utilities  Trade

109061 109062

  Domestic trade   Foreign trade

10907 10908 10909

 Procurement   State credit institution   State insurance organization

10910

 Other

110

Machine-tractor station revenue

111

11111

Taxes from enterprises and organizations   Income tax of cooperative, social organization and enterprise   Kolkhoz

104 105 106 107 108 109

109001 109002 109003

109004

1111

11112 1112 1113 1115

   Consumer cooperatives, etc.   Non-commodity handling tax  Sovkhoz  Construction

1090112 1090113

  Profit (income) deduction and other payment   Labor resource usage fee   Industry and construction   Industry    Heavy industry and machine building    Light industry    Food industry

112 113

109012 10902

  Construction  Agriculture

114 115

10903 109031 109032

 Transportation   Rail transport   Maritime transport

116 11601 11602

Various payments by enterprises Rental of state-owned land, peatland, fishery, and hunting areas Rent of regional Soviet assets Revenue from food and necessities provided to residents Local tax   Enterprise and organization  Residents

109005 10901 109011 1090111

(continued)

8  STATE BUDGET 

265

Table 8.4 (continued) Code

Name

Code

Name

1161 11611 11612 1162 1163 1164 1165 1166 117

12152 1216 1217 1219 122 2 21 22 221

  Rural   Voluntary donation   Handicraft tax   War tax Money and goods lottery Financing of deficits  Borrowing   State bonds    Purchase by residents

118

  Building tax and rent   Building tax   Rent   Entertainment tax   Stamp duty   Temporary collection   Market service fee   Cooperative permission fee Revenue from foreign economic activities (customs revenue) State social insurance fund

2211

121 1211 1212

Collection from residents    Personal income tax   Agricultural tax

2212 222 2221

1213

   Bachelor, single person, small family tax    Tax on horse under private management    Construction fee for housing and cultural facilities    Urban

2222

    State bonds for residents (by subscription)     State bonds with lottery    Purchase by organization    Sberkassa (Saving bureau)    State insurance organization    Gosbank (State Bank)

1214 1215 12151

2223 2224 2225

   Cooperative and other organization    Other organization

Source: See Appendix Table 8.4

8.3.2  Data Sources Budget data in the Soviet period were basically obtained from Narkhoz SSSR. But, since this statistical yearbook started to be published in 1956, we referred to statistical handbooks and archive materials specialized in budget and financial information. It should be emphasized that there were statistical handbooks on the budget that became available on the website of the Ministry of Finance in recent years that cover the period from 1918 to the 1950s such as GBS (1955a, b). By using these data, we could obtain data from 1918 to 1990, including the periods of the Russian Civil War and the Second World War II. It should be noted that, in GBS (1955a) that published data in 1918–1937, revenues and expenditures were classified in the same manner as was the case in the latter period of the Soviet Union (GBS 1955a, p. 6).

266 

S. TABATA AND T. TABATA

Table 8.5  Classification of state budget expenditure of the Soviet Union (1918–1990) Code

Name

Code

Name

1 11 111 1111

1136 1137 114 115

Aviation (civilian) Road Communication Trade and procurement

1151 11511 11512 11513

Trade Domestic trade Cooperative Foreign trade

1152

Procurement

1117 1118

Total expenditure National economy Industry and construction Heavy industry and machine building Electrification Light industry Food industry Local industry (including fuel industry) Industry of Ministry of Health and Culture Cinema Construction

116 1161

1119 112 1121

Sovnarkhoz Agriculture Sovkhoz

117 118 12

1122

Ministry of Agriculture (including MTS) Machine-tractor station

121

Housing and public utilities Ministry of private housing construction Meteorological observatory Payment from insurance premium Social, cultural and scientific expenditure Education and science

Forestry Water management Immigration bureau Agriculture and procurement (excluding MTS) Transportation Railroad

1211 12110 12111 121111

121112 1211121 1211122

11332

Water Marine Marine (except for northern sea route) Northern sea route

1134 1135

River Moscow–Volga Canal

1112 1113 1114 1115 1116

11221 1123 1124 1125 1129

113 1131 1132 1133 11331

1210

1211111 1211112

1211123

Education and science (excluding investment) Education Education (excluding investment) General education Preschool child education facility

Nursery school Orphanage and school for handicapped children General Education School Elementary and secondary school Boarding school Nighttime and correspondence education school

(continued)

8  STATE BUDGET 

267

Table 8.5 (continued) Code

Name

12112

Code

Name

12211

Treatment, prevention and sanitation facilities Treatment and prevention facilities Hospital Sanitary and prevention facilities Midwifery, children’s treatment and prevention Physical education Physical education (excluding investment) Social security

Cultural and enlightenment activity 121121 Library maintenance 12113 Personnel training 121131 University 121132 Secondary special education facility 121133 General personnel training 121134 Professional and technical education 1211341 Handicraft and railroad school, factory education 12113411 Handicraft and railroad school 12113412 Factory education school 1211342 Agricultural technical school

1222 12220

1211343

Technical school

126

12114

Publication, art, TV, and radio Publication Arts and TV and radio Theater Science

13

121141 121142 1211421 1212 12120 122 1220

1221 12210

Science (excluding investment) Health and physical education Health and physical education (excluding investment) Health Health (excluding investment)

Source: See Appendix Table 8.6

12212 122121 12213 12214

123 1231 124 125

14 141 142 143

Social security by state social insurance fund State social insurance State aid to mother with many children and to widows Transfer to central federal fund of social security for kolkhoz members National defense

15

Administration State administration organization Justice organization Expenditure by state social insurance State debt service

16

Foreign economic activity

268 

S. TABATA AND T. TABATA

8.4   Budget Statistics of the Russian Federation (1992–2015) 8.4.1  Outline and Problems of Budget Statistics After the collapse of the Soviet Union and during the transition to a capitalist economy, the budget system of Russia became a capitalist one (Tabata 2011) and its statistics changed substantially. Since this change required time, there were considerable differences in the state budget statistics of Russia between three periods, that is 1992–1994, 1995–2004, and after 2005 in terms of statistical methods and classifications (below, we call these three periods period A, B, and C, respectively). State budget data in these three periods were published in separate tables in RSE and other statistical handbooks such as FNSR. One of the main contributions of this section is to make a unified table that integrates budget data in these three periods. One of the greatest problems is that, while state budget data in periods A and B excluded off-budget funds, in period C, budget data of general government including off-budget funds were released. This implies that data in periods A and B on the one hand, and those in period C on the other, are not comparable at all. Therefore, in this section, we made an estimate of the general government budget in periods A and B. As far as we know, there were no budget data of general government in periods A and B except for those published in Government Financial Statistics compiled by the IMF and those reported in the Transition Report of the EBRD (1994–2014). The former were based on the answers to questionnaires addressed by the IMF to Russia’s Ministry of Finance according to a detailed manual (IMF 2001). Since 2009, these answers themselves have been published on the website of the Federal Treasury.12 But data were available only for the years 1994–1995 and after 1998. In addition, the definition of the general government of the IMF is broader than that of Russia: total revenues and expenditures released by the IMF were larger than those published by Russia in period C. Although it may be possible to make a time-series analysis of Russia’s budget using the IMF’s data after 1998, it is necessary to precisely understand the relationships between the IMF’s data and the official data of Russia. With respect to the EBRD’s data, only data on total revenues and expenditures, and their balance were available. As for their sources, the EBRD (2009, p.  24) added rough notes like “the most recent official estimates of outturns as reflected in publications from the national  http://www.roskazna.ru/reports/gf.html.

12

8  STATE BUDGET 

269

a­ uthorities, the IMF, the World Bank, and Eurostat” to the table of data for the former Soviet and Eastern European countries. There is another general note in the EBRD (2009, p. 215) saying, “General consolidated government includes the federal, regional, and local budgets and extrabudgetary funds, and excludes transfers.” Data were not considered to be reliable since data were revised almost every year retrospectively and there were discrepancies in the figures published even in the same publication. Taking this situation into consideration, we decided to make our own estimate of the general government budget for the period 1992–2004. Refer to Note 2 in Appendix for the method of estimation in detail. A revenue and expenditure breakdown of the general government budget collected is shown in Tables 8.6 and 8.7. It is interesting to note that, with respect to expenditures, some names of items are the same as in the Soviet Union, such as expenditures for the national economy and socio-­cultural measures. Note that the values in rubles in this chapter are shown in new rubles after the redenomination of January 1, 1998, when the ruble was devaluated a thousand times. Table 8.6  Classification of the general government budget revenue of the Russian Federation (1992–2015) Code

Name

1 101 102 103 104 105 106 107 1071 1072 108 109 1091 1092 1093 1094 1095 1096 1099 1100 1110

Total revenue Corporate tax Personal income tax Value-added tax Excise Property tax Tax on resource use Revenues from foreign economic activities Export and import duty Non-tax revenue from foreign economic activities Public property revenue Social security-related tax and payment Mandatory medical insurance fund Pension fund Social insurance fund Federal mandatory medical insurance fund Regional mandatory medical insurance fund State resident employment fund Reference: Unified social tax Special-purpose fund Other

Source: See Appendix Table 8.7

270 

S. TABATA AND T. TABATA

Table 8.7  Classification of the general government budget expenditure of the Russian Federation (1992–2015) Code

Name

1 11 111 112 1121 1122 113 114 115 116 117 118 119 12 121 122 123 124 13 131 132 133 134 135 14 15 16 161 162 163 1631 1632 1633 164 1641 1642 1643 1644 169 17

Total expenditure State administration and security State-level issues (excluding state bonds) Justice and security Security Justice State administration and local autonomy International activity Basic science State reserve Emergencies and disaster countermeasures Reserve fund Execution of elections and referendum National defense National defense Mobilizing preparation of economy Weapons discard Military reform National economy Industry, energy, and construction Space development and utilization Agriculture and fishery Transportation, roads, communications, and information Development of market infrastructure Environment and others Housing and public utilities Social and cultural expenditure Education Culture, film, and mass media Health, physical education, and sports State budget Federal mandatory medical insurance fund Regional mandatory medical insurance fund Social policy State budget Pension fund Social insurance fund State resident employment fund Social and cultural expenditure in state budget State debt service (continued)

8  STATE BUDGET 

271

Table 8.7 (continued) Code

Name

18 19

Special-purpose fund Other

Source: See Appendix Table 8.8

8.4.2  Data Sources We refer to the website of the Federal Treasury, unpublished documents of the Ministry of Finance (data on state budget implementation), and laws of the implementation of the Pension Fund of Russia, in addition to RSE and FNSR (various years).13 In principle, we collected the data published in statistical handbooks, such as RSE and FNSR, if there are discrepancies between different sources. Concerning the website of the Federal Treasury, finally updated data on the state budget after 2003 are available as of July 14, 2016.14 As for unpublished documents of the Ministry of Finance, in the period 1992–2002, final and detailed data were available in the years 1992–1994 and 2000. Provisional and detailed data were obtained for 1995,15 1999, and 2001–2002. We have not obtained these documents that contained detailed data for 1996–1998. 8.4.3  Result of the Estimation and Remaining Problems In periods A and B, the ratios of revenues of general government and state budgets to GDP fluctuated in parallel (Fig. 8.1). This was true in the case of ratios of expenditures as well. Therefore, the balance of budget was almost the same in the general government and state budgets. We can see a clear shift in 1998 from budget deficits to surpluses.16 As a result of the integration of data in periods A, B, and C, we can more distinctly understand the trend of constrained expenditures by the establishment of the Stabilization Fund in 2004 and of increasing revenues due to oil price hikes from 2005.  Since 1992, FNSR has been published biennially.  With respect to data in 2008, since there were discrepancies with those published in RSE, data released at the Federal Treasury’s website were not considered to be those finally updated. See Note 2 in Appendix for more details. 15  This was published in Kuboniwa (1996, pp. 116–117). 16  See Tabata (2011) for an analysis of Russian budget performance based on these data. 13 14

272 

S. TABATA AND T. TABATA

50 40 30 20 10 0 -10 -20

General government budget revenue General government budget balance State budget expenditure

General government budget expenditure State budget revenue State budget balance

Fig. 8.1  General government and state budgets of the Russian Federation, in percent of GDP, 1992–2015. Sources: Compiled from total revenue and expenditure in Appendix Tables 8.7 and 8.8

With respect to the breakdown of revenues, since there are no significant differences in its classifications and definitions among the three periods, our estimates seem to be worth using for basic analysis (Fig. 8.2). As for breakdown of expenditures, “other” in 1996–1998 is much larger in comparison with that in the period afterward, which implies that estimation is not satisfactory in that period (Fig. 8.3). This is because we were unable to classify the expenditures of the budget fund earmarked for special purposes in the other expenditure items. As explained in Note 2 in Appendix, while in the years 1995 and 1999–2004 we could do this owing to the detailed state budget data, in the years 1996–1998, we have not obtained such data. As a result, it should be noted that the shares of expenditures for state administration and security, and for the national economy were smaller than those in other years. It also remains to be solved that, in period A, we were unable to divide the expenditures for the national economy, and housing and public utilities.

8  STATE BUDGET 

273

100% 90% 80% 70%

Other Special-purpose fund Social security-related tax and payment Public property revenue Revenues from foreign economic activities Excise Value-added tax Tax on resource use Property tax Corporate tax Personal income tax

60% 50% 40% 30% 20%

0%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

10%

Fig. 8.2  Structure of general government budget revenue of the Russian Federation, in percent, 1992–2015. Source: Compiled from Appendix Table 8.7

8.5   Preliminary Analyses 8.5.1  Data In this section, we make a preliminary analysis by integrating the budget data of three periods, which are the periods of the Russian Empire, the Soviet Union, and the Russian Federation. As we explained in the Introduction, we disregard the big difference between budget data of these three periods in terms of territories and the treatment of regional budget. In addition, it is an enormous challenge to unify the items of ­revenues and expenditures, which are comparable in these three periods. What is included in each item is described in Note 3 in Appendix. In this section, we make three figures, which are budget deficits (Fig. 8.4), structure of revenues (Fig. 8.5), and structure of expenditures (Fig. 8.6). In this section, we make some analyses of the following six issues, which are (1) budget deficits and their financing, (2) direct taxes and economic development, (3) defense expenditures, (4) indirect taxes, (5) socio-­ cultural expenditures, and (6) changes in the 2000s and customs duties.

274 

S. TABATA AND T. TABATA

100% 90% 80% 70% 60% 50% 40% 30%

Other Social policy Education, culture and health State administration and security National defense Housing and public utilities National economy State debt service

20% 10% 0%

Fig. 8.3  Structure of general government budget expenditure of the Russian Federation, in percent, 1992–2015. Source: Compiled from Appendix Table 8.8

8.5.2  Budget Deficits and Their Financing In the period of the Russian Empire, the state budget ran a chronic deficit. In Fig. 8.1, if the ratio of revenue to expenditure exceeds 100 percent, it means a budget surplus; otherwise, it implies a deficit. Although official data show that there are surpluses in 56  years, in exactly half of the 112 years from 1803 through 1914, these data included loans for covering the deficit, called “emergent revenues,” as one of the revenue items. As explained above, since they include state bonds and loans from banks, we do not include them in the state budget revenue.17 If we exclude them from the revenue, then only in 6 years in these 112 years did the Russian state budget run a surplus. Although in the official Soviet statistics revenues from state bond sales were included in the budget revenue, we exclude them. There are two types of bond sales: one for residents and the other for enterprises and 17  Shebaldin (1959, pp.  164–165, 181) adopted the same treatment as we did here. Malinin (2010) made a detailed analysis of emergent revenues, budget deficits, and their financing in the Russian Empire.

8  STATE BUDGET 

275

140 120 100 80 60 40 20 0

Revenue excludes loans Revenue includes loans

Fig. 8.4  Ratio of revenue to expenditures of the state budget in the Russian Empire, USSR, and Russian Federation, in percent. Sources: Compiled from total revenue and expenditure in Appendix Tables 8.1, 8.2, 8.3, 8.4, 8.6, 8.7, and 8.8

organizations, both of which data were published in GBS (1955a, b, 1957). However, in the statistical handbooks published no earlier than FNSS (1962), data on the latter have not been published, because there was a division of revenues into those from socialist institutions and those from residents, and, as part the latter, data on state tax revenues and state bond purchases by residents have been published. We can obtain only data on purchases of state bonds by sberkassa (a financial institution for savings of the population) that have been released as a part of state bond purchases by residents. Thus, we cannot exclude bond purchases by enterprises and organizations. It is true that the sales of state bonds to residents had been nearly compulsory until the 1950s so that it was justified to treat them in the same way as taxes.18 However, since, as a principle, revenues from bond sales should be regarded not as revenues, but as the financing of deficits, we 18  As for the role and abolishment of the subscription sale of state bonds, see Nakamura (2017, pp. 160–169).

276 

S. TABATA AND T. TABATA

100 90

80 70

60 50

40 30

Other Social security tax and payment Taxes on foreign economic activities Indirect taxes Taxes on resource use Property tax Corporate tax Personal income tax

20 10

0

Fig. 8.5  Structure of state budget revenue in the Russian Empire, USSR, and Russian Federation, in percent. Sources: Compiled from Appendix Tables 8.1, 8.2, 8.4 and 8.7, and Note 3 in Appendix

decided to treat them as such in this chapter. It follows from this that by including the items of budget financing in revenues, the Soviet authorities pretended to show that revenues covered expenditure. Purchases of state bonds by sberkassa imply that this institution, which stored almost all savings of the population, implicitly compensated for budget deficits by savings of the population. As sberkassa had been under the jurisdiction of the Ministry of Finance until 1963, deposits of the population except for 3 percent of the total were transferred to this Ministry through the purchase of state bonds (Nakamura 2013, pp. 186– 187). In fact, data on purchases of state bonds by sberkassa had been available until 1963. It was only in 1988 that the Soviet authorities admitted the existence of a deficit. They published the revised revenue data for the period ­1985–1989. These deficits were financed by the loans from the Gosbank (the state bank).19 Although we have not obtained data on these loans 19  The “loans” were called “loaned resources of public lending funds for covering excess of expenditures over revenues (zaemnykh sredstva obshchegosudarstvennogo ssudnogo fonda na

8  STATE BUDGET 

277

100 90

80 70

60 50

40 30

Other Social secutiry Health and physical education Education Administration and security National defense National economy State debt service

20 10

0

Fig. 8.6  Structure of state budget expenditure in the Russian Empire, USSR, and Russian Federation, in percent. Sources: Compiled from Appendix Tables 8.3, 8.6 and 8.8, and Note 3 in Appendix

prior to 1984,20 Zakharov (2007, p. 60), who worked at the Gosbank in the 1980s, wrote that “in the 1970s and 1980s, a certain amount of credit resources had already been put aside in the revenue part of the budget at the stage of its compilation (mainly from savings of the population in sberkassa), in order to demonstrate to the Soviet and foreign public a fictitious absence of budget deficits.” Kashin and Kozlova (2013) also discussed this problem and published relevant data.21 We can assume that compensation of budget deficits by sberkassa continued in a hidden form. pokrytie prevysheniia raskhodov nad dokhodami)” (Narkhoz SSSR 1989, p. 624) or “resources included in union budget for securing finance of expenditures (sredstva privlechennye v soiuznyi biudzhet dlia obespecheniia finansirovaniia raskhodov)” (Narkhoz SSSR 1990, p. 612). As for 1990, data on revenues including loans were not available. 20  Since, in Russian budget statistics, the sum of officially published breakdowns did not amount to the published total revenue, these loans must have been one of the unpublished items of revenues. 21  While they published stock data concerning these loans as of the beginning of each year (Kashin and Kozlova 2013, pp. 163–169), data on these loans in each year were shown only

278 

S. TABATA AND T. TABATA

If financing of deficits such as bond sales revenues is excluded from total budget revenue, in the Soviet period, the state budget ran a deficit in more than 60 percent of years as well (Fig. 8.4). While in the official data there was a surplus in 65 years out of the 73 years from 1918 to 1990, if we exclude the financing of deficits, a surplus was found in 28 years. Bond sales revenues accounted for more than 10 percent of state budget revenues without financing of debts at the beginning of the 1930s and in the years of World War II: 14.9 percent in 1931 and 14.2 percent in 1943. Concerning state bond purchases, residents accounted for 73.5 percent and enterprises and organizations, for 26.5 percent on average in 1922–1957.22 It is clear from Fig.  8.4 that budget deficits expanded in wartime, including 1808–1809 (Napoleonic Wars), 1855–1856 (Crimean War), 1877–1878 (Russo-Turkish War), 1905 (Russo-Japanese), and 1914 and 1941–1942 (World Wars I and II). In these years, except for the year 1941–1942, total expenditures exceeded total revenues by more than 30 percent. It should be noted that, at the time of the collapse of the Soviet Union and in the recent global financial crisis, the state budget ran a considerable amount of deficits. State budget deficits have mostly been covered by state bonds. Accordingly, debt service in state budget expenditure increased afterward (Fig. 8.6). In the time of the Russian Empire, the share of debt service in the state budget expenditure was very large, especially in the years 1879– 1899 when its share exceeded 20 percent, in which in the years 1882– 1889 and 1895 (it was the time of Finance Ministers Bunge, Vyshnegradsky, and Witte) it surpassed 30 percent. It should be noted that, in the years 1804–1816, debt service (it was called the “state credit system” in the budget statistics of that time) was included in the expenditure of the Ministry of Finance (Ministerstvo finansov 1902, Vol. 1, pp. 620–621). Accordingly, it is included in “Economy” in Fig. 8.6. As a result, there was no debt service in that period. In the Soviet period, debt service accounted for 3–4 percent of total revenue at maximum and this share has been lower than 0.1 percent since published data on state bond sales revenues decreased considerably in 1964. in the years 1970, 1980, 1985, and 1988 (Kashin and Kozlova 2013, p. 153). See Nakamura (2017) for more in detail on this issue. 22  Since the ratio of bond purchases to total budget revenues decreased to 1.6 percent in 1958 and remained low in subsequent years, we calculated the average value until 1957.

8  STATE BUDGET 

279

In contemporary Russia, since budget deficits were financed by state bonds in accordance with the recommendation of the IMF in the period 1995–1998, the share of debt service increased after 1998, when such policy failed completely. Its share, however, declined rapidly in the 2000s. 8.5.3   Direct Taxes and Economic Development Direct taxes have been one of the most important sources of revenues, accounting for 20–40 percent of total revenues for most of the periods in Russia. Under the Russian Empire, a poll tax had been one of the major revenue sources until its abolition in 1882. I included redemption dues in personal taxes that were paid by peasants, in order to become freeholders of allotments made at the time of emancipation. In Fig.  8.5, corporate taxes in the time of the Russian Empire include revenues from state-owned factories and government projects. In fact, in the period from 1895 through 1914, when corporate tax revenues exceeded 25 percent of total state budget revenues, state-owned railroads accounted for approximately 60 percent of these corporate taxes. Other revenues in corporate taxes in this period include state business taxes (promyslovyi nalog), revenues from forestry industries, and postal revenues. As is shown in Fig. 8.5, there was a shift from individuals to corporations in the Soviet period.23 In the 1930s under the Soviet regime, the share of revenues from corporations was small. We should bear in mind that this was the time of industrialization financed by the state budget from the item called “Economy.” Since the 1960s, revenues from corporations have accounted for a significant part of the total state revenues. Since the 1960s, the share of asset tax has been large, due to the increase in the usage fees of production fixed capital and standard liquidity, which were also revenues from corporations. In contemporary Russia, a sharp decline in the share of corporate taxes in 1996 was due to a decrease in corporate profits caused by the continuation of recession and the slowdown of inflation (inflation undervalued depreciation of the assets of corporations). A boost in the share of personal taxes after 2002 was due to an increase in their revenues caused by the introduction of flat taxes from the beginning of 2001 (Tabata 2011, p. 313). 23  Revenue data for 1918 showed that emergent revolutionary taxes from the propertied classes of the population reached just 100 billion rubles (no rounding off, just 100 billion) and accounted for 64.3 percent of the total revenue.

280 

S. TABATA AND T. TABATA

On the expenditure side, the share of “Economy” was always large, except for wartime. Under the Russian Empire, among the expenditures for the economy, expenditures of the Ministry of Finance and those for railroads were dominant.24 Until 1837, the share of the Ministry of Finance had exceeded 80 percent of the expenditures for the economy and had been larger than 50 percent until 1868. In the period 1900–1914, almost half of the expenditures of the Ministry of Finance were related to the sales of alcoholic drinks.25 Expenditures for railroads began to be recorded in 1810 and their share was larger than 30 percent of the expenditures for the economy in the period 1844–1851, except for 1849.26 From 1866, emergent expenditures were assigned for the construction, acquisition (nationalization), and renovation of the railroads (Table  8.3). From 1898, another emergent expenditure for providing loans to railroad associations was added, which accounted for 8–10 percent of the expenditures for the economy in the period 1899–1902. The sum of these three items, that is ordinary expenditures for railroads and two items of emergent expenditures, were larger than 40 percent of the expenditures for the economy in the years 1867– 1878 and 1990–1914. Especially in the period 1895–1904, they were approximately 60 percent. Although there were revenues from railroads, as explained above, the profitability of railroads for the state was negative in most years.27 If we compare revenues from and expenditures for railroads, revenues exceeded expenditures only in the years 1888–1889 and 1909–1913 under the Russian Empire. Until 1881, revenues had been smaller than half of expenditures, and they were 50–70 percent of expenditures in the years 1882–1886. In Soviet times, the share of “Economy” was very large in the early 1930s and it continued to increase after its shrinking in the early 1940s. Approximately 40–50 percent of the expenditure for the economy was earmarked for the industry and construction sectors. Roughly, another 20 percent was distributed to the agriculture sector, including expenditures for machine-tractor stations. The increase in the share of “Economy” in 24  It should be noted that not all expenditures of the Ministry of Finance were earmarked for economic development, since in some periods they included debt service, as explained above. 25  Data on expenditures for sales of alcohol before 1899 were not available. 26  The Ministry of Railroad was established in 1865. 27  Revenues related to railroads began to be recorded in 1857.

8  STATE BUDGET 

281

the latter period of the Soviet Union is at least partially explained by the increase in subsidies, especially in agricultural subsidies, that is compensation for the price differences between the procurement and the realization of agricultural products. Although revenues from corporations began to increase from the 1960s, as explained above, expenditures for “Economy” surpassed these revenues by a considerable margin. It should be noted, however, that expenditures for “Economy” included defense expenditures, as explained below. In contemporary Russia, a trend of decrease is observed until 1998 and of increase from 1999 in the expenditures for “Economy,” which reflected the improvement of budgetary performance. 8.5.4  Defense Expenditures Defense expenditures accounted for a significant share in expenditures both in the periods of the Russian Empire and the Soviet Union. In the time of the Russian Empire, they were the largest items of state budget expenditures reaching almost 40 percent of the total. In addition to the big wars mentioned above, Imperial Russia was constantly at war. It is well known that the data on defense expenditures in Soviet times were underreported. According to official data, the share of defense expenses in total state budget expenditures gradually decreased from 18.4 percent in the 1950s to 13.7 percent in the 1960s, to 8.7 percent in the 1970s, and to a mere 4.9 percent in the 1980s (1980–1988). While their share in total expenditures was reported to be only 4.4 percent in 1988, from 1989, “true” figures began to be released: it was announced to be 15.6 percent in 1989. It was indicated in a footnote of Narkhoz SSSR (1990, p. 612) that some of the defense expenses had been recorded in the expenditures for “Economy” until 1988 and that, if the same practice had been adopted for 1989, defense expenses for 1989 would have been 3.8 percent of the total state budget expenditures. It should be noted that even the revised figure (15.6 percent) was regarded as underreported (IMF et al. 1991, p. 266). In contemporary Russia, there was no such significant underreporting.28 While the share of official defense expenses in total expenditures was around 7.3–8.5 percent in the period 1995–2012, except for 6.2 percent 28  The Stockholm International Peace Research Institute (SIPRI) makes its own estimate of defense expenditures of Russia for international comparison by adding several items to the

282 

S. TABATA AND T. TABATA

in 1998, since 2011, the defense expenses increased significantly and reached 10.7 percent in 2015. In terms of percentage against GDP, it was in the range of 2.5–3.5 percent in the period 1995–2014 and increased to 3.9 percent in 2015. Although it has grown in recent years, it is significantly lower than in the Soviet period.29 8.5.5  Indirect Taxes Indirect taxes have always been one of the major sources of revenues in all periods. In the Russian Empire, its share in revenues was stable at around 30–40 percent: 34.7 percent on average in the period 1805–1914. Approximately, 80–90 percent of indirect taxes had been obtained from alcoholic drinks until the early 1890s. Note that there was a transition from indirect taxes on alcohol to revenues from the state-owned alcoholic beverage industry starting in 1895, which were also included in indirect taxes in Fig. 8.5. The share of alcohol decreased to 73–80 percent of indirect taxes in the years 1891–1913 due to the increase in taxes on sugar and tobacco from the second half of the 1880s, and to the introduction of taxes on kerosene and matches in 1888. The state-owned alcoholic beverage industry was very profitable: its revenues were 3.8 times larger than expenditures for the sale of alcohol by the Ministry of Finance on average in the years 1900–1913. In the Soviet Union, turnover tax (nalog s oborota) was the main indirect tax.30 While in the 1920s there were various indirect taxes, including excises on alcohol and tobacco, they were integrated into turnover tax in the tax reform in 1930 (Smirnov 1963, p. 209).31 Turnover tax was basically formed as the difference between sales and production prices. For instance, in the case of vodka, turnover tax accounted for 85 percent of its retail price in 1953 (Zamaraev 1999, p. 40). official figures, which resulted in total expenditures larger than the official ones by almost 30 percent in 2014. 29  While in contemporary Russia “Security” accounts for more than half of “Administration and security,” in Soviet times, the share of “Administration and security” was very small, which indicates that “Security” was included in “Defense.” We should take this into consideration when we compare these two periods. 30  One of the first studies on turnover taxes of the USSR in Japan was Nihei (1970). 31  In GBS (1955a, pp.  5, 219–221), to secure the continuity of statistical data, the tax revenue data that were integrated into turnover taxes in 1930 were published for 1927– 1929, which are collected in this chapter.

8  STATE BUDGET 

283

The share of turnover tax in state budget revenues was very high: 41.6 percent on average in 1928–1990. Especially in the periods 1932–1941 and 1946–1951, its share exceeded 50 percent of total state budget revenues, and in 1935–1937 its share was almost 70 percent. There were significant changes in the structure of turnover taxes in the Soviet period, as shown in Table 8.8.32 In 1933, the share of food and light industry was large, including vodka (24.7 percent of turnover tax revenues) (Smirnov 1963, p. 225). Afterward, the share of turnover tax revenues from procurement (grain) increased: its share increased rapidly from 10.6 percent in 1933 to 33.3 percent in 1937 and to 34.4 percent in 1939, while the share of vodka decreased to 9.6 percent in 1937 (Smirnov 1963, pp. 225, 227).33 Turnover taxes on grain were formed as the difference between very low procurement prices on grain and purchaser prices that baking factories paid to agricultural procurement organizations. It follows from this that the burden of these taxes was carried by collective farmers. It was grain that sustained the state budget and industrialization of the Soviet Union. Roughly, 20–30 percent of state budget revenues were secured by turnover taxes on grain in the latter half of the 1930s. In the second half of the 1950s and in the 1960s, when procurement prices of grain were gradually raised, revenues from turnover taxes on grain decreased substantially. In 1975, the share of procurement of grain in revenues from turnover taxes was a mere 0.1 percent, and vodka, ­passenger cars, and gasoline were the major sources of turnover taxes (Semenov 1983, p. 119). While the share of alcoholic drinks in turnover tax revenues was 35.9 percent in 1984 just before the anti-alcohol campaign of Gorbachev in 1986 (Anon 1988, p. 112), it decreased to 30.8 percent in 1987 (FNSS 1989, p. 5). Revenues from turnover taxes decreased by 8.3 billion rubles (8.0 percent) from 1984 to 1987, of which revenues from alcohol were 7.8 billion rubles (21.2 percent). Thus, the anti-alcohol campaign inflicted considerable damage on budget revenues. 32  Since a change in definition of branch was apparently made in the 1950s, we show both sets of data for the 1950s in Table 8.8. In FNSS (1962, p. 8), there were detailed explanations of statistics by branch, which strongly suggests this change of definition. In Table 8.8, though data of every five years are shown in principle, if they were not available, the data in just before and after that year are shown. 33  In the table compiled by Smirnov (1963, p.  225), data on “grain product (procurement)” are shown, which indicate that most of the turnover tax revenues from procurement were those from grain.

1935

1940

1945

1950

1955

1950

1956

1960

1965

1969

1975

1980

1986

1988

53.4 13.7 … 23.8

39.4 15.1 28.2 7.2

62.9 6.7 9.1 16.9

43.5 22.4 24.2 2.4

41.5 29.1 17.3 3.1

… … 3.9 −0.1

… … 2.1 −0.6

51.2 32.0 0.9 −1.1

53.2 26.7 1.0 −0.8

53.0 29.3 0.2 −0.7

46.6 25.0 0.1 0.2

Note: “Other” is calculated as residual. Since there were some payments from turnover taxes, “other” turned negative in some years

30.8 4.2 39.7 14.8

40.8 23.4 0.1 0.1

39.6 22.8 … 0.0

42.7 22.1 … −0.3

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 9.1 10.5 10.1 4.6 7.6 9.0 8.0 11.2 16.9 19.9 18.4 28.1 35.6 37.6 35.6 67.0 35.0 54.5 69.5 65.8 70.6 88.2 87.3 83.2 79.9 82.2 71.6 64.2 62.4 64.8

Source: See Appendix Table 8.5

Total Heavy industry Food and light industry  Food industry  Light industry Procurement Other

1931

Table 8.8  Turnover tax revenues by branch, in percent

284  S. TABATA AND T. TABATA

8  STATE BUDGET 

285

After the breakup of the Soviet Union, the share of indirect taxes in the state budget revenue decreased: 22.7 percent on average in 1992–2010. In 1992, the value-added tax was introduced as the main indirect tax and its share was 70–90 percent of the indirect taxes (its tax rate was reduced from 32 to 20 percent in 1993). The rest of the indirect taxes were exclusively excises on various commodities. The reason that the share of excises was relatively high in the years 1996–2003 (Fig. 8.2) is explained by the increase in excises on natural gas following the abolition of its export duties in 1996. Since 2004, however, excise revenues have decreased substantially, due to the abolition of excises on natural gas in that year after the introduction of extraction taxes on mineral resources in 2002 (Tabata 2008, pp. 213–218). In 2015, excises on tobacco accounted for 36.1 percent of total excise revenues, alcoholic drinks—27.7 percent, gasoline, and other oils—26.8 percent, automobiles—2.5 percent, and other—6.8 ­percent.34 Excise revenues from alcohol amounted to a mere 1.1 percent of the total state revenues in 2015, implying that alcohol ceased to be one of the main revenues of the state budget for the first time in almost two centuries. 8.5.6  Socio-cultural Expenditures Social and cultural measures include expenditures for education, health and sports, and social security. Figure 8.6 shows that there were no expenditures for social security and health and sports under the Russian Empire. As explained in the Introduction, this may be partly a result of the exclusion of regional budgets in that period. The share of social and cultural measures including education expanded in the Soviet and post-Soviet periods. Its share was 30.0 percent of total expenditures on average in the former period (1928–1990) and 47.3 percent on average in the latter (1992–2010). The share of social security increased from 11.5 percent in the former period to 25.4 percent in the latter and that of health and sports—from 5.1 to 9.7 percent, while the share of education decreased from 13.4 to 12.2 percent. The reason that socio-cultural expenditures increased in the 2000s is explained by the increase in pensions in the first term of the Putin administration from 2000 and the implementation of national projects for education and health in his second term from 2004. 34   Calculated from data at the konsolidirovannogo-byudzheta-rf/.

Federal

Treasury,

http://www.roskazna.ru/

286 

S. TABATA AND T. TABATA

Increases in expenditures for social security were partly compensated for by the increases in revenues for social benefits. Until 1936, expenditures for social security had been totally covered by revenues for social insurance collected from enterprises. They have been covered by approximately 35–45 percent since the late 1950s. After the collapse of the Soviet Union, they had been covered by 40–50 percent until 2004, while the compensation rate decreased to less than 30 percent in the late 2000s mostly due to the reduction in pension fees in 2005 (Ohtsu and Tabata 2006).35 This implies that the burden of social security on the state budget has grown considerably in recent years. Nonetheless, the ratio of state budget expenditures to GDP was 35–37 percent in the years 2013–2015 (Fig. 8.1), which was approximately 10 percentage points lower than in EU countries. 8.5.7  Changes in the 2000s and Customs Duties One of the salient peculiarities in the 2000s was the fact that state budget expenditures were covered by its revenues by a good margin (Fig. 8.4). This was the first time in the past two centuries. This was due to the increase in revenues from taxes on resource use and on foreign economic activities.36 In fact, most of the former taxes are extraction taxes on oil and most of the latter are export duties on oil. Both revenues increased in the 2000s because their tax rates were raised automatically in accordance with the increase in oil prices in the international market. In addition, it should be noted that under Minister of Finance Kudrin, expenditures were controlled by putting aside a significant portion of the two tax revenues from oil mentioned above in the Stabilization Fund (Tabata 2007). Taxes on resource use are considered as a part of corporate taxes or a special tax on excess profits. In fact, corporate tax rates were reduced from 30–35 percent in the 1990s to 24 percent in 2002 and to 20 percent in 2009. This implies that the tax burden on companies in sectors other than 35  Unified social tax was a regressive tax and its maximum tax rate was decreased from 35.6 to 26 percent from the beginning of 2005 by Federal Law No. 70 on July 20, 2004. This tax was abolished at the beginning of 2010 by Federal Law No. 213 on July 24, 2009, implying a return to the previous system of paying an insurance premium to the Pension Fund and other insurance funds. 36  Mineral taxes on crude oil were introduced in 2002. Export duties including those on commodities other than crude oil were abolished in the period 1996–1998. They were reintroduced in 1999.

8  STATE BUDGET 

287

the oil and gas sector was eased. We can see from Fig. 8.5 that the decrease in the share of corporate tax revenues has been compensated for by the increase in revenues from taxes on resource use. With respect to taxes on foreign economic activities, it should be noted that their share in total state budget revenues was always significant in the past two centuries: 11.8 percent on average in imperial times (1805–1914) and 12.1 percent on average after the collapse of the Soviet Union (1992– 2010). In the early Soviet times until the 1940s, their share had been small, probably because foreign trade was not active in this period. The problem lies in the fact that the Soviet authorities hid data on revenues from foreign economic activities in the period 1970–1984. In Fig. 8.5, we estimated these revenues from data on value added in foreign trade (special foreign trade earnings) in national income statistics.37 As late as in 1988, revenues from foreign economic activities were reported in Narkhoz SSSR (1989, p. 624).38 According to our estimate, taxes (revenues) on foreign economic activities accounted for 10.9 percent of the total state budget revenues on average in the 1970s and 18.1 percent on average in the 1980s. We could say that this contributed to a significant degree to the stagnated revenues of the state budget in the 1980s. In the latter period of the 2000s, the share of taxes on foreign economic activities was even higher: it was 20.3 percent on average in 2005–2010 thanks to unprecedented increases in oil prices.

Appendix Notes 1–3 and Appendix Tables 8.1–8.8 are available at www.ier.hit-u. ac.jp/histatdb/projects/view/2.

37  Since the ratio of special foreign trade earnings to state budget revenues from foreign economic activities was 76.7 percent on average in 1964–1969 and 1985–1990, we applied this ratio to the data on special foreign trade earnings in 1970–1984. 38  They were reported as “Revenues from foreign economic activities (customs duties, and revenues from export and non-trade organizations).”

288 

S. TABATA AND T. TABATA

References Anon (1988). Alokogol’naia problema v zerkale ekonomiki. Voprosy ekonomiki, (12), 107–128. EMF (1869–1914). Ezhegodnik Ministerstva finansov. St. Petersburg. European Bank for Recovery and Development (EBRD) (1994–2014). Transition Report. London. FNSR (1992–2014). Finansy Rossii. Moscow: Rosstat. FNSS (1962). Finansy SSSR. RGAE F.1562, Op.41, D.543. FNSS (1989). Finansy SSSR (1987–1988 gg.). Moscow: Goskomstat SSSR. GBS (1938). Gosudarstvennyi biudzhet SSSR 1918–1937 gg. RGAE F.7733, Op.15, D.491. GBS (1955a). Gosudarstvennyi biudzhet SSSR: Statisticheskii sbornik, Chast’ I. 1918–1937 gg. GBS (1955b). Gosudarstvennyi biudzhet SSSR: Statisticheskii sbornik, Chast’ II. 1938–1950 gg. GBS (1957). Gosudarstvennyi biudzhet SSSR za chetvertuiu i piatuyu piatiletku (1946–1950 i 1951–1955 gg.). Gosudarstvennaia kantseliariia (1894). Polnoe sobranie zakonov Rossiiskoi imperii sobranie tretie, tom XI, 1891. St. Petersburg. Gregory, Paul R. (1982). Russian National Income: 1885–1913. Cambridge: Cambridge U.P. IMF (2001). Government Finance Statistics Manual. Washington, DC: IMF. IMF et al. (1991). A Study of the Soviet Economy, Vol. 1. Paris: IMF. Kashin, Iu. I. and T. V. Kozlova (2013). Gosbank SSSR i Minfin SSSR v protsesse resursnogo regulirovaniia (vedomstvenye materialy), Po stranitsam arkhivnykh fondov Tsentral’nogo banka Rossiskoi Federatsii, vypusk 14. Moscow: CBR. Khromov, P. A. (1950). Ekonomicheskoe razvitie Rossii v XIX–XX vekakh: 1800– 1917. Moscow: Gosudarstvennoe izdatel’stvo politicheskoi literatury. Kuboniwa, Masaaki (1996). System and Trend of the Russian Budget after Independence (in Japanese). Roshia no Zaisei (Chosa Shiryo, No. 28, Research Institute for International Investment and Development, Japan Export-Import Bank), 5–133. Malinin, Nikolai V. (2010). Zaimovye sredstva gosudarstvennogo biudzheta Rossiiskoi Imperii i ikh znachenie v sotsial’no-ekonomicheskoi i politicheskoi zhizni strany v kontse XIX – nachale XX v., dissertatsiia na soiskanie uchenoi stepeni kandidata istoricheskikh nauk. Moscow: Moskovskii pedagogicheskii gosudarstvennyi universitet. Ministerstvo finansov (1902). Ministerstvo finansov 1802–1902, Vol. 1 and Vol. 2. St. Petersburg. Ministerstvo finansov (1913). Ministerstvo finansov 1904–1913. St. Petersburg. Nakamura, Yasushi (2013). Soviet Banking, 1922–1987: An Analysis of Gosbank Balance Sheets. Comparative Economic Studies, (55), 167–197.

8  STATE BUDGET 

289

Nakamura, Yasushi (2017). Monetary Policy in the Soviet Union: Empirical Analyses of Monetary aspects of Soviet Economic Development. New  York: Palgrave Macmillan. Narkhoz SSSR (1955–1991). Narodnoe khoziaistvo SSSR. Moscow: Finansy i statistika. Nihei, Takeo (1970). Role of Turnover Tax in the Accumulation Mechanism of Soviet Socialism (in Japanese). Keizaigaku Ronshu, 36(3), 28–51. Ohtsu, Sadayoshi and Shinchiro Tabata (2006). Pension Reforms in Russia (in Japanese). In Yoshiaki Nishimura (Ed.), Pension Reforms in Transition Economies: Experiences in Central-Eastern European and Former Soviet Countries and Lessons for Japan (pp. 207–235). Tokyo: Minerva Shobo. RSE (1994–2015). Rossiiskii statisticheskii ezhegodnik. Moscow: Rosstat. Sasaki, Teruo (1974). A Note on the Official Statistics of the Russian Empire (in Japanese). Keizai Kenkyu, 25(3), 276–284. Semenov, V.  N. (1983). Finasovo-kreditnyi mekhanizm v razvitii sel’skogo khoziaistva. Moscow: Finansy i statistiki. Shebaldin, Iu. N. (1959). Gosudarstvennyi biudzhet tsarskoi Rossii v nachale XX v. Istoricheskie zapiski, (65), 163–190. Smirnov, A. (1963). Ekonomicheskoe soderzhanie naloga s oborota. Moscow: Izdatel’stvo sotsial’no-ekonomicheskoi literatury. Tabata, Shinichiro (2007). The Russian Stabilization Fund and its successor: Implications for inflation. Eurasian Geography and Economics, 48(6), 699–712. Tabata, Shinichiro (2008). Marketization of Russia and the Energy Trade (in Japanese). In Shuichi Ikemoto, Ichiro Iwadaki, and Fumikazu Sugiura (Eds.), Globalization and Economics of Systemic Transition (pp.  202–220). Tokyo: Bunchindo. Tabata, Shinichiro (2011). Transition to Capitalism of the Russian Budgetary System (in Japanese). In Tadayuki Hayashi and Manabu Sengoku (Eds.), Politics and Economics in the Period of Post-socialism: Comparison of the Former Soviet and Central-Eastern European Countries (pp.  301–317). Sapporo: Hokkaido University Press. Tsentral’nyi statisticheskii komitet (TsSK) (1886). Statisticheskii vremennik Rossiiskoi imperii, Seriia III, Vypusk, 16, Dokhody i raskhody gubernskikh i uezdnykh zemstv za 1883 g. St. Petersburg. Tsentral’nyi statisticheskii komitet (TsSK) (1905–1911). Ezhegodnik Rossii. St. Petersburg. Tsentral’nyi statisticheskii komitet (TsSK) (1916). Statisticheskii ezhegodnik Rossii 1915 g. St. Petersburg. Zakharov, V.  S. (2007). Ocherki bankovskoi sistemy SSSR. Moscow: Finansy i statistiki. Zamaraev, B. A. (1999). Nalog s oborota: ekonomicheskoe soderzhanie, mesto i rol’ v sisteme khoziaistvovaniia byvshego SSSR. Voprosy statistiki, (2), 33–41.

CHAPTER 9

Foreign Trade Akira Uegaki

9.1   Introduction This chapter presents the trade statistics of (I) Imperial Russia from 1897 until 1917, (II) the Soviet Union from 1918 to 1991, and (III) the Russian Federation from 1992 to 2010, in a unified way as far as possible, and attempts some analysis. Imperial Russia, the Soviet Union, and the Russian Federation are countries that encompass different areas, and presenting their trade statistics in one series of time would be misleading. Therefore, in this chapter, the trade statistics of (I), (II), and (III) are regarded as different and are shown in separated tables.

9.2   Materials Most materials on which this study is based have been published by these government agencies: MVD (1905–1916), TsSU SSSR (1922), Klepikov (1924), MVT GTU (1960), MVT PEU (1967), MVT (1957–1988), MVES (1989–1991), SKSNG (1992), Goskomstat Rossii (1993, 1994), and GTK (1995–2011). We also used two sets of archive documents, MVT UEO (1946) and NKVT (1941–1945), and we checked the data by A. Uegaki (*) Department of Economics, Seinan Gakuin University, Fukuoka, Japan e-mail: [email protected] © The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5_9

291

292 

A. UEGAKI

FSGS (2015), Khromov (1950), Vinokur and Bakulin (1931), and Voznesenskii and Voloshinskii (1933). Export and import commodities are classified according to the United Nations’ Standard International Trade Classification (SITC) Rev.1.1 However, the classifications of trade goods of the Soviet Union and the Russian Federation are not in accordance with the SITC. The Soviet trade statistics were classified by the so-called Council for Mutual Economic Assistance Trade Nomenclature (CTN) classification, whereas the trade statistics of the Russian Federation are based on the harmonised system (HS) of the EU’s Combined Nomenclature. Therefore, we checked the data at two-digit, three-digit, or sometimes four-digit levels of CTN and HS and transferred them into one-digit and two-digit classifications of SITC Rev.1. With respect to the trade statistics of Imperial Russia, such consideration of the commodity classification is impossible, as the classification of the source materials for Imperial Russia was very primitive. We made tables on the trade of Imperial Russia according to very broad classifications. Trade prices are mainly free on board for exports and cost-­ insurance-­freight for imports. The trade value is expressed in rubles for the periods of (I) and (II) and dollars for (III). The change in the exchange rate used here is complicated with the years. The last point is explained later.

9.3   Previous Research Here, we briefly survey the previous research in order of publication years. Paul Marer (1972) showed not only the total value of imports and exports of the Soviet Union and Eastern Europe as compared to those of the whole world and Western capitalist countries, but also the bilateral trade values within the region (between the Soviet Union and Poland, between Poland and Czechoslovakia, etc.), in accordance with the Classification by the Broad Economic Categories of the United Nations. However, the period of coverage is only from 1946 to 1969. It is interesting that he argues about the problem of “residual items” in a supplementary note of the book.2 Gregory (1982) makes a challenging attempt to calculate the “current account of the balance of payments” for 16 years around 1897 (the year the gold standard was introduced) in order to estimate the 1  Although the latest version of SITC is Revision IV, we use Revision I because it fits historical long-term trade data. 2  This problem will be discussed later.

9  FOREIGN TRADE 

293

national income of Imperial Russia. This work is valuable because it is based on an accurate understanding of the balance of payments system. Treml and Kostinsky (1982) also discuss the “residual” problem in an attempt to combine the 1972 input-output table with import and export statistics. Marrese and Vaňous (1983) assert that, unlike general impressions, the Soviet Union had given implicit assistance through trade to the countries of the Council for Mutual Economic Assistance (CMEA) from 1960 to 1978. These scholars instituted an original time series of the bilateral trade between the Soviet Union and each CMEA country. It is also interesting that they used their own commodity classification. Grossman and Solberg (1983) tried to reconstruct the Soviet balance of payment table in 1985. Belkindas and Ivanova (1995) presented a record of a seminar held by the World Bank in Moscow right after the dissolution of the Soviet Union that comprehensively discussed various issues regarding foreign trade statistics of the Soviet Union and its successor states. Their study contains valuable data that had not been previously published. Simchera (2007) compiled economic statistics from 1900 to 2000; however, as far as this chapter is concerned, it is inadequate for our purposes. He simply collected the existing statistics (with fewer significant figures: for example he used 2 instead of 2.1 or 2.13 thousand), and it does not include statistics by commodity or statistics by region. The differences in this chapter compared with previous research include the extensive period covered, 1897–2010, and its unified commodity and regional classification system (at least for the period after 1918).

9.4   Trade of Imperial Russia Table 9.1 shows the trade structure of Imperial Russia by using MVD (1905–1916) and Klepikov (1924). The gold ruble, which is the criterion for evaluation here, refers to a convertible  ruble,  which was set to 1 ruble = 0.774234 g gold in the Russian gold standard system established in 1897. Therefore, it can be considered that the trend shown here generally did not suffer from the influence of domestic price fluctuations. This table and other source material data show that exports and imports were growing steadily from the end of the nineteenth century to the beginning of World War I. Exports exceeded imports during this period, and the trade balance was in surplus (except in 1899). This situation would change completely when World War I started in 1914. First, exports sharply declined, and imports increased in 1916–1917. Consequently, the trade balance of 1916–1917 became a large deficit.

294 

A. UEGAKI

The details of the statistics by commodity show that “food” constituted a large part of exported goods by 1915. According to further detailed data (not listed here), “grains and their products (= flour, etc.)” comprised 65%–80% of “food”. The second group of export goods was “crude materials and half-finished goods”, the most important of which is “timber”. The shares of “timber” in this export category were 26.0%, 29.3%, and 30.1% in 1912, 1913, and 1914, respectively. The share of petroleum exports, which was included in “crude materials and half-finished goods”, was not so large. The export of “petroleum and its products” was 3.4% of the total export value in 1914. The source data for Table  9.1 show that “food” exports declined sharply after 1915 (“livestock” exports also declined sharply). It can be inferred that this is because of the outbreak of World War I, especially the war against Germany. In fact, the export of grains to Germany, which had been large before the war, ceased in 1915, and exports to England and France also drastically declined. As for imports, before the war, the main product group of imports was “crude materials and half-finished goods”, the share of which had remained in the range of 46% to 54%. Important items within this product group are Table 9.1  Trade value by commodity group, Imperial Russia, 1897–1917 Products group

Food

SITC codes(Rev.1)

SITC 03, 04, SITC 21, 22, 23, 24, 05, 06, 07, 26, 28, 29, 32, 33, 09, 11, 12 41, 42, 43, 52, 53, 54, 55, 61, 65, 66

Exports(1000 gold ruble) 1897 421,968 1902 539,863 1907 584,530 1912 821,452 1917 51,467 Imports(1000 gold ruble) 1897 97,930 1902 120,601 1907 201,817 1912 209,647 1917 127,783

Crude materials and Livestock Industrial half-finished goods goods

Total

SITC 00 SITC 61, 62, 63, 65, 69, 71, 73, 86, 89

257,221 260,892 390,365 589,045 383,815

17,355 21,744 23,654 31,021 5

29,990 37,824 54,462 77,279 28,676

726,624 860,322 1,053,011 1,518,797 463,963

302,022 312,621 402,905 555,516 628,778

3389 5185 5440 11,979 60

156,657 160,743 237,203 394,630 1,560,127

559,998 599,151 847,365 1,171,772 2,316,748

Sources: 1887–1914: MVD (Various years, Section X). 1915–1917: Klepikov (1924)

9  FOREIGN TRADE 

295

Table 9.2  Trade value by area, Imperial Russia, 1897–1917 Europe

North and South America

Exports (1000 gold ruble) 1897 659,688 2707 1902 776,299 4374 1907 944,696 8424 1912 1,358,362 18,007 1917 437,081 26,480 Imports (1000 gold ruble) 1897 409,389 49,328 1902 436,476 40,840 1907 606,024 56,519 1912 887,287 88,330 1917 1,414,714 705,816

Asia

Middle East

Africa

8825 18,185 33,289 38,862 0

29,061 39,893 47,581 83,123 0

5816 6790 3424 5277 0

48,361 69,010 116,634 116,520 188,356

24,846 31,030 32,530 51,637 0

Other

Total

20,525 726,624 14,781 860,322 15,596 1,053,010 15,166 1,518,797 400 463,963

24,091 3979 559,998 15,153 6642 599,151 12,262 23,398 847,365 3122 24,876 1,171,772 0 7862 2,316,748

Source: Same as Table 9.1

semi-finished goods, such as rubber products, unprocessed metals, cotton, jute, silk, wool, and so on. The percentage of these items in the group of “crude materials and half-finished goods” was 56.3% in 1912. What is noteworthy is that the amount of “industrial goods” increased rapidly in 1916 and 1917. This can be also attributed to the outbreak of war. Table 9.2 shows imports and exports by region. From this table and source data for Table  9.2, we can realise the significance of Europe to Russia’s trade before World War I, especially Germany. In 1913, just before the war, Germany’s shares of Russia’s exports and imports were 29.8% and 47.4%, respectively. Germany was a very important trading partner as a destination for Russia’s grain exports and a source of machine imports. World War I, in which Russia and Germany fought against each other, disrupted the trade between the two countries. Britain and the USA filled the vacancy. In the next section, we will discuss how such a situation changed in the era of violent fluctuations of international relations caused by the October Revolution, the Russian Civil War, and the market-­oriented New Economic Policy (NEP), and so on.

9.5   Trade in the Soviet Period 9.5.1  Imports and Exports by Product We have made data series of imports and exports by product during the Soviet era based on MVT GTU (1960), MVT PEU (1967), MVT

296 

A. UEGAKI

(1957–1988), MVES (1989–1991), and SKSNG (1992). To make the tables, we have transformed the original data of these materials in accordance with a one-digit and a two-digit classification of SITC Rev.1. The results, which are so large that we do not present here, are shown in Appendix Tables 9.8, 9.9 (one-digit), 9.10 and 9.11 (two-digit). “ Residual” Trade Items Concerning the data series of imports and exports by product during the Soviet era, we must pay a special attention to the existence of “residual” items. As mentioned above, until 1991, the Soviet authorities published trade statistics based on the Soviet-style commodity classification, named CTN. What troubles us here is the fact that they have not systematically published trade data on one-digit or two-digit classifications of CTN.  For example, although we can find figures for exports and imports of code numbers 800 (“meat and meat products” in CTN 4th edition) and 803 (“eggs and processed goods”), we cannot find any figures for code number 80 (“meat products and dairy products”) in official publications. They have been publishing trade data according to their sense of “importance”, and the data we have are too detailed in one case and too rough in another. On the other hand, the total amount of imports and exports were printed in all official materials. It is curious that these official totals are different from the figures we can calculate by adding together all the figures of exports and imports of all the products appearing in the official materials, even after carefully considering the problem of double counting. This phenomenon may be due to the accidental or intentional omission of trade figures of some items from the materials, whose figures are, however, secretly included in the official totals. Of course, even if we transform the Soviet-type classification into SITC, we cannot find what were the concealed trading goods. However, we can make a good time series of the “residual” by recalculating the trade data by SITC classification (see Appendix Tables 9.8 and 9.9). This is a serious problem related to the trade statistics of the entire Soviet Union period, but as far as the data from 1918 to 1940 are concerned, this “residual” has little importance. The amounts of the “residual” are negligible within a range of statistical error (not larger than 2% of the official total). As for the years of World War II, the “residual” is, curiously, negative. This might be due to a false announcement of the total

9  FOREIGN TRADE 

297

40 35 30 25 20 15 10 5

19 1 19 8 2 19 0 2 19 2 2 19 4 2 19 6 2 19 8 3 19 0 3 19 2 3 19 4 3 19 6 3 19 8 4 19 0 4 19 2 4 19 4 4 19 6 4 19 8 5 19 0 5 19 2 5 19 4 5 19 6 5 19 8 6 19 0 6 19 2 6 19 4 6 19 6 6 19 8 7 19 0 72 19 7 19 4 7 19 6 7 19 8 8 19 0 8 19 2 8 19 4 8 19 6 8 19 8 90

0 -5 -10

Fig. 9.1  “Residual” items in the Soviet export = (B–A)/B (%). Note: A = Total by Author’s calculation, B = Official total. Source: Same as Table 9.3

figures (especially for 1942). This “residual” problem would become serious after World War II. In fact, the simple average of the share of “residual” items in the total trade in 1946–1990 is 18.9% for exports and 12.0% for imports. The maximum figure is 33.4% for exports in 1950. Such a large figure would make us doubt artificial concealment. One of the results of our calculation is shown in Fig. 9.1. Many researchers have been studying this problem since Marer (1972). Here, we introduce the work of Treml and Kostinsky (1982). They tried to convert Soviet import and export statistics into domestic prices in 1972 and link them to the Soviet input-output table in the same year. In this attempt, they took up the problem of the “residual” and tried to identify them based on a comparative analysis of production statistics, mirror statistics of trade counterparts, and trade statistics of other CMEA nations, such as Poland and Czechoslovakia. They found that the “residual” items were “precious metals”, “uncut diamonds”, “radioactive isotopes”, “amorphous chemicals”, “silver coins”, “meat products”, and “cut diamonds” for exports, and “uranium ore”, “coal”, “food”, and “consumer goods” for imports. Omission or concealment of some of these items is understandable, but for some items, we cannot understand the reason.

298 

A. UEGAKI

The most serious problem of their study is the fact that they could not identify quite a large part of the “residual”. Treml and Kostinsky suggested that most of these were genuine weapons, such as “tanks, missiles, firearms”, or dual military/civilian goods. The second problem is that they estimated data only for the year of 1972. Although their inference that the secret items were military goods is not unrealistic, it is still open to debate. Exchange Rate Another problem is the exchange rate. MVT GTU (1960), which is the basis of the data for 1918–1940, uses the exchange rate as of 1951, that is, US$1 = 4.0 rubles. On the other hand, the trade data since 1946 are calculated by the exchange rate as of January 1, 1961, that is, $1 = 0.9 ruble (MVT PEU 1967). Therefore, if we use the data of MVT GTU (1960) as they are, a serious problem arises regarding continuity with the post-war data. Therefore, we recalculated the data for 1918–1940 at the exchange rate as of January 1, 1961. As for the period of World War II, since the source materials (archive documents) use the  ruble value at the current exchange rate ($1 = 5.3 rubles), we have again recalculated them at the exchange rate on January 1, 1961. As for the exchange rate for 1946–1971, we used the exchange rate of January 1, 1961 because the source materials do so. For the period 1972–1990, we used the current official rates announced by the Gosbank (central bank of the Soviet Union). The official exchange rate had fluctuated relatively violently, as shown in Table 9.3. Although it is also possible to recalculate trade data at some fixed rate, it would result in misleading figures because, during this period, the exchange rate of the world’s major currencies was fluctuating under the floating exchange rate regime, and because the market prices of oil and other natural resources had also been changing violently. As for the data of 1991, it is necessary to know that they have quite different characteristics from those of the past. In that year, due to the partial liberalisation of the foreign exchange market, a sort of coexistence appeared between the commercial market and the official market of foreign exchange. SKSNG (1992), on which we rely, includes data at the exchange rate of the commercial market. Considering the continuity of the figures, we recalculated the data at the official exchange rates. We used the conversion rate between the commercial rate and the official rate as calculated by Shinichiro Tabata, who closely examined the trade statistics at that time (Tabata 1994).

9  FOREIGN TRADE 

299

Table 9.3  Exchange rate of ruble against US dollar (official rate) Year/month/day 1970/1/1 1971/1/1 1972/1/1 1973/1/1 1974/1/1 1975/1/1 1976/1/1 1977/1/1 1978/1/1 1979/1/1 1980/1/3 1981/1/1 1982/1/1 1983/1/13 1984/1/1 1985/1/1 1986/1/1 1987/1/1 1988/1/6 1989/1/4 1990/1/3 1991/1/2

Unit of US dollar 1 1 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

Value in ruble 0.9 0.9 82.9 82.6 75.4 73.0 75.8 74.2 70.6 65.9 64.0 67.5 70.8 70.7 79.1 87.0 75.9 67.0 58.0 60.6 60.7 56.1

Source: Central Bank of Russia, Website, http://www.cbr.ru/currency_base/OldVal.aspx

 rade During World War II and Lend-Lease T As for the data of the period of World War II, we used a new archive material (MVT UEO 1946). This material contains detailed data by country and product. No detailed trade data for this period had been publicly disclosed until the appearance of this archive material on the Internet. However, this material has serious flaws. The export data for 1941, 1942, and 1943 were not noted on a yearly basis. Only the amount of exports of two and a half years from June 22, 1941, (Nazi Germany’s invasion of the Soviet Union, the so-called Barbarossa operation started on this day) to December 31, 1943, were announced. Regarding imports, data for each year are listed after 1942, but for 1941, only data for the half year after June 22 are listed. In other words, by MVT UEO it is impossible to obtain data year by year. Therefore, we decided to fill out the gap with another archive document (NKVT 1941–1945).

300 

A. UEGAKI

The classifications of products of both archive materials are unique, different not only from SITC but also from CTN. Therefore, we reorganised them according to the classification of SITC Rev.1. The most important thing that the new archive material has shown is the trade associated with the Lend-Lease Act (hereafter, LLA). The LLA was the legal framework by which the USA supplied many goods to the allied countries, such as the United Kingdom and the Soviet Union, for the war against Nazi Germany. It was not well known how much this trade was included in the statistics previously circulated in the Soviet Union. This archive material shows statistics about trade through the LLA separately from other trade data. The amount is shown in Table  9.4. This clearly indicates that most of the imports of the Soviet Union during World War II were from the USA, and most were through the LLA. Converting the total at the exchange rate of the time ($1 = 5.3 ruble), it totalled 9238 million dollars, an amount close to the 9377 million dollars that Mark Harrison (English specialist of Soviet military economy history) estimated from American sources (Harrison 1996, p. 133). Another feature of the document is that it includes statistics of the trade of military goods and non-military goods separately. The structure of the document is shown in Fig. 9.2. This suggests that, by the framework of LLA, we cannot clarify exactly how much of the imports from the USA were non-military imports; however, we can infer that a considerable part of LLA imports from the USA was non-military goods.3 It has been asserted by Western researchers that many non-military goods were imported through the LLA (Harrison 1996, p. 133). Now this has been confirmed by a Soviet source. 9.5.2  Imports and Exports by Region Figures 9.3 and 9.4 show the amount of trade by region in the Soviet era. The referenced materials and the exchange rates here are all the same as in the previous section. Here, the trading partners of the Soviet Union are classified into six groups: “Western Europe and North America”, “Socialist Countries”, “Asia”, “Africa”, “Central and South America”, and “Oceania”. However, because the Soviet’s trade with the last three regions 3  In Appendix Tables 9.9 and 9.11 (on the Internet), we classified military goods as Code 9 goods because “arms and ammunition” and “other military equipment” are classified as 941 of SITC Rev.1.

6,076,005 4,033,647 3,792,137 241,510 – 2,374,944 1,717,406 1,262,252 426,255 28,899 1,281,610 13,438 – 13,320 118 –

699,065 414,771 267,828 16,466 414,771 712 – 712 – –

1942

1,124,554 202,844 50,626 152,217 – 61,044

1941 (June 22–December 31)

1944

1945

Total: 1941–45

48,652 30,939 16,916 797 6185

2,845,582 2,242,127 601,331 2,123 2,233,528

401,991 390,870 11,121 – 187,354

1,861,920 1,168,911 688,561 4,449 1,158,030

311,075 262,425 43,289 5361 81,707

646,016 331,789 313,740 486 331,206

775,868 684,234 85,358 6276 275,246

7,769,989 5,419,850 2,297,715 52,423 5,419,145

16,219,886 22,089,617 14,796,052 60,306,114 13,015,464 19,420,492 12,799,278 49,471,725 12,963,704 19,399,792 12,755,225 48,961,484 51,760 20,700 24,693 490,880 – – 19,360 19,360 6,701,710 8,591,846 6,373,358 24,102,902

1943

Note: The exchange rate here is $1 = 5.3 ruble. Therefore, the figures are different from those of Figure 9.4

Source: MVT UEO (1946, pp. 10–11, 155)

Total Import   In which from USA    Through Lend-Lease    By payment in kind    By credit agreement of October 15, 1945   In which “arms and other military equipment” from USA   In which from Great Britain    By war assistances    By credit agreement    By payment in kind   In which “arms and other military equipment” from Great Britain   In which from Canada    By Law of mutual assistances    By credit agreement    By payment in kind   In which “arms and other military equipment” from Canada

Current value (1000 ruble)

Table 9.4  Soviet import through Lend-Lease and other programmes

9  FOREIGN TRADE 

301

302 

A. UEGAKI

Fig. 9.2  Trade structure of the Soviet Union during World War II according to the archive document. Source: Made by the author based on the data of MVT UEO (1946)

Import through LLA

Import of military goods

Import of non-military goods

Import by other framework 80000 70000 60000 50000

Western Europe and North America Socialist Countries Asia other

40000 30000 20000 10000 0

Fig. 9.3  Trade value by region, export of the Soviet Union (in millions of ruble). Sources: MVT GTU (1960), MVT PEU (1967), MVT (1957–1988), MVES (1989–1991), and SKSNG (1992)

was negligible, the trade with these regions was integrated in the category “other” in the figures. This is in line with the taxonomy of the Soviet Trade Yearbook (MVT 1957–1988). The countries in each group are described in Table  9.5. The problem is the treatment of “Socialist Countries”. Before the end of World War II, only the Soviet Union and the Mongolian

9  FOREIGN TRADE 

303

80000 70000 60000 50000

Western Europe and North America Socialist Countries Asia other

40000 30000 20000 10000 0

18 28 /22 /24 /26 /28 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 19 19 21 23 25 27 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19

Fig. 9.4  Trade value by region, import of the Soviet Union (in millions of ruble). Source: Same as Fig. 9.3

People’s Republic were socialist countries. We, however, include the countries that would become socialist after World War II, such as Hungary, Poland, Romania, and Bulgaria, in the category of “Socialist Countries” even for the period before World War II. This classification method can emphasise the long-term trend of Soviet trade, in that we can clarify the positions of the countries that later would become socialist in Soviet trade. Although Figs. 9.3 and 9.4 do not show it clearly, the original sources for the figures tell the overwhelming importance of “Western Europe and North America” before World War II. During this period, the major trading partners of the Soviet Union were the United Kingdom, Germany, and the USA. Especially, Germany had a great significance and, for example in 1931 (before Nazi’s seizure of the political power), 15.9% of the exports of the Soviet Union and 37.2% of the imports were trade with Germany. Although the Soviet trade with Germany contracted after the establishment of the Nazi regime, it was not completely disrupted. In the previous section, we note that World War I disrupted trade between Germany and Russia, and that with Britain and the USA filled the vacuum; however, after the October Revolution, Germany again became an important trading partner of the Soviet Union.

304 

A. UEGAKI

Table 9.5  Countries in the six regional categories Western Europe and North America Socialist Countries

Asia

Africa

Central and South America Oceania

Austria, Belgium, United Kingdom, Greece, Denmark, West Berlin, Ireland, Iceland, Spain, Republic of Cyprus, Liechtenstein, Luxemburg, Malta, The Netherlands, Norway, Portugal, West Germany, Finland, France, Swiss, Sweden, Canada, USA. Bulgaria, Hungary, East Germany, Poland, Romania, Czechoslovakia, Yugoslavia, Burma, North Vietnam, Peoples’ Democratic Republic of Yemen, Cambodia, China (including “Manchuria” and Xinjiang during WWII), People’s Democratic Republic of Korea, Laos, Cuba, Mongolia (Of course, all the countries except Mongolia were not “socialist” until the end of WWII). Afghanistan, Bangladesh, India, Indonesia, Jordan, Iraq, Iran, Kuwait, Lebanon, Malaysia, Nepal, UAE, Pakistan, Saudi Arabia, Singapore, Syria, Thailand, Turkey, Philippines, Ceylon, Hong Kong, Republic of Korea, Japan. Algeria, Angola, Benin, Ivory Coast, Arabic Republic of Yemen, Ghana, Guinea, Dahomey, Guinea-Bissau, Zambia, Cameroon, Kenya, Liberia, Libya, Madagascar, Mali, Morocco, Mozambique, Nigeria, Ruanda, Egypt, (Democratic) Republic of the Congo, Senegal, Somalia, Sudan, Sierra Leone, Tanzania, Togo, Tunisia, Uganda, Chad, Central Africa, Equatorial Guinea, Ethiopia, United Arab Republic, Rhodesia, and Nyasaland. Mexico, Argentina, Bolivia, Venezuela, Guyana, Guatemala, Dominica, Colombia, Costa Rica, Nicaragua, Panama, Peru, El Salvador, Trinidad-­ Tobago, Uruguay, Chile, Ecuador, Jamaica. Australia, New Zealand.

Source: Same as Table 9.3

On the other hand, the “Socialist countries” (including countries that would later become socialist) occupied only a very insignificant position in trade. In the second half of the 1930s, trade with “Socialist countries” grew, but that can be attributed to increased trade with China and Mongolia. During World War II, naturally, the trade of the Soviet Union with Germany was disrupted, and “North America and Europe” once again occupied a major position. Especially, the overwhelming significance of the USA for Soviet Union imports is shown in Table 9.4 and Fig. 9.4. After World War II, “Socialist countries” replaced “North America and Europe”, but their share gradually declined after the peak in the first half of the 1950s. According to the source data for Figs. 9.3 and 9.4, whereas the weight of “Socialist countries” in Soviet exports in 1946–1953 was 78.0%, in 1985–1991 it became 60.4% (for imports, 74.9% and 55.2%,

9  FOREIGN TRADE 

305

respectively). Regarding “Asia”, it is interesting that after World War II until the dissolution of the Soviet Union there had not been a year when Asia’s share of exports or imports exceeded 10%. 9.5.3  The Long Trend of Soviet Trade (1918–1991) Tables 9.6 and 9.7 show the commodity composition ratios of exports and imports in the Soviet era in accordance with the author’s own periodisation. Here, the number of years in each period is not necessarily the same. “Residual” items are not included in the totals. Regarding exports, the first thing to note is that although “food and animals” constituted a large proportion from NEP until the post-war period of Stalin’s era, it gradually lowered its importance until the Perestroika period. This transition reflects the process by which the Soviet Union, once an agricultural country, has struggled to industrialise. “Inedible crude materials excl. fuels” also followed a similar process. Considering the fact that the main item in this group is “wood”, the movement of this figure is also interesting, as “wood” was sometimes cut by workers in concentration labour camps. In fact, the export of “inedible crude materials excl. fuels” greatly increased at the time of the “establishment of the Stalin regime” and “from the German-Soviet pact to World War II”. On the other hand, the export of “mineral fuels, lubricating oil, and related products” appeared as a major export item only ten years after the end of World War II, and then it rapidly increased its proportion to more than 50% after the period of the “second oil shock”. It has not been long since “mineral fuels” became the overwhelmingly top export item of the Soviet Union. The weight of “machinery and transport equipment” exceeded 10% only after World War II and exceeded 20% at the end of the 1960s or the beginning of the 1970s. This trend cannot be understood without considering the situation that the Soviet machines, which were not necessarily high quality by global standards, could be sold to “friendly” socialist countries under the organisation of CMEA. In addition, it is necessary to note that “manufactured goods classified by material”, which had great importance until the “first oil shock”, includes “iron and steel products”. This indicates a characteristic of Soviet-style industrialisation. Regarding imports, it is important that “food and livestock” occasionally had a high proportion. This shows the instability of the agricultural production in the Soviet Union. The weight of “inedible crude materials

Revolutionary Russia (1918–1920) NEP (1921–1928. September) Collectivization of agriculture and first five-year plan (1928 October–1932) Establishment of Stalin regime (1933–1938) From German-­Soviet pact to WWII (1939–1945) Post-war Stalin’s era (1946–1953)

1.9

0.6

0.8

0.6

2.4

1.5

7.1

29.8

27.2

19.3

23.6

25.9

26.2

43.2

33.4

28.2

25.8

39.5

Food Beverages Inedible and and crude livestock tobacco materials excl. fuels

2

Product group

1

0

Code (SITC Rev.1)

5.8

7.6

14.3

17.1

13.1

1.2

Mineral fuels, lubricating oil, and related products

3

0.7

0.8

3.2

3.7

5.9

1.5

Animal or vegetable oils and fats

4

6

2.6

3.5

3.2

1.5

1.1

3.4

25.3

15.0

21.7

18.1

22.1

43.3

Chemicals Manufactured goods classified by material

5

10.3

2.5

2.2

0.4

0.1

0.2

Machinery and transport equipment

7

Table 9.6  Commodity composition of Soviet export (SITC Rev.1) 1918–1991 (%)

1.8

1.3

2.0

3.0

1.5

1.9

Miscellaneous manufactured goods

8

0.0

0.0

0.0

0.0

0.0

0.0

Commodities and transactions not classified according to kind

9

(continued)

100.0

100.0

100.0

100.0

100.0

100.0

Total by author’s calculation

0–9

306  A. UEGAKI

0.5

0.1

0.2

0.2

0.1

0.2

14.2

9.6

7.6

3.5

1.7

1.7

Thaw and criticism of Stalin (1954–1961) Attempt for economic reforms (1962–1967) Cold war and standstill (1968–1972) First oil shock (1973–1978) Second oil shock and East-West confrontation (1979–1984) Perestroika (1985–1991) 57.3

62.4

39.4

20.2

19.9

16.3

Mineral fuels, lubricating oil, and related products

3

0.3

0.3

1.0

2.2

2.4

1.7

Animal or vegetable oils and fats

4

Source: Calculated by the author based on the source material of Table 9.3

8.4

8.3

14.8

17.4

19.1

21.0

Food Beverages Inedible and and crude livestock tobacco materials excl. fuels

2

Product group

1

0

Code (SITC Rev.1)

Table 9.6 (continued) 6

4.9

3.2

3.2

3.6

3.3

2.8

8.4

7.5

14.0

25.6

29.4

30.5

Chemicals Manufactured goods classified by material

5

18.0

15.8

22.9

22.2

15.3

11.9

Machinery and transport equipment

7

0.8

0.6

1.0

1.1

1.0

1.2

Miscellaneous manufactured goods

8

0.0

0.0

0.0

0.0

0.0

0.0

Commodities and transactions not classified according to kind

9

100.0

100.0

100.0

100.0

100.0

100.0

Total by author’s calculation

0–9

9  FOREIGN TRADE 

307

1.2

0.0

0.0

0.2

0.0

3.9

12.2

16.2

9.3

10.8

12.4

12.2

Revolutionary Russia (1918–1920) NEP (1921–1928. September) Collectivisation of agriculture and first five-year plan (1928 October–1932) Establishment of Stalin regime (1933–1938) From German-­Soviet pact to WWII (1939–1945) Post-war Stalin’s era (1946–1953)

28.1

7.3

22.0

20.8

35.3

5.9

Food Beverages Inedible and and crude livestock tobacco materials excl. fuels

2

Product group

1

0

Code (SITC Rev.1)

11.7

3.3

0.5

0.1

0.9

0.5

Mineral fuels, lubricating oil, and related products

3

3.1

3.6

1.0

0.5

0.9

0.2

Animal or vegetable oils and fats

4

1.4

2.5

2.3

3.2

6.4

1.6

Chemicals

5

16.1

9.1

29.4

19.7

16.9

23.8

Manufactured goods classified by material

6

8

21.1

14.8

31.6

43.9

18.8

6.6

2.6

0.1

2.2

2.3

4.5

48.0

Machinery Miscellaneous and manufactured transport goods equipment

7

Table 9.7  Commodity composition of Soviet import (SITC Rev.1) 1918–1991 (%)

0.0

46.6

0.0

0.0

0.0

0.0

Commodities and transactions not classified according to kind

9

(continued)

100.0

100.0

100.0

100.0

100.0

100.0

Total by author’s calculation

0–9

308  A. UEGAKI

3.1

4.6

3.2

2.7

1.8

14.8

12.0

19.1

22.9

17.5

Source: Same as Table 9.6

2.3

11.3

Thaw and criticism of Stalin (1954–1961) Attempt for economic reforms (1962–1967) Cold war and standstill (1968–1972) First oil shock (1973–1978) Second oil shock and East-West confrontation (1979–1984) Perestroika (1985–1991)

4.0

5.4

6.8

9.8

14.3

23.2

Food Beverages Inedible and and crude livestock tobacco materials excl. fuels

2

Product group

1

0

Code (SITC Rev.1)

Table 9.7 (continued)

2.5

0.0

1.6

2.5

2.7

5.6

Mineral fuels, lubricating oil, and related products

3

1.1

1.7

0.6

0.4

0.6

1.7

Animal or vegetable oils and fats

4

8.9

6.5

5.6

6.8

5.1

2.3

Chemicals

5

15.4

17.0

19.1

18.5

16.4

19.1

Manufactured goods classified by material

6

8

41.0

37.3

37.4

35.5

34.6

29.1

7.7

6.5

6.6

9.7

8.3

5.3

Machinery Miscellaneous and manufactured transport goods equipment

7

0.0

0.0

0.0

0.0

0.0

0.0

Commodities and transactions not classified according to kind

9

100.0

100.0

100.0

100.0

100.0

100.0

Total by author’s calculation

0–9

9  FOREIGN TRADE 

309

310 

A. UEGAKI

excl. fuels” was also high until the mid-1960s. The main items of this group are natural rubber, textile fibre, metal ore, waste, and so on. The weight of “machinery and transport equipment” is consistently high except during a short period after World War II. It is interesting that the weight of this product group in the Perestroika period increased to that comparable to the period of the collectivisation of agriculture and the first five-year plan. This suggests one aspect of the Gorbachev reform, that is, an accelerated industrialisation strategy.

9.6   Trade in the Russian Federation, 1992–2010 At the end of 1991, the Soviet Union was dissolved, and the 15 republics that had formed the Soviet Union became independent. The largest of them is the Russian Federation. It can be said that the Russian Federation is a successor to the Soviet Union in various ways. Of course, we cannot directly connect Soviet trade statistics with those of the Russian Federation because Russia is only a part of the Soviet Union, and because the internal circulation of products within the former republics of the Soviet Union has become foreign trade. Detailed customs statistics of the Russian Federation were made public in 1994, which is also when the statistics on trade with Commonwealth of Independent States (CIS) countries (called “near foreign countries”) and statistics on trade with other countries (called “distant foreign countries”) were published separately. Therefore, detailed trade data by product with the entire world exist only after 1994. In this section, we present only trade statistics for trade with “distant foreign countries” for 1992–1993 and those with the world after 1994. Here, we should note that the source materials are compiled by a product classification named TN VED SNG (Commodity nomenclature of the CIS external economic activity  =  Tovarnaia nomenklatura vneshnei ekonomicheskoi deiatel’nosti Sodruzhestva nezavisimykh gosudarstv), which is based on the harmonised system (HS) of the EU’s “Combined Nomenclature (CN)”. Here, we converted them into data according to SITC Rev.1. Since TN VED SNG and SITC Rev.1 have a correspondent relationship at the two-digit level for almost all codes, this conversion is not as difficult as the conversion of trade statistics in the Soviet era. The results are shown in Appendix Tables 9.12 and 9.13. Although it is somewhat surprising, there is also a “residual” problem. If there is a high

9  FOREIGN TRADE 

311

possibility that the “residual” problem of the Soviet era was the result of the concealment of information on trade in sensitive goods, such as military goods, precious metals, and uranium ore, the “residual” problem in the trade of the Russian Federation would be due to the inaccuracy of statistical data caused by the turmoil after the collapse of the Soviet Union (1992–1993) and to deficiencies in the information arrangement in CIS trade (since 1994). Looking at the transition of trade products, the movement of “mineral fuels, lubricating oil, and related products”, which account for most of the exported goods of the Russian Federation, is important. As mentioned in the previous section, in the Soviet Union, the proportion of “mineral fuels, lubricating oil, and related products” to total exports was over 60% in the early 1980s. Appendix Table 9.12 shows what happened after the dissolution of the Soviet Union. The share of this category in the exports of the Russian Federation started at a lower level than in the last years of the Soviet Union. It gradually increased and, in 2005, exceeded the highest level in the Soviet era. In fact, the concentration of exports is actually more remarkable in trade with “distant foreign countries” than in trade with CIS. On the other hand, exports of “machinery and transport equipment” to “distant foreign countries” are insignificant, while exports of them to CIS are not small. As for imports, imports of “machinery and transport equipment” accounted for a large proportion of the trade with “distant foreign countries”, but, at the same time, the Russian Federation is importing not a negligible amount of “machinery and transport equipment”, “manufactured goods classified by material”, and “chemicals” from CIS.  In this way, it can be said that the Russian Federation is showing different faces to “distant foreign countries” and CIS. That is, some type of horizontal division of labour appears between CIS and Russia, whereas Russia is facing “distant foreign countries” as a developing country with many natural resources. Figures 9.5 and 9.6 show the trade amounts by region (but only trade with “distant foreign countries”). As for the “socialist countries”, we follow the same taxonomy (here, it was called “former socialist countries”) as the Soviet era. As compared to Figs. 9.3 and 9.4, it is clear that the status of “(former) socialist countries” is decreasing and that of “Western Europe and North America” is overwhelming. However, looking at the statistics in more detail, something else is also interesting. That is, the significance

312 

A. UEGAKI

450000 400000 350000 300000 250000 200000

Western Europe and North America (Former) Socialist Countries Asia other

150000 100000 50000 0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Fig. 9.5  Trade value by region, export of the Russian Federation (in millions of US$). Note: Taxonomy of the regions is same as Table  9.5, though Estonia, Latvia, and Lithuania are included in “Western Europe and North America”. Sources: Goskomstat Rossii (1993, 1994), and GTK (1995–2011) 250000

200000 Western Europe and North America 150000

(Former) Socialist Countries Asia other

100000

50000

0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Fig. 9.6  Trade value by region, import of the Russian Federation (in millions of US$). Note: Same as Fig. 9.5. Source: Same as Fig. 9.5

9  FOREIGN TRADE 

313

of “(former) socialist countries” as Russia’s importing partners has rapidly increased in recent years. This is due to the inclusion of China in the category of “(former) socialist countries”. In fact, in 2008, China has become the biggest importing partner of the Russian Federation, surpassing Germany. Also, the recent growth of Asia as a trading partner area is worth noting. During the Soviet era, at no time was the status of Asia, including China, so high.

9.7   Conclusion The author’s endeavour in this chapter differs from previous similar research in the following ways. First, the period covered in this study is very long—from 1897 to 2010. As a result, now we are able to provide the basis for considering many aspects of the economic development of Russia and the Soviet Union from a unified perspective. For example, it would be meaningful just to see how the major trading partners have changed in Imperial Russia, each Soviet period, and the Russian Federation. Next, with respect to trade statistics since 1918, we have made a time series of trade in one-digit and two-digit classifications of SITC, not missing any year. Now, we can trace the long-term trend of the composition of trading items in a unified classification method from 1918 to 2010. Doing so should be the basis of research on the relationship between domestic industry and foreign trade. Third, as a result of having created a time series in a unified way, we have been able to clarify some problems of Russian and Soviet statistics. One example is the “residual” problem. We could get a long-term time series of the “residual”, which had been only discussed fragmentally in the past, because we tried to re-compile the trade data according to the unified SITC system. As for the composition of trade items, the author found that the export of “inedible crude materials excluding fuels”, whose main item are “woods”, greatly increased at the time of the “establishment of the Stalin regime” and “from the German-Soviet pact to World War II”. It reveals the importance of forced labour in the period of Soviet industrialisation.

Appendix Appendix Tables are available at www.ier.hit-u.ac.jp/histatdb/projects/ view/2.

314 

A. UEGAKI

References Belkindas, M. and Ivanova, O. (1995). Statistika vneshnei torgovli v SSSR i gosudarstvakh–preemnikakh. Washington, DC: The World Bank. (FSGS) Federal’naia sluzhba gosudarstvennoi statistiki. (2015). Velikaia otechestvennaia voina: iubileinyi statisticheskii sbornik. Moscow: Rosstat. (Goskomstat Rossii) Gosudarstvennyi komitet Rossiiskoi Federatsii po statistike, Ministerstvo vneshnikh ekonomicheskikh sviazei Rossiiskoi Federatsii. (1993– 1994). Vneshnie ekonomicheskie sviazi Rossiiskoi Federatsii v 1992 g., v 1993 g., Statisticheskii sbornik. Moscow: Goskomstat RF. Gregory, P.  R. (1982). Russian National Income, 1985–1913. Cambridge: Cambridge U. P. Grossman, G. R. and Solberg, R. L. (1983). The Soviet Union’s Hard-Currency Balance of Payments and Creditworthiness in 1985. Santa Monica: The Rand Corporation. (GTK) Gosudarstvennyi tamozhennyi komitet Rossiiskoi Federatsii. (1995–2011). Tamozhennaia statistika vneshnei torgovli Rossiiskoi Federatsii. Godovoi sbornik, 1994 god, …, 2010 god. Moscow: Gosudarstvennyi tamozhennyi komitet Rossiiskoi Federatsii. Harrison, M. (1996). Accounting for War: Soviet Production, Employment, and the Defense Burden, 1940–1945. Cambridge: Cambridge U. P. Khromov, P. A. (1950). Ekonomicheskoe razvitie Rossii v XIX–XX vekakh, 1800– 1917. Moscow: Gosudarstvennoe izdatel’stvo politicheskoi literatury. Klepikov, S. A. (Ed.) (1924). Statisticheskii spravochnik po narodnomu khoziaistvu, vyp. 4, Finansy i vneshniaia torgovlia. St. Petersburg: Gosudarstvennoe izdatel’stvo. Marer, P. (1972). Soviet and East European Foreign Trade, 1946–1969: Statistical Compendium and Guide. Bloomington: Indiana U. P. Marrese, M. and Vaňous, J. (1983). Soviet Subsidization of Trade with Eastern Europe: A Soviet Perspective. Berkeley: University of California Press. (MVD) Tsentral’nyi statisticheskii komitet ministerstva vnutrennikh del. (1905– 1916). Ezhegodnik Rossii, 1904 g., …, 1915 g. St. Petersburg. (MVES) Ministerstvo vneshnikh ekonomicheskikh sviazei SSSR, Gosudarstvennyi komitet SSSR po statistike. (1989–1991). Vneshnie ekonomicheskie sviazi SSSR v 1988 g., …, 1990 g. Statisticheskii sbornik. Moscow: Finansy i statistika. (MVT) Ministerstvo vneshnei torgovli SSSR, Planovo-ekonomicheskoe upravlenie. (1957–1988). Vneshniaia torgovlia SSSR za 1956 god, …, 1987 god: statisticheskii obzor. Moscow: Vneshtorgizdat (or Finansy i statistika). (MVT GTU) Ministerstvo vneshnei torgovli SSSR, Glavnoe tamozhenoe upravlenie. (1960). Vneshniaia torgovlia SSSR za 1918–1940 gg. statisticheskii obzor. Moscow: Vneshtorgizdat.

9  FOREIGN TRADE 

315

(MVT PEU) Ministerstvo vneshnei torgovli SSSR, Planovo-ekonomicheskoe upravlenie. (1967). Vneshniaia torgovlia SSSR.  Statisticheskii sbornik, 1918– 1966. Moscow: Mezhdunarodnye otnosheniia. (MVT UEO) Ministerstvo Vneshnei Torgovli SSSR, Uchetno-ekonomicheskii otdel (1946). Vneshniaia torgovlia Soiuza SSR za period s 22-VI-1941 g. po 31-XII-1945 g. (Statisticheskii spravochnik po dannym operativnogo ucheta). Russian State Archive of the Economy (RGAE) F.413, O.12, D.10949. (NKVT) Narkomat vneshnei torgovli SSSR, Ministerstvo vneshnei torgovli SSSR. (1941–1945). Statisticheskii obzor torgovli SSSR za ianva 2’-dekabr’ 1941–1945 g. po tovaram (Statisticheskii otchet Narkomvneshtorg po eksportu i importu tovarov). RGAE F.413, O.13, D.3705; F.413, O.13, D.3965; F.413, O.13, D.4191; F.413, O.13, D.4407; F.413, O.13, D.4717. Simchera, V.  M. (2007). Razvitie ekonomiki Rossii za 100 let, 1900–2000: istoricheskie riady, vekovye trendy, institutsional’nye tsikhly. Moscow: Nauka. (SKSNG) Statisticheskii komitet Sodruzhestva nezavisimykh gosudarstv. (1992). Vneshneekonomicheskie sviazi v 1991 g. Statisticheskii sbornik. Moscow: Finansoviy inzhiniring. Tabata, S. (1994). The Anatomy of Russian Foreign Trade Statistics. Post-Soviet Geography, 35(8), 433–454. Treml, V. G. and Kostinsky, B. L. (1982). Domestic Value of Soviet Foreign Trade: Exports and Import in the 1972 Input-Output Table. Washington, DC: U.S. Department of Commerce and Bureau of Census. (TsSU SSSR) Tsentral’no statisticheskoe upravlenie SSSR. (1922). Statisticheskii sbornik za 1913–1917 gg. (vypusk vtoroi), SSSR Trudy tsentral’nogo statisticheskogo upravleniia, Vol. 7, No. 2, Moscow. Vinokur, A.  P. and Bakulin, S.  N. (Eds.) (1931). Vneshniaia torgovlia SSSR za period 1918–1927/28 g.g., Statisticheskii obzor. Moscow and Leningrad: Snabkoopgiz. Voznesenskii, A. P. and Voloshinskii, A. A. (Eds.) (1933). Vneshniaia torgovlia za pervuiu piatiletku (za period s 1928 po 1933 g.), Statisticheskii obzor. Moscow and Leningrad: Vneshtorgizdat.

CHAPTER 10

Supplement: Soviet Foreign Trade Earnings Revisited Masaaki Kuboniwa, Shinichiro Tabata, and Yasushi Nakamura

10.1   Introduction Soviet statistics authorities began to incorporate foreign trade earnings into national income, based on a unique formula, around 1960. As is known, the Soviet Union is the leader of Material Product System (MPS) on which former socialist economies constructed their national accounting systems. However, so far as we know, only the Soviet statistics office of all MPS countries employed a unique formula of foreign trade earnings arising from differential prices, which are described as “special forM. Kuboniwa Institute of Economic Research, Hitotsubashi University, Kunitachi, Tokyo, Japan e-mail: [email protected] S. Tabata Slavic-Eurasian Research Center, Hokkaido University, Sapporo, Japan e-mail: [email protected] Y. Nakamura (*) Graduate School of International Social Sciences, Yokohama National University, Yokohama, Japan e-mail: [email protected] © The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5_10

317

318 

M. KUBONIWA ET AL.

eign trade earnings (SFE)” (see Treml et al. 1972). It was not clear when this feature of foreign trade was introduced. Post-Soviet disclosure of archive materials, such as the Russian State Archive of the Economy (RGAE)’s Fond No. 1562 and CIS Statistics Committee (1998), suggests that it might have been introduced after 1960 because we can witness the fact that only foreign trade revenues at domestic prices were embedded into the Soviet national income as not net exports but net imports in the domestic prices for 1950–1957 (RGAE, F.1562, O.33, D.3107; F.1562, O.33s, D.3108; F.1562, O.41, D.513). In addition, the first Soviet input-­output table for 1959 was compiled in 1960. In this table, net domestic income on the expenditure side in the MPS framework clearly included net exports in domestic prices in place of net imports. However, Soviet net exports in domestic prices always suffered huge deficits irrespective of whether trade balances in foreign trade prices showed surpluses or deficits. The first Soviet input-output table revealed abnormal aspects of official national accounting of trade balances for the years 1950–1957 even though it was confidential. As the Soviet input-output table was entirely compiled in domestic prices, within this table, trade deficits in distorted domestic prices, subject to State budgetary needs, were inevitable. However, these huge deficits did not reflect actual trade balances. In order to resolve this drawback, Soviet authorities might have introduced a unique concept of SFE into the national accounting. However, as is shown in this paper, this compromise brought about another drawback. In this chapter, first we look at the Soviet unique formula in comparison of the so-called Burge and Geary system for trading gain or terms of trade (Burge and Geary 1957; the United Nations 1957; Silver and Mahdavy 1989). This comparison suggests that an origin of the Soviet formula must have been the Burge and Geary system despite differences in the definitions of variables. Then, we prove that the Soviet formula should have been corrected according to practices in other MPS countries as well as Western countries. Second, demonstrating our estimate of Soviet foreign trade earnings for 1966–1990 by using Soviet official published data on foreign trade and released inputoutput tables, we explore the implications of our estimates. Lastly, we provide an outlook at how present Russia has succeeded to the Soviet statistical and institutional legacies of foreign trade earnings in the national accounting.

10  SUPPLEMENT: SOVIET FOREIGN TRADE EARNINGS REVISITED 

319

10.2   Origin of Soviet Formula for Foreign Trade Earnings Soviet input-output tables were precisely compiled in domestic purchaser or producer prices in the framework of MPS (see, e.g. Treml 1989). Soviet 18-sector input-output tables (MINECON 1994) for 1966, 1972 and 1975–1990 were constructed in the current domestic purchaser prices. Some aggregated versions of these tables were published in the Soviet Statistics office’s house journal in 1991. As was stated, the first Soviet benchmark input-output table for 1959 was constructed in 1960, followed by the 1966 benchmark table and then 1972, 1977, 1982 and 1987 benchmark tables. In addition to benchmark tables with 111 endogenous sectors, Soviet statistics authorities constructed 18-sector small tables for 1975–1990 in current and constant prices. The sole source of official data on exports and imports in domestic prices, available then and now, may be Soviet input-output tables. In these tables, foreign trade and national income were treated in the MPS as follows:

D + NMP IO = C + RI + NI + G + L + Ed + M d ,

(10.1)

where D = capital depreciations, NMP IO = net nationalincome or net material product (NMP) on the production side or NMP produced in the MPS input-output table, C = final consumption, RI = replacement investment and capital repair, NI = new investment, G = other expenditures , including defence expenditures, L = losses, Ed = exports in domestic prices and M d = imports in domestic prices. NMP on the expenditure side or NMP used in the MPS input-output table is defined as follows:

IO NMPused = C + ( RI − D ) + NI + G + L + Ed − M d .

(10.2)

The term ( RI − D ) consists of capital depreciations in the final demand sectors, including consumption and other expenditures (defence expenditures), in Soviet input-output tables. Then, we have

IO NMP IO = NMPused .

(10.3)

320 

M. KUBONIWA ET AL.

This identity is strictly confirmed by the input-output tables. As all imported goods for consumption and investment, included in C, NI and G, are evaluated in domestic purchaser prices, Soviet input-output ­accounting looks perfect in the MPS framework. However, in the Soviet era, as in other countries, all foreign trade transactions were performed in not domestic prices but foreign trade prices. All revenues or rents arising from the differences between foreign trade prices and domestic prices were monopolized as implicit export taxes or import duties by the State, while in the input-output table no foreign trade revenues arising from price differentiation was recorded. What was added to NMP IO in order to correct this drawback was a special component in the official national income produced, NMP, that is to say, SFE. Thus, we have:

NMP = NMP IO + SFE.

(10.4)

This SFE was allocated to the trade and distribution sector in the official publications of Statistical Yearbooks, whereas it was not added to official NMP used. SFE from 1959 onwards is defined as follows:

SFE = ( E f − M f ) / Π − ( Ed − M d ) ,

(10.5)

where Π = Π e = E f / Ed if E f > M f , and Π = Π m = M f / M d if E f < M f . If Soviet actual trade balance is positive, it is adjusted by the export tax rate. If Soviet actual trade balance is negative, it is adjusted by the reciprocal of the import duty rate. If Soviet actual trade is zero ( E f = M f ), Eq. (10.5)

can be written as SFE = E − M d , which was exactly the Soviet definition of foreign trade earnings in national income accounting for 1950–1957.1 1  CMEA Statistics Commission (1986) provided Soviet formula Eq. (10.5) for special foreign trade earnings with our Eq. (10.6). See also Treml et al. (1972) and Becker (1972). We have not yet found any official data on trade balance in the domestic prices for 1958. Therefore, we cannot say whether SFE was introduced for the official 1958 national income. However, SFE was likely to be incorporated into the Soviet national income for 1959 as is shown by Treml et al. (1972). Their estimate of special foreign trade earnings for 1959 is still appropriate because they employed official trade balances in both foreign trade prices and domestic prices. The official trade balance in foreign trade prices, which they employed, is the officially revised version in light of the denomination as well as the new fixed foreign exchange rate introduced on January 1, 1961.

10  SUPPLEMENT: SOVIET FOREIGN TRADE EARNINGS REVISITED 

321

Equation (10.5), introduced by Soviet statistical authorities, is reduced to the Burge-Geary system for trading gain if we consider ( E f − M f ) as the

nominal trade balance, ( Ed − M d ) as the trade balance in real terms and Π

as the common deflator. In the Burge-Geary system, if the nominal trade balance is positive, Π is the export deflator. If the nominal trade balance is negative, Π should be the import deflator. Soviet authorities were likely intended to reflect Soviet actual trade balance in foreign trade prices in the national income as Burge and Geary intended to reflect the nominal trade balance in the national accounting in real terms. Considering these similarities and Soviet membership of the United Nations, we may state that Soviet authorities must have applied the Burge-Geary system to their formula. However, the Soviet formula concerns only nominal balances irrespective of whether they are in domestic or foreign trade prices. In particular, there is no rational reason to change an adjustment coefficient according to the sign of actual trade balance. This is also true for the Burge-Geary system (Silver and Mahdavy 1989), although the United Nations (1957) highly appreciated the Burge-Geary system. We also wonder if Soviet authorities strictly applied their formula in the national accounting, as is discussed in the next section. Anyhow, as the Soviet formula may not exactly reflect the actual State revenues from foreign trade, it may not be meaningful. Thus, even in the Council for Mutual Economic Assistance (CMEA) countries of the Soviet bloc, we could not find any follower of the Soviet formula. Chinese statistical authorities also employed MPS until the beginning of 1990s, while they did not follow the SFE formula. As was practised in other MPS countries, the adjustment coefficient Π in Eq. (10.5) should be always unity ( Π = 1). (See also Belkin & Geronimus 1978). Then, Eq. (10.5) can be written as:

SFE∗ = ( E f – Ed ) + ( M d – M f ) ,



(10.6)

The first term ( E f − Ed ) of the right-hand side of this equation shows

implicit export taxes, while the second term ( M d − M f ), shows implicit import duties. Smirnov (1978) also proposed this treatment. Thus, Eq. (10.1) corresponding to Eq. (10.4) is reformulated as:

D + NMP = C + RI + NI + G + L + E f − M f ,

(10.1′)

322 

M. KUBONIWA ET AL.

Central Intelligence Agency (CIA) rightly employed this equation for foreign trade in their estimation of Soviet gross national product (GNP), converting ( D + NMP ) and ( C + RI + NI + G + L ) to estimated GNP concepts (CIA 1983; JEC 1990). However, needless to state, CIA could not make use of Soviet official information of ( Ed − M d ) as well as D, G and L in their GNP estimation.2 It is also noteworthy to learn that information of official SFE was disclosed partially in the end of the Soviet Union and completely after its collapse (IMF et  al. 1991; PlanEcon 1992; CIS Statistics Committee 1998).

10.3   Estimation of Foreign Trade Earnings in the Soviet National Accounting Figure 10.1 demonstrates our estimate of SFE∗ and official SFE with official foreign trade balances in foreign trade prices and domestic prices. As can be seen, our estimate without any use of adjustment coefficients Π is very similar to the official SFE with a correlation coefficient of 0.9983. Figure 10.1 also shows that Treml and Kostinsky (1982) and CIA (1988) over-estimated SFE due to their over-estimation of trade deficits in domestic prices.3 The high similarity between our estimate SFE∗ and official SFE is not so surprising because both SFE∗ and SFE were dominated by not adjusted trade balance ( E f − M f ) in foreign trade prices but also unadjusted trade

2  Neither Soviet official national income nor CIA’s GNP estimates considered net receipt from abroad. Soviet national income means net domestic income in the material sphere. Also, CIA’s GNP provides GDP estimates. 3  We also calculated SFE∗∗, which is exactly based on the Soviet formula and official data on exports and imports, to verify Soviet accounts (see Table 10.1 displayed in the end of this chapter). We could not reach the exact figures of official SFE despite our use of official data on exports and imports in foreign trade prices and domestic prices. The similarity (correlation coefficient of 0.9984) between official SFE and this SFE∗∗ is just slightly greater than that between official SFE and SFE∗. Soviet authorities were likely to make further adjustments for official data on foreign trade revenues after their application of formula Eq. (10.5).

Calculated SFE∗∗ for 1975, with large deficits in foreign trade prices ( E f < M f ) , is largely different from official SFE for the year. This suggests that Soviet Authorities might have occasionally employed Π e in place of Π m irrespective of the sign of trade balance in foreign trade prices because the use of Π e for 1975 makes the difference smaller.

10  SUPPLEMENT: SOVIET FOREIGN TRADE EARNINGS REVISITED 

323

mln rubles 100,000 80,000 60,000 40,000 20,000 0 -20,000 -40,000 -60,000 -80,000 -100,000 Ef − Mf

Ed − Md

estimated SFE*

official SFE

Treml et al. Ed − Md

Treml et al. SFE

Fig. 10.1  Soviet foreign trade balances and revenues in current prices. Source: Table 10.1 shown in this chapter

imbalance ( M d − Ed ) in domestic prices. Figure 10.2 shows the share of net imports ( M d − Ed ) in domestic prices in foreign trade earnings SFE or SFE∗. As can be seen, this share was very high at the average share of 97% (for official SFE) and 95% (for our estimate) for 1966–1990. For the years with trade deficits in foreign trade prices, 1975–1976 and 1989–1990, the share was over 100%. What supported this abnormal system of foreign trade revenues were high implicit tax and duty rates for exports and imports as is demonstrated by Fig. 10.3. The overall import duty rate was raised from 2 times (100%) in 1966 to 2.3 times (130%) in 1972. It was lowered down to 1.7 times (70%) in 1975 according to increases in the overall export tax rate from 0.7 times (−30%; a subsidy) in 1972 to 1.1 times (10%) in 1975. From 1975 onwards the import duty rate was stabilized around 1.5 times (50%). On the other hand, the export tax rate was further raised up to about 2 times (100%) until 1985 and then lowered down to 1.3 times (30%) in

7957 12,734 24,034 28,023 33,255 35,670 42,426 49,635 57,108 63,165 67,891 74,386 72,664 68,285 68,142 67,115 68,742 60,757

7122 13,309 26,671 28,733 30,093 34,554 37,881 44,463 52,631 56,411 59,589 65,373 69,429 62,586 60,741 65,040 72,137 70,728

9581 18,121 22,524 23,161 25,574 25,804 26,798 27,739 28,530 34,500 35,676 36,912 36,642 39,737 44,350 47,196 49,536 45,634

14,423 31,324 44,723 48,172 50,944 53,592 57,582 68,449 76,203 84,139 87,711 89,790 97,202 95,132 94,731 97,627 109,108 114,097

5812 13,492 19,165 24,288 27,812 29,520 34,487 44,391 50,897 54,730 57,546 59,297 63,704 58,745 55,289 51,839 57,238 54,968

SFE

Official SFE

5677 12,628 19,562 24,301 28,533 28,904 35,329 45,882 52,150 56,393 60,337 61,890 63,794 61,094 57,782 52,506 56,177 58,492

SFE∗ 5848 11,850 17,777 23,821 27,802 28,595 33,655 43,600 49,910 53,328 56,397 57,350 62,191 58,712 55,197 53,449 54,436 52,378

SFE∗∗

Estimated Calculated using Eq. using Eq. (10.6) (Π = 1) (10.5)

7000 12,800 26,700 31,000 32,500 38,000 43,200 49,800 56,800 63,700 72,100 78,400 86,100 77,600 75,300 75,600

SFE Treml

285,496 431,607 500,046 530,820 558,245 586,698 606,324 635,785 666,223 713,700 746,848 777,107 788,032 800,181 816,821 859,315 917,694 991,910

GDP

Treml Overall et al. using GDP Eq. (10.5)

1.8 2.1 7.2 9.8 12.5 13.1 18.1 24.1 29.6 34.3 33.8 31.8 29.8 25.1 22.3 18.8 16.5 18.8

US$/bbl

Int’l oil price: 4-year mov. av.

Notes: Data in foreign trade prices: Published Soviet official data and Uegaki (2004). Data in domestic prices: MINECON (1994). Official SFE: CIS Statistics Committee (1998). SFE: Treml and Kostinsky (1982) and CIA (1988). SFE∗ and SFE∗∗: authors’ estimate and calculation. Overall GDP: authors’ extrapolation by using the proportion of CIA’s GNP estimate (CIA 1983 and JEC 1990) to the official overall net national income (NMP) in 1980 and 1982. We applied the 1980 proportion of 1.376 to GDP for 1966–1978, the 1982 proportion of 1.362 to GDP for 1983–1990 and the average proportion of 1.369 to GDP for 1981. International oil price (four-year moving average): Authors’ estimate using historical oil price data in BP (2016)

Sources: MINECON (1994), Soviet Yearbook of Foreign Trade (various years), Uegaki (2004), CIS Statistics Committee (1998), JEC (1990), CIA (1983, 1988), Treml et al. (1982), BP (2016) and authors’ estimates

1966 1972 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

Md

Ed

Mf

Ef

Imports in domestic prices

Exports in Imports in Exports in foreign foreign domestic trade prices trade prices prices

Table 10.1  Soviet Foreign Trade and Foreign Trade Earnings, 1966–1990 (current million rubles) 324  M. KUBONIWA ET AL.

10  SUPPLEMENT: SOVIET FOREIGN TRADE EARNINGS REVISITED 

325

% 130 120 110 100 90 80 70 60 50

1966 72

75

76

77

78

79

80

81

% Md − Ed in estimated SFE*

82

83

84

85

86

87

88

89

90

% Md − Ed in official SFE

Fig. 10.2  Share of net imports at domestic prices ( M d − Ed ) in SFE. Source: Table 10.1 shown in this chapter

1990. Movements of the overall export tax rate may well be explained by those of the oil and gas export tax rate, which was raised up to 5.8 times (480%) in 1981, noting the high correlation coefficient of 0.963 between the tax rate of overall exports and that of oil and gas exports. Figure 10.4 summarizes our estimation in terms of gross domestic product (GDP) share, using current GDP estimated by an exploration. The share of estimated foreign trade revenues SFE∗ in the overall GDP increased from 2% in 1966 to 8% in 1982–1985, and then fell down to about 6% in 1990. The SFE share of 8.1% in 1983 consisted of trade surplus in foreign trade prices, 1.1%, and trade deficits in domestic prices, 7%; as were the amounts of SFE∗, its share in GDP was also dominated by that of net imports in domestic prices. Amounts of SFE∗ as well as its share in overall GDP can well be explained by the changes in international prices. Exports of the oil and gas to the West were immediately reflected in SFE∗, while those to the member countries of the socialist international economic organization, CMEA, were reflected in SFE∗ with time lags of five years mainly due to the CMEA

326 

M. KUBONIWA ET AL.

export tax rate, import duty rate (times) 2.5

oil & gas export tax rate (times) 7.0 6.0

2.0

5.0 1.5

4.0 3.0

1.0

2.0 0.5

0.0

1.0

1966 72

75

76

77

78

export tax rate

79

80

81

82

83

import duty rate

84

85

86

87

88

89

90

0.0

oil & gas export tax rate (right)

Fig. 10.3  Soviet implicit tax rates for overall exports, imports and oil and gas exports. Source: Table 10.1 shown in this chapter

commitment that foreign trade oil prices should be determined based on their past five-year average level. Considering lags in Fig. 10.4, we display a series of the four-year moving average of international oil prices. Let us confirm our statement by simple regressions. For a small set of 16 samples during the period of 1975–1990, an estimator canonical cointegration regression (CCR) yields the following result:



sfe∗ =

0.506oil 4 + 0.040trend + 7.9; [ 42.6] [212] [29.4]

Adj. R 2 = 0.991,

(10.7)

where sfe∗, oil4 and trend denotes log (SFE∗), log (four-year moving average of international oil prices) and a linear trend, respectively. The figures in [ ] indicate t-statistic. Clearly, all of estimated coefficients and constant term are significant at the 1% probability level. Equation (10.7) suggests that a 10% increase in international oil prices (four-year moving average) led to a 5% increase in estimated Soviet foreign trade earnings, SFE∗, with the steady growth rate of 4%.

327

10  SUPPLEMENT: SOVIET FOREIGN TRADE EARNINGS REVISITED 

international oil price US$/bbl

% GDP 10 8

30.0

6 4 2

20.0

0 -2 -4

10.0

-6 -8 -10

1966 72

75

76

77

78

79

estimated SFE (% GDP) Ed − Md (% GDP)

80

81

82

83

84

85

86

87

88

89

90

0.0

Ef − Mf (% GDP) international oil price: 4-year moving average (right)

Fig. 10.4  GDP shares of Soviet foreign trade balances and revenues in current prices. Note: GDP is estimated by an exploration using CIA’s GNP estimates and Soviet official NMP in current prices for 1980 and 1982. Sources: Table  10.1 shown in this chapter along with authors’ estimates

Similarly, for the same small set of samples, using CCR, we have



sfe∗ =

0.506oil 4 + 0.526; [29.7] [11.7]

Adj. R 2 = 0.957,

(10.8)

where sfe∗ is defined as log ( SFE ∗ / GDP × 100 ). All of the estimated coefficients and constants are significant at the 1% probability level. Equation (10.8) demonstrates that a 10% increase in international oil prices (four-­ year moving average) resulted in a 4.5% increase in the share of estimated Soviet foreign trade earnings, SFE∗, in overall GDP without any underlying steady trend rate. It follows from Eqs. (10.7) and (10.8) that, indeed, movements of Soviet foreign trade earnings were largely exposed to the changes in international oil prices after oil shocks (for oil-poor countries) or oil windfalls (for oil-rich countries) in the 1970s.

328 

M. KUBONIWA ET AL.

Let us go to a sectoral analysis of foreign trade revenues arising from price differentials. We focus on the year 1982, which is the benchmark year for CIA’s estimate in JEC (1990). Appropriate data on exports and imports of non-ferrous metals in foreign trade prices from 1976 onwards are missing in the official sources while those in domestic prices are clearly shown in our input-output tables (see Table 10.2 displayed at the end of this chapter). Data on imports of the oil and gas industry for 1976–1985 and data on the coal and other fuels industry from 1976 onwards are missing in the official sources while those in domestic prices are also shown in the input-output data. As for fuels, JEC (1990) considered only aggregated fuel’s foreign trade in foreign trade prices. Here, we also consider disaggregated oil and gas exports in light of their importance for the Soviet economy without considering negligible oil and gas imports. Table 10.2  Soviet foreign trade by sector: 1982 (current million rubles) Exports

Industry  Non-ferrous metals  Ferrous metals  Oil & gas  Coal and other fuels  Electric power  Machinery  Chemicals  Wood, pulp and paper  Construction materials  Light industry  Food industry  Other industry Agriculture Other branches Residuals Total

Imports

Exports

Imports

In foreign trade prices

In domestic prices

62,479 Na 2765 31,287 1203 545 18,899 2348 1908 459 1253 726 352 470 216 734 63,165

33,736 1373 2963 7521 730 394 11,941 2304 2446 198 2684 943 238 121 644 0 34,500

49,443 Na 4022  

2481 0 20,991 4172 1521 659 5377 7513 304 6869 99 2403 56,411

75,209 1256 3282 323 163 0 21,531 6168 2596 721 21,842 16,132 1195 8497 434 0 84,139

Sources: JEC (1990), p. 116. Soviet Yearbook of Foreign Trade for 1982, Uegaki (2004), Chap. 9 of the book and MINECON (1994) Notes: Data in foreign trade prices: JEC (1990). A typo for other branches’ exports in JEC (1990) was corrected. Data on oil and gas, coal and other fuels and ferrous metals are from published Soviet official data and Uegaki (2004). Imports of electric power were regarded as zero, judging from its imports in domestic prices and published Soviet foreign trade data. Residuals are calculated by authors. n.a. = not available. Data in domestic prices: MINECON (1994)

10  SUPPLEMENT: SOVIET FOREIGN TRADE EARNINGS REVISITED 

329

Figure 10.5 shows sectoral sources of export taxes and import duties as well in 1982. 83% of export taxes was generated from the oil and gas exports, followed by 24% from the machinery industry. On the other hand, almost 60% of overall import duties arose from the light industry, followed by about 30% from the food industry, 7% from the chemical industry and 6% from the agriculture sector. Figure 10.6 presents sectoral rates of export taxes and import duties in 1982. The oil and gas industry showed the highest export tax rate, 4.2 times (320%), followed by the agriculture sector, 3.9 times (290%), the coal and other fuels sector, 1.65 times (65%) and the machinery sector, 1.58 times (58%). The light industry with 0.5 times ( −50% ), the wood, pulp and paper sector with 0.8 times ( −20% ), the food industry with 0.8 times ( −20% ) and the ferrous metal sector with 0.9 times ( −10% ) were subsidized for their exports. Excepting the other branches sector with the import duty rate of 4.4 times (340%), the light industry demonstrated the highest import duty rate, 4.1 times (310%), followed by the industry not elsewhere classified, 3.9 times (290%), the food industry, 2.1 times (110%), the wood, pulp % 90

export taxes (% of total)

import duties (% of total)

83

80 70 59

60 50 40

31

30

24

20 10 0 -10

0 -1

-3

2 0

1 0

2

7

4

0 -2

1 0

0 -5

-1

3

1

6

1 -1

Fig. 10.5  Sectoral sources of export taxes and import duties in 1982. Source: Table 10.2 shown in this chapter

330 

M. KUBONIWA ET AL. export tax rate

times 5.0

4.0

import duty rate

4.2

4.4

4.1

3.9

3.9

3.0 2.3 2.0

1.65

1.4

1.0

1.0 0.90.8

0.0

1.58

0.0

0.0

1.5 1.0

2.1

1.7 0.8

1.5 1.1 0.5

1.2

0.8 0.3

0.0

Fig. 10.6  Sectoral rates of export taxes and import duties in 1982. Source: Table 10.2 shown in this chapter

and paper industry, 1.7 times (70%) and the chemical industry, 1.5 times (50%). The ferrous metal industry with the import duty rate of 0.8 times ( −20% ) was subsidized for its imports. The machinery industry was the largest importer in the Soviet Union. Its export share in terms of foreign trade prices amounted to 37%, whereas that in domestic prices accounted for only 26.0% which was slightly less than the light industry’s export share of 26.4% in domestic prices. In contrast to the light industry, the average import duty of the machinery industry was merely 1.03 times (3%). Generally, most of the light industry products consist of consumer goods, while the machinery industry products consist of consumer durables (TV, etc.), production equipment and military goods as well. More disaggregated data would show import duty differentiations among consumer durables, production equipment and military goods. From the above observations we witness how the Soviet State “exploited” industrial producers for revenues from exports and private consumers for revenues from imports. The State purchased the oil and gas products from producers at low domestic prices and exported them at

10  SUPPLEMENT: SOVIET FOREIGN TRADE EARNINGS REVISITED 

331

much higher international prices, given the official foreign exchange rate. The State imported the light industry products at international prices and sold them to Soviet consumers at much higher domestic prices, given the official foreign exchange rate.

10.4   Concluding Remarks We pointed out a high probability that around 1960 Soviet statistics authorities applied the so-called Burge-Geary system for trading gain to their specific accounting of foreign trade revenues in the Soviet context. We clarified that this Soviet accounting of foreign trade was not meaningful. Then, demonstrating our estimate of Soviet foreign trade earnings by using Soviet official data on foreign trade and input-output tables, we explored the implications of our estimate. With evidence, we witnessed how Soviet State “exploited” producers and consumers through foreign trade. How has today’s Russia succeeded to the Soviet statistical and institutional legacies of foreign trade earnings in the national accounting? Immediately after the collapse of the Soviet Union, Russia liberalized most of domestic prices, foreign trade and the foreign exchange market. Along with Russia’s integration into the world markets, Russia abolished Soviet-­ type high import duty policy for consumer goods. National accounting was gradually converted from MPS to System of National Accounts (SNA). The Soviet formula of Eq. (10.5) lost its position. However, when we look at the key Russian industry, that is to say, the oil and gas industry, we find Soviet legacies in Russia’s practices of SNA. With regard to the oil and gas industry, foreign trade revenues arising from price differentiation, measured by ( E f − Ed ), the first term of Eq. (10.6), have been generated.

As was clarified by Kuboniwa et  al. (2005), these revenues have been incorporated into the trade and distribution sector in the national accounting as was in the Soviet Union. This method is not likely to visualize the key industry’s economic performance from the lens of sectoral GDP. As State monopoly of foreign trade was abolished, oil and gas foreign trade revenues have been co-shared between the federal government and the oil and gas giants such as Gasprom, Rosneft, Lukoil and Transneft.4 Export 4  Kuboniwa (2016), for instance, focuses on the oil and gas industry’s foreign trade revenues. In contrast, this paper attempts to clarify the general characteristics of Soviet national accounting practice of macro and sectoral foreign trade revenues, exploring the origin and background of Soviet national accounting.

332 

M. KUBONIWA ET AL.

taxes on oil and gas have not yet been replaced by corporate income taxes on the oil and gas industry. Price liberalization introduced in 1992 induced hyper-inflation, while governmental regulation on the domestic oil and gas prices remained. Thus, our historical study on Soviet foreign trade revenues would shed light on contemporary Russian oil dependency, national accounting system and tax policy.

References Becker, A. S. (1972). National Income Accounting in the USSR. In Treml, V. G. and Hardt, J.  P. (Eds.), Soviet Economic Statistics (pp.  69–119) Durham: Duke U. P. Belkin, V. & Geronimus, A. (Eds.) (1978). Income-Commodity Model and Balance of National Economy. Moscow: Nauka. BP. (2016). BP Statistical Review of World Energy 2015. London: BP. Burge, R. & Geary, R. (1957). Balancing of a System of Accounts in Real Terms, Paper presented to the 5th Conference of the International Association for Research in Income and Wealth, De Pietersburg (reproduced in the United Nation (1957)). Central Intelligence Agency of the USA (CIA). 1983. Soviet Gross National Product in Current Prices, 1960–80: A Research Paper, SOV 83-10037. Washington, DC: CIA. Central Intelligence Agency of the USA (CIA). 1988. USSR: Sharply Higher Budget Deficits Threaten Perestroyka: A Research Paper, SOV 88-1004U. Washington, DC: CIA. CMEA Statistics Commission. (1986). Basic Principles of Compilation Methodology of Statistical Balance of National Economy. Moscow. International Monetary Fund, World Bank, Organization for Economic Co-operation, and European Bank for Reconstruction and Development (IMF et al.). (1991). A Study of the Soviet Economy, Vol. 1. Washington, DC: IMF. Interstate Statistical Committee of the CIS. (1998). Soviet National Income Data for 1950–1990. Moscow: CIS. Joint Economic Committee, Congress of the USA (JEC). (1990). Measures of Soviet Gross National Product in 1982 Prices. Washington, DC: US Government Printing Office. Kuboniwa, M. (2016). Estimating GDP and Foreign Rents of the Oil and Gas Sector in USSR Then and Russia Now, Paper Presented to EACES Conference at Regensburg University, Regensburg, Germany on September 8, 2016 (Chapter 12 of the book). Kuboniwa, M., Tabata, S. & Ustinova, N. (2005). How Large is the Oil and Gas Sector of Russia? A Research Report. Eurasian Geography and Economics, 46(1), 68–76.

10  SUPPLEMENT: SOVIET FOREIGN TRADE EARNINGS REVISITED 

333

PlanEcon. (1992). PlanEcon Report 8 (11-12-13). Washington, DC: PlanEcon. Russian Ministry of Economy (MINECON). (1994). USSR Input-Output Tables for 1966, 1972 and 1975–1990. Moscow. Silver, M. & Mahdavy, K. (1989). The Measurement of a Nation’s Terms of Trade Effect and Real National Disposable Income within a National Accounting Framework. Journal of the Royal Statistical Society. Series A (Statistics in Society), 152(1), 87–107. Smirnov, A. (1978). Reflection of Foreign Trade in balance of National. In Belkin, V. & Geronimus, A. (Eds.), pp. 203–221. The United Nations. (1957). A System of Price and Quantity Indexes for National Accounts, E/CN.3/L.46. New York: The United Nations. Treml, V. & Kostinsky, B. (1982). Domestic Value of Soviet Foreign Trade: Exports and Imports in the 1972 Input-Output Table, US Dept. of Commerce, Foreign Economic Report, No. 20. Treml, V. (1989). The Most Recent Input-Output Table: A Milestone in Soviet Statistics. Soviet Economy, 5(4), 341–359. Treml, V., Gallik, D., Kostinsky, B., & Kruger, K. (1972). The Structure of the Soviet Economy: Analysis and Reconstruction of the 1966 Input-Output Table. New York: Praeger. Uegaki, A. (2004). Conversion of Soviet Foreign Trade Statistics to SITC rev.3, Hi-Stat Discussion Paper Series, No. 34, Institute of Economic Research, Hitotsubashi University.

CHAPTER 11

Gross Domestic Products Masaaki Kuboniwa, Yoshisada Shida, and Shinichiro Tabata 11.1   GDP Growth in Imperial Russia 11.1.1  Historical Background Sect. 11.1 aims to estimate GDP growth for the period from 1860, the year before the 1861 Emancipation Reform, to 1913, the last normal year before World War I. The Russian Empire was in the early stages of industrialization. The standard of living in Russia was lower than that in early-­modernized countries in Western Europe and North America, while it was probably comparable to that in Japan. Population growth and railway construction were the two driving factors of Russian economic growth after 1860. The population

M. Kuboniwa (*) Institute of Economic Research, Hitotsubashi University, Kunitachi, Tokyo, Japan e-mail: [email protected] Y. Shida Research Division, The Economic Research Institute for Northeast Asia, Niigata, Japan e-mail: [email protected] S. Tabata Slavic-Eurasian Research Center, Hokkaido University, Sapporo, Japan e-mail: [email protected] © The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5_11

335

336 

M. KUBONIWA ET AL.

grew from 74.1 million in 1860 to 170.9 million in 1913, thanks mostly to a high birth rate and a high natural population growth rate; the total railway length grew impressively, from 1600 km in 1860 to 70,000 km in 1913 and 80,000 km in 1916 (Khromov 1950). This rapid railway construction led the industry to grow at an average annual rate of 4.8%. The industrial growth for the period is generally characterized as “state capitalism” because it heavily relied on foreign capital, foreign technology, and state budget funds. In this section, we estimate that real GDP grew at an annual average rate of 2.5% for the entire period from 1860 to 1913; this led GDP per capita to grow at an annual average rate of 0.9%. For the first half of the period from 1860 to 1885, however, the average annual growth of real GDP was 1.2%, while that of the population was 1.6%. This implies that GDP per capita contracted at an annual average rate of 0.4%. For the second half of the period from 1885 to 1913, the growth record of Imperial Russia improved to an average annual rate of 3.5%. This indicated that GDP per capita grew at an annual average rate of 1.9%. The low growth performance during the first half of the period resulted in relatively low growth performance in the entire period. The GDP level of the Russian Empire was far lower than that of the USA but comparable to that of France in 1913. However, the level of GDP per capita in the Russian Empire was far behind those in Western Europe and the USA despite the moderate increase for the entire period from 1860 to 1913. We can conclude that the Russian Empire did not catch up with early-industrialized countries in terms of GDP per capita, and was thus still a developing economy. We should note here, however, that Japanese economic growth also was not outstanding in comparison with that of early industrializing countries in that period but was generally like that of Russia. A remarkable characteristic of the economic growth in the Russian Empire was high volatility of economic growth in comparison with both early-industrialized countries and Japan. This characterized Russian economic growth for the entire period from 1860 to 1913. The high volatility probably intensified the dissatisfaction of the Russian people, aristocrats, and intelligentsia with the imperial government despite the modest economic growth in the period. The volatile economic growth may have led the Russian intelligentsia to become interested in the Marxist theory of business cycle and economic crisis even though the Russian economy had not reached the development stage of machine-based large factory industry. Moreover, Russian intellectuals were influenced by Marxist movements and ideas because of

11  GROSS DOMESTIC PRODUCTS 

337

geographical proximity. The chaotic situation of World War I brought a mood of war-weariness among soldiers and officials, while the imperial family, aristocrats, and rich capitalists were known for their gossip, hedonistic lifestyles, and attitudes lacking a sense of crisis. In contrast, the Bolsheviks, that is, the Communist Party, had many intelligent and disciplined leaders with the firm ideology, such as Lenin and Trotsky. The Communist Party successfully drew support from the ordinary people, industrial workers, farmers, and soldiers, absorbing the general public’s dissatisfaction and rejecting parliamentary democracy. This resulted in the 1917 socialist revolution. 11.1.2   The Estimation Method The most important previous estimations of GDP and net national product (NNP) in the imperial period are Goldsmith (1961) and Gregory (1982). Goldsmith (1961) estimated GDP using the production approach, while Gregory (1982) estimated NNP using the expenditure approach. Goldsmith (1961) presented annual time series of industrial production and cultivation agriculture production from 1860 to 1913; however, he gave only some fragmental figures and general remarks on the GDP series. Gregory (1982) showed the annual time series of expended NNP; however, his estimation period was limited to 1885–1913. We estimate annual time series of real GDP for 1860–1913 taking Goldsmith’s production approach. Falkus’ (1968) seminal study on the gross value added by sector in 1913 gave the benchmark data for our estimation. Real GDP can be estimated via the production approach using (1) data on the total and sectoral breakdowns of nominal GDP for the benchmark year and (2) real growth rates by sector. Falkus (1968) gives the (1) data for 1913. It would have been better to include more benchmark years in the estimation period but it was difficult to compile gross value-added data by sector compatible with Falkus’ (1968) for other years because of the lack of relevant base data. Sect. 11.1.4 discusses the possible over- or underestimation bias caused by the one-point benchmark and shows that the bias is likely small. Another problem of Falkus’ (1968) data is that he excluded the “non-material services,” such as public, housing, education, financial, and insurance services. Falkus (1968) adopted the Soviet methodology that assumed the “material” production to already include the non-material services.1 This Soviet statistical 1

 Falkus (1968, p. 54). Falkus ignored non-material services, following Studenski (1958).

338 

M. KUBONIWA ET AL.

methodology, in turn, inherited the imperial statistical methodology that gave importance to the production of “material” goods.2 In contrast, Gregory (1982) estimated the net value added of services (Gregory 1982, Tables 3.4 and 3.6). Following Markevich and Harrison (2011), we set the net value added of services to 1790.4 million rubles, subtracting Falkus’ (1968) net value added of 18,475.6  million rubles from Gregory’s (1982) expended NNP of 20,266 million rubles.3 Finally, we obtained a gross value added of the service sector of 1884.6  million rubles, assuming that the fixed capital consumption was 5% of the gross value added in the service sector.4 Concerning the data on real growth rate by sector, we use Suhara’s estimations in Chaps. 5 and 6 for the main sectors of large industry and agriculture. We adopted shortcut methods for the other sectors (Goldsmith 1961): the growth rate of small industry was assumed to be two-thirds of that of large-enterprise industry, following Strumilin’s (1928) estimation based on the handicraft production data and the large-factory production data for 1887–1913.5 The growth rates of construction and of transportation and communication were assumed to be equal to those of large industry, considering that railway construction universally determined the growth in large-factory industry, construction, and transportation. Goldsmith (1961) assumed that the trade sector’s real annual growth rate was 2%; Maddison (2010) accepted this estimation. We, however, estimate the trade sector growth in our own way. First, we calculate the retail trade growth rates at 1913 prices for 1885–1913 from Gregory (1982, Table A, column 6). We assume that these growth rates applied to the total trade 2  Goldsmith (1961) also pointed out that the preference of material production in the Soviet statistical methodology stemmed from the statistical methodology of the Russian Empire. 3  We did not independently confirm that real GDP produced and real GDP expended match; Gregory (1982, Table 3.6) indicates that Falkus’ (1968) GDP produced and GDP expended almost match. 4  This figure was set to correspond to the consumption rate of fixed capital in the GDP of the entire Russian Empire. The final estimation results of service GDP changed little if we changed the figure from 1% to 10%. The simplified method, therefore, seems acceptable. Falkus’ (1968) ratios of consumption of fixed capital to the gross value added were 9.4%, 3.6%, and 2.6% for large industry, agriculture, and small industry, respectively. The figures for large industry were taken from TsSU (1921) and those for agriculture and small industry from Prokopovich (1931). 5  This assumption has the effect of decreasing the volatility more strongly than the assumption setting the same growth rates for both large and small industries. Under the assumption taken, the signs of the growth rates of large and small industries can be opposite.

11  GROSS DOMESTIC PRODUCTS 

339

sector.6 Second, we obtain a regression equation from the trade growth (trade) and industry growth (ind) for 1885–1913. Third, using the regression equation and the industry growth estimation for 1860–1885, we calculate the trade growth for 1860–1885. The service growth is estimated in a similar way. First, we calculate the service sector GDP growth as the weighted average of the growth rates of housing services; domestic services; medical services; the imperial government’s administration, education, health, and defense services; and the local governments’ administration, education, health, and defense services for 1885–1913 in Gregory (1982, Table 3.1, 2, 3d, 3e, 6, 7) and the housing service expenditure, domestic and medical services expenditure, and government expenditures in 1913 in Gregory (1982, Table 3.4, IIb, c, d). Then we regress the estimated service GDP growth (service) to the industry GDP growth (ind) for 1885–1913. Finally, the service GDP growth is estimated using the regression equation and the industry growth data for 1860–1885.7 The estimation using regression equations deviates from our principle that we use the actual data; however, it is inevitable due to the lack of relevant data. Estimations using the regression equation seem better than the simple method to assume a fixed growth rate for the entire period. Another option is to estimate GDP growth based only on industry and agriculture. This method is worth considering because industry and agriculture accounted for around 80% of the total GDP in 1913. We discuss the result of this method in Sect. 11.1.4. To calculate the GDP per capita, we need the population data. For the imperial Russian territory, the official population figures collected by Khromov (1950) are transformed into the mid-year figures for 1860–1913. For present Russia, we transformed the figures in Chap. 3 into the mid-­year  It may be possible to estimate trade using Strumilin’s (1963) data on employment and fixed capital in the trade sector and using the wages paid in large industry. 7  The two regression equations for 1886 to 1913 are as follows: 6



log ( trade ) = 0.761 log ( ind ) + 2.489;



log ( service ) = 0.535 log ( ind ) + 2.791.



The White heteroskedasticity-consistent t-values are 27.273 and 11.498 for the independent and constant terms, respectively, in the first equation. Adjusted R2 for the first equation is 0.956. The White heteroskedasticity-consistent t-values are 17.278 and 11.857 for the independent and constant terms, respectively, in the second equation. Adjusted R2 for the second equation is 0.885. All coefficients are significant at the 1% level.

340 

M. KUBONIWA ET AL.

figures for 1867–1913. To obtain population figures for the present Russian territory for 1860–1866, we regressed the figures of Chap. 3 for the present Russian territory (rus_present) to Khromov’s figures for the imperial Russian territory (rus_empire) for 1867–1913. Then, the population of the present Russian territory was calculated using the regression equation and Khromov’s (1950) population figures for the imperial Russian territory for 1860–1866. The size of GDP for the territory equivalent to present Russia’s in 1913 was calculated with the simple assumption that the GDP ratio is equal to the population ratio of the imperial and present Russian territories. The population figures were taken from the estimation in Chap. 3 for the Soviet Union, present Russia, and from Khromov (1950) for the Russian Empire. In 1913, the populations in the territories equivalent to that of the Soviet Union between World War I and World War II and that of present Russia were 90% and 55%, respectively, of the population of the Russian Empire in 1913. Further, we assume that GDP grew evenly in the entire territories of Russian Empire, the Soviet Union, and present Russia. This assumption is open to question; however, it seems acceptable considering limited data availability and the fact that the economic activities in the territory equivalent to the territory of present Russia were also dominant in the periods of the Empire and the Soviet Union. 11.1.3  Results Table 11.1 outlines the GDP estimation for the Russian Empire. Appendix Tables 11.1.1 and 11.1.2 include the detailed figures. Table 11.1 indicates that agriculture still accounted for more than the half of GDP in 1913. Appendix Table 11.1.1 indicates that urban and peasant small industry (Resmelo and Kustar) accounted for 30% of the industrial GDP in 1913. Russian industrialization advanced in the period after 1860; the Russian industrialization was, however, still insufficient in 1913. Fig. 11.1 compares our estimation and Gregory’s (1982). The Russian Empire tripled its GDP from 1860 to 1913; its growth accelerated after 1885, accompanied by violent economic cycles. Fig. 11.1 also suggests that our estimation using the production approach and Gregory’s (1982) estimation using the expenditure approach generally match. Table  11.2 shows the estimated GDP levels for the territory adjusted to that of the Russian Federation in the periods of Russian Empire, the Soviet Union, and present Russia. Fig. 11.2 outlines the estimated GDP per capita (see Appendix

341

11  GROSS DOMESTIC PRODUCTS 

Table 11.1  GDP in the Russian Empire estimated by the author, 1860–1913 Agriculture Industry Construction T & C At 1913 prices: million ruble 4332.1 530.5 100.6 4818.1 1188.7 251.3 10,629.4 4561.6 1142.0 Index (1913 GDP = 100) 1860 20.5 2.5 0.5 1885 22.8 5.6 1.2 1913 50.3 21.6 5.4 Average real annual growth rate: % 1860–1913 1.7 4.1 4.7 1860–1885 0.4 3.3 3.7 1885–1913 2.9 4.9 5.6

1860 1885 1913

Trade

Services

GDP

113.6 328.7 537.4 5942.8 283.6 587.6 862.6 7991.9 1288.7 1639.7 1884.6 21,146.0 0.5 1.3 6.1

1.6 2.8 7.8

2.5 4.1 8.9

28.1 37.8 100.0

4.7 3.7 5.6

3.1 2.4 3.7

2.4 1.9 2.8

2.5 1.2 3.5

Source: Appendix Table 11.1.1. See the text for the estimation method Note: T & C: Transportation and communications

 

*'3HVWLPDWHGE\WKHDXWKRU



113*UHJRU\

     



















Fig. 11.1  Real GDP of the Russian Empire, 1860–1913 (1913 = 100). Source: Appendix Table 11.1.1

342 

M. KUBONIWA ET AL.

Table 11.2  GDP sizes in the Russian Empire, the Soviet Union, and the Russian Federation At 1913 prices, million ruble

1860 1870 1880 1885 1890 1900 1913

Russian Empire

Soviet Union

Russian Federation

5942.8 7152.6 7002.8 7991.9 9253.3 14,441.1 21,146.0

5416.1 6518.7 6382.1 7283.5 8433.2 13,161.2 19,271.8

3272.7 3939.0 3856.5 4401.2 5095.9 7952.8 11,645.3

Source: Appendix Table 11.1.2

       

*'3HVWLPDWHGE\WKHDXWKRU



113*UHJRU\



















Fig. 11.2  Real GDP per capita in the Russian Empire, 1860–1913 (1913 = 100). Sources: Appendix Table 11.1.3. Gregory (1982)

Table 11.1.3 for details) that grew more slowly than the total GDP did. Sect. 11.1.5 discusses this in detail, comparing the GDP per capita growth in Russia and other countries. Table 11.3 compares our estimation and the previous estimations. We estimated that the average annual growth rates were 2.5% for 1860–1913

11  GROSS DOMESTIC PRODUCTS 

343

Table 11.3  Estimated economic growth rates of the Russian Empire Average annual growth rate (%) GDP Author Goldsmith 1860–1913 1860–1885 1885–1913

2.5 1.2 3.5

Population Gregory

2.5 2.5–3

3.4

1.6 1.6 1.6

GDP per capita Author

Goldsmith

0.8 −0.4 1.9

0.9

Gregory

1.8

Sources: Table 11.1, Appendix Table 11.1.2, Khromov (1950), Goldsmith (1961), Gregory (1982)

and 3.5% for 1885–1913, while Goldsmith (1961) estimated 2.5% for 1860–1913 and Gregory (1982) estimated 3.4% for 1885–1913. Our estimations are quite close to the previous ones, and our estimation results are robust for our method applied to the service GDP estimation. The weight of the service sector in the imperial Russian economy was small. An alternative method, which assumes that trade grew at a constant rate of 2% and the other services grew at the population growth rate, estimated an average annual GDP growth rate of 2.3% for 1860–1913, 1.4% for 1860–1913, and 3.2% for 1885–1913. The alternative estimation did not differ much from our main estimation results. Hereafter, we call the period from 1860–1885 the first half and the period from 1885–1913 the last half. 11.1.4  Checking Estimation Biases The method we applied is to estimate GDP backward for over 50 years using the value-added structure only in 1913. This implies that we assumed that the industrial structure in 1913, when the industrialization had already advanced, had changed little for the entire estimation period. As Gerschenkron pointed out, this may cause an underestimation bias (i.e., the Gerschenkron effect), which would be stronger because the beginning of the estimation period goes back farther than 1913. To check the intensity of the bias, we made an alternative estimation using alternative weights. Table 11.4 shows the results. Case A uses 82:18 for the ratio of agricultural value added to industrial value added in 1860 for the GDP estimation constant for the entire period. The ratio of 82:18 followed Goldsmith (1961). Case A showed an average annual GDP growth rate of 1.1% for the first half and 3.4% for the last half of the period. Case B

344 

M. KUBONIWA ET AL.

Table 11.4  Checking estimation biases Average annual growth rates (%) Benchmark

1860–1913 1860–1885 1885–1913

1860

1913

Chain

A

B

C

2.4 1.1 3.6

2.2 0.8 3.4

2.3 1.1 3.4

Source: Calculated by the author Note: Series A : the agriculture to industry ratio, 82:18, was used. Series B : the agriculture to industry ratio, 70:30, was used, Series C : Series A for 1860–1885 and series B for 1885–1913 were linked by a chain method

uses a 70 to 30 ratio of agriculture to industry in 1913 as the constant weight for the entire period. Case B showed a growth rate of 0.8% for the first half and 3.4% for the last half of the period. Judging from the assumption of the weight, Case A seems more reliable for the first half and Case B for the last half. Following this judgment, we calculate GDP growth for the entire period using Case A for the first half and Case B for the last half (Case C ). Case C showed an average annual GDP growth rate of 2.3% for the entire period. Case C and our estimation results almost match. A bias might exist for the first half; however, it seems insignificant for the entire estimation period. 11.1.5  International Comparisons We need to convert the currencies to compare the GDP of the Russian Empire with those of other countries. The following three cases are considered because there is no one-for-all way to convert currencies. (1) At 1913 US dollars. Russia and other major economies used the gold standard in 1913. Conversions using 1913 US dollars, therefore, can give relatively reliable figures. (2) At Geary–Khamis PPP (Purchasing Power Parity)-based 1990 international US dollars (GK 1990 US dollars). GK 1990 US dollars is often used for international comparisons. We use the GK 1990 US dollars figures for 1913 and 1990 as calculated by Maddison (2010).

11  GROSS DOMESTIC PRODUCTS 

345

(3) At PPP-based 2011 international US dollars (ICP 2011 US dollars). The ICP 2011 US dollars is based on the results of the International Comparison Project (ICP) of the World Bank. We calculated the figures at 2011 US dollars for 1913 using the figures in 1990 at 2011 US dollars and the growth rates that Maddison (2010) had estimated. Table 11.5 shows the results using the exchange rates in 1913. The total GDP of the Russian Empire tripled from 1860 to 1913, surpassing the total GDP of France and becoming three times larger than that of Japan. However, the total GDP of the Russian Empire was still onefourth of that of the USA. It is also noteworthy that the total GDP of the territory corresponding to that of present Russia was reduced to about two times that of Japan. The GDP per capita of the Russian Empire was US$62, which was higher than that of Japan (US$52); however, it was about one-fourth of France’s and Sweden’s and one-eighth of the USA’s. These results suggest that economic growth was driven by population growth in the Russian Empire and productivity remained Table 11.5  International comparison of GDP at 1913 US dollars GDP, million

Russia  Russian Empire  Soviet Union  Present Russia USA Japan France Sweden

GDP per capita

1860

1870

1885

1913

1860

1870

1885

1913

3031 2763 1669 5308 – 4665 288

3649 3325 2009 7529 916 4765 357

4077 3715 2245 14,236 1193 5797 493

10,787 9831 5940 39,600 2617 9550 1089

41 – 40 167 – 125 75

43 – 42 187 28 124 86

37 – 38 250 38 146 106

62 62 62 407 51 230 194

Source: Calculated by the author Notes: Russia: Appendix Tables 11.1.1, 11.1.2, 11.1.3. Population for the present Russian territory in 1860 is estimated using the population for present Russia from 1867 to 1990 estimated in Chap. 3 and that for the Russian Empire from 1867 to 1990 in Khromov (1950). USA: US Census Bureau (1975) for the nominal GDP in 1913. Maddison (2010) for the GDP growth rates and population for 1860–1913. Japan: Ohkawa et al. (1974) for the nominal GDP in 1913 and the GDP growth rates from 1885 to 1913. Maddison (2010) for the GDP growth rates for 1860 to 1885. France: Maddison (1995, Table B-2) for the nominal GDP in 1913. Sweden: Edvinsson (2015) for the nominal GDP in 1913. Maddison (2010) for the GDP growth rates and the population. Edvinsson (2016) for the exchange rates of Russian, Japanese, French, and Swedish currencies against the US dollar in 1913

346 

M. KUBONIWA ET AL.

low. The l­ atecomers of Russia and Japan to capitalism continued to grow generally in parallel in the period but ranked low in the international comparison; the US economic growth was outstanding. The upper panel of Table  11.6 summarizes the results using the GK 1990 US dollars. Russian Empire and Present Russia 1 show the figures for the Soviet Union in Maddison (2010) and those adjusted to the territory corresponding to the Russian Federation (see Table 11.2). Present Russia 2 shows the estimation using the GDP figure of present Russia in 1990 given by Maddison (2010) and our estimated growth rates for 1913–1990 in Sect. 11.2. Table 11.6  GDP of the Russian Empire in international comparison (Maddison and the World Bank methods) 1860

1870

1885

1913

GDP at GK 1990 US million dollar Russia  Russian Empire  Soviet Union  Present Russia 1  Present Russia 2 USA Japan France Sweden Germany UK

1870

1885

1913

GDP per capita at GK 1990 US dollar

71,649

86,235

96,354

254,947

970

1015

877

1474

65,299

78,592

87,814

232,351

–

–

–

1474

39,458

47,490

53,063

1,40,401

956

999

906

1474

20,992

25,265

28,230

74,695

484

506

459

747

69,346 – 70,577 4570 59,096 81,760

98,374 25,393 72,100 5659 72,149 100,180

1,85,992 33,052 87,705 7812 99,917 128,706

5,17,383 71,653 1,44,489 17,273 237,332 224,618

2178 – 1892 1195 1639 2830

2445 737 1876 1359 1839 3190

3270 860 2207 1675 2216 3574

5301 1387 3485 3073 3648 4921

GDP at ICP 2011 US million dollar Present Russia 2 USA Japan

1860

GDP per capita at ICP 2011 US dollar

56,252

67,704

75,648

200,161

1362

1424

1292

2101

110,778 –

157,149 38,709

297,116 50,384

826,502 109,227

3479 –

3905 1124

5224 1311

8468 2114

Source: Calculated by the author Notes: Russia: Maddison (2010) for the GDP figure for the Soviet Union in 1913. The GDP figures of the Russian Empire and the present Russia were calculated by the ratios in Table 11.2. Appendix Tables 11.1.2 and 11.1.3 for the GDP growth rates. Figures for the present Russia 2 are from the average of Estimations A and B in the next section, and the figures in 1913 at international dollars (1990 GK dollars or ICP 2011 dollars). The others: Table 11.5 and http://data.worldbank.org/products/wdi

11  GROSS DOMESTIC PRODUCTS 

347

The result using the data in GK 1990 US dollars suggests that the total GDP of the Russian Empire was a bit less than that of the UK, a bit more than that of the USA and France, and far larger than that of Germany, in 1860. The total GDP of the Russian Empire became half that of the USA but far larger than those of the UK, France, and Germany, in 1913. In comparison with Japan, the total GDP of the Russian Empire had been four times larger than that of Japan throughout the period, except in 1885. The GDP per capita of the Russian Empire had been a bit higher than that of Japan through the period as well; however, it was far smaller than those of the USA, the UK, Germany, France, and Sweden. In contrast, Present Russia 2 indicates that the GDP per capita was 748 in GK 1990 US dollars in 1913. This was lower than half that of Japan. The total GDP was, accordingly, about half that in Present Russia 1. As these results suggest, it seems inappropriate to use the data in GK 1990 US dollars estimated by Maddison (2010) for GDP estimation for the following two reasons. First, Maddison (2010) converted the GDP figures in rubles into GK 1990 US dollars based on the ruble to US dollar exchange rate in 1990, that is, in the period of confusion. The ruble to US dollar rates had increased during the period from 1986 to 1990 because the exchange rates of major European currencies to US dollars also increased in accordance with the Plaza Accord in 1985. The ruble appreciation was appropriate in terms of foreign trade; however, it was questionable in terms of the currency’s domestic credibility. The ruble lost credibility after the official disclosure of government deficits; the sharp depreciation in the tourist and black market rates of rubles to US dollars supported it. It is highly questionable to regard the official ruble to US dollar rate in 1990 as an economically proper exchange rate. Second, our estimation showed the growth rates to be about two times higher than those of Maddison (2010) for 1913–1990. The growth rates in our estimation do not seem overestimated, since they are still one-tenth of the official growth rates in the period. The lower panel of Table  11.6 shows the Russian GDP figures for 1913–1990 calculated using the GDP figures at ICP 2011 US dollars for 1990 and the growth rates from our estimation. The GDP figures for Japan and the USA are calculated using the GDP figures at ICP 2011 for 1990 and the growth rates estimated by Maddison (2010). The results indicate that the GDP per capita of the Russian Empire is about 2000 ICP 2011 US dollars. This is almost equal to that of Japan and one-fourth that of the USA in 1913. The GDP level of the Russian Empire in 1913 is two times that of Japan and one-fourth that of the USA. The results seem plausible.

348 

M. KUBONIWA ET AL.

Table 11.7  International comparison of Russian economic growth rates GDP growth rates (%)

GDP per capita growth rates (%)

1860–1913 1860–1885 1885–1913 1860–1913 1860–1885 1885–1913 Russia USA Japan France Germany Italy UK Mean of Europe 12

2.4 3.9 2.4 1.4 2.7 1.8 1.9 2.2

1.2 4.0 1.8 0.9 2.1 1.0 1.8 1.9

3.5 3.7 2.8 1.8 3.1 2.4 2.0 2.5

0.8 1.7 1.5 1.2 1.5 1.1 1.0 1.4

−0.4 1.6 1.0 0.6 1.2 0.3 0.9 1.1

1.9 1.7 1.7 1.6 1.8 1.7 1.1 1.6

Source: Calculated by the author Notes: Appendix Table 11.1.3 for Russia. Maddison (2010) for the others. Japan started from 1870. The 1860 figures for Italy were calculated from the GDP per capita in Maddison Project (2013) and the population in Maddison (2010). Europe 12 includes France, Germany, Italy, UK, Netherland, Austria, Belgium, Denmark, Finland, Norway, Sweden, and Switzerland

Table 11.7 compares the average annual growth rate of the total GDP and GDP per capita in the Russian Empire with those in other countries in the period from 1860 to 1913. In terms of growth in the total GDP, the Russian Empire grew more slowly than Germany but more quickly than Japan and the other European countries did. In contrast, in terms of GDP per capita, the Russian Empire grew more slowly than the other countries through the entire period; the high growth in the last half of the period could not compensate for the slow growth in the first half. Goldsmith (1961) concluded that GDP per capita grew in the Russian Empire as quickly as in European countries for 1860 to 1913; however, that conclusion was not supported. Table 11.8 shows an international growth comparison using new estimation data for Japan. The new estimation indicates that Japan’s GDP per capita at GK 1990 US dollars is higher than that of the Russian Empire in 1874 and 1909. The new figure is higher by 30% than the old figure for 1874. Because the GDP per capita in the benchmark year remains, this implies that Japanese growth rates decreased. The average annual growth rate of Japan in the new estimation is 1.1%, which is still higher than the 0.6% of the Russian Empire but about one-half that of the USA and almost equal to the growth rates averaged for the 12 European countries.

11  GROSS DOMESTIC PRODUCTS 

349

Table 11.8  International comparison of GDP per capita using the new estimates for Japan GDP per capita at GK 1990 USD

Japan, new Japan, Maddison Russian Empire USA Europe 12

Annual growth rate (%)

1874

1909

1874–1909

1013 756 1110 2527 2278

1467 1301 1359 5017 3375

1.1 1.6 0.6 2.0 1.1

Source: Calculated by the author Notes: Russia: the figures are calculated using the growth rates estimated by the author and the figure for 1913 in Maddison (2010). Japan, new: Settsu et al. (2016) and Saito and Takahashi (2016). The others: calculated from Maddison (2010)

11.1.6  Outlook: Growth and Volatility As discussed previously, high volatility characterized the economic growth of the Russian Empire (Fig.  11.3). Short periods of unusually high and low economic growth, such as more than 20% positive or negative annual growth rates, were often observed. Table 11.9 measures volatility as the standard deviation of gross growth rates in logarithms. The  %    



















Fig. 11.3  Volatility in GDP growth rates of the Russian Empire, 1861–1913. Source: Appendix Table 11.1.2

350 

M. KUBONIWA ET AL.

Table 11.9  International comparison of GDP volatility 1860–1913 Mean Russia, the author 0.024 Russia, Gregory USA 0.039 Japan 0.024 France 0.014 Germany 0.026 Italy 0.017 UK 0.019 Europe 12, mean Ratios to Russia, the author  USA  Japan  Europe 12, mean

1860–1885

1885–1913

S.D.

Mean

S.D.

0.129

0.012

0.153

0.045 0.049 0.047 0.024 0.039 0.021 0.030

0.042 0.018 0.009 0.021 0.010 0.018

0.034 0.028 0.059 0.029 0.036 0.018 0.019

2.8 2.6 4.2

Mean 0.035 0.034 0.037 0.028 0.018 0.031 0.024 0.020

4.5 5.4 8.2

S.D. 0.105 0.078 0.051 0.057 0.032 0.016 0.042 0.024 0.024 2.1 1.8 4.4

Sources: Calculated from Appendix Table 11.1.2 and Maddison (2010) Notes: The USA and Japan started in 1870. See the note of Table 11.7 for Europe 12. Volatility is defined as the standard deviation (S.D.) of log transformed gross growth rates: log( GDPt / GDPt−1 )

Russian volatility was 2.3 times higher than that of Japan, 2.4 times higher than that of the USA, and 4 times higher than that of Western Europe for the period from 1860 to 1913. In the first half of the period, the Russian standard deviation was five, four, and eight times higher than those of the USA, Japan, and Western Europe, respectively. In the last half of the period, the Russian volatility seemed a bit reduced; however, it was still two, two, and four times higher than those of the USA, Japan, and Western Europe, respectively. The Russian volatility calculated from Gregory (1982) for the last half of the period was lower than that calculated from our estimation, but it was still high by the international standard. Fig. 11.4 visualizes it. Table 11.10 compares volatilities in the growth of agriculture and industry in the Russian Empire and Japan for 1885–1913. The table shows that the high volatility in agriculture, which was two times higher than that in the industry, mostly accounted for the high volatility in the whole economy of the Russian Empire. In the first half of the period, the difference between the volatilities in the two sectors was not outstanding; in the last half, however, the volatility in agriculture

11  GROSS DOMESTIC PRODUCTS 

351

 

86 $



*URZWKUDWH



*HUPDQ\

6ZLW]HUODQG



5XVVLD

-DSDQ



8.



,WDO\ )UDQFH

   















6WDQGDUG'HYLDWLRQ

Fig. 11.4  Volatility and growth rates, 1860–1913. Source: Table 11.9 Table 11.10  Volatility by sector in the Russian Empire and Japan GDP

Agriculture

Mining and Industry Large Factories

Russia  1860–1913   Mean   S.D.  1860–1885   Mean   S.D.  1885–1913   Mean   S.D. Japan  1885–1913   Mean   S.D. Russia to Japan  1985–1913, S.D.

0.024 0.129

0.017 0.200

0.041 0.088

0.046 0.105

0.012 0.153

0.004 0.216

0.032 0.116

0.037 0.140

0.035 0.105

0.028 0.187

0.048 0.052

0.054 0.060

0.028 0.058

0.016 0.101

0.060 0.053

1.81

1.86

0.98

Source: Calculated by the author Notes: Calculated from Appendix Table 11.1.2 for Russia and Ohkawa et al. (1974) for Japan. Volatility is defined as the standard deviation of the log-transformed growth rates: log( GDPt / GDPt−1 )

352 

M. KUBONIWA ET AL.

became three times greater than that in the industry because volatility in the industry was halved. In the last half of the period, the volatilities in industry were similar in the Russian Empire and Japan, while the volatility in agriculture in Russia was almost two times greater than that in Japan. Measuring volatility by standard deviation can lead to the overestimation of volatility if an increasing trend exists in the economic growth rates. To avoid this problem, we calculated the standard deviation of the deviations from the trend. The log-transformed GDP series were regressed to the trend term, assuming the first-order autoregression process in the error term. This implies that we assume a “bent (kinked)” trend line. Table 11.11 shows the result. The result also identified a high volatility in Russia by the international standard. The Russian volatility is 2 to 2.5 times higher than those of other countries for 1860–1913 are. In the first half of the period, the Russian volatility was three to five times higher than those of the other countries were. In the last half, Russian volatility decreased, though it was still two times higher than that of the other countries. It is notable that the ratio of the volatility of the Russian Empire to that in Western Europe showed a different pattern here. The ratio was 3.5:1 in the first half of the period; it increased to 4.1:1 in the last half. Our finding of high volatility in economic growth in the Russian Empire is robust.8 8  Another factor that may influence the volatility is small industry. Small industry might grow countercyclically to the growth in large industry, and thus, the “true” volatility might have been lower. However, there is no reliable data on the small industry growth. Fragmental data on small industry seem to suggest that the inclusion of small industry may increase the volatility. Gukhman and Strumilin (Gukhman 1927; Kaufman 1962, Table 6) estimated the gross nominal production of large and small industries using the tax data. The year, total industry, large industry, and small industry are given below (in million rubles). (Year) Total Large Small (1900) 5463 3761 1702 (1901) 5322 3906 1416 (1902) 5413 4029 1384 (1903) 5408 4162 1246 (1904) 5637 4217 1420 (1905) 5527 4230 1297 (1906) 5294 4136 1158 (1907) 5836 4621 1215 (1908) 6105 4800 1305 (1909) 6337 4982 1355 (1910) 6429 4977 1452

11  GROSS DOMESTIC PRODUCTS 

353

Table 11.11  Another international comparison of GDP volatility of the Russian Empire

Russia, the author Russia, Gregory USA Japan France Germany Italy UK Europe 12 Ratios of Russia, the author, to  USA  Japan  Europe 12

1860–1913

1860–1885

1885–1913

0.093

0.102

0.041 0.038 0.023 0.038 0.020 0.028 0.039

0.032 0.020 0.026 0.021 0.017 0.028 0.044

0.091 0.067 0.041 0.039 0.014 0.039 0.022 0.021 0.028

2.3 2.5 3.4

3.2 5.0 3.6

2.2 2.4 4.3

Source: Calculated by the author Notes: Volatility is defined in this table as the deviation from the trend. The trend is estimated from

(

)

log ( GDP ) = a1 log GDP( −1) + a2 ∗ trend + C. Russia: Calculated from Appendix Table 11.1.2. The others: Calculated from Maddison (2010). The USA and Japan start in 1870.

The unusually high volatility in economic growth probably fomented dissatisfaction and antagonism against the state capitalism of the Russian Empire. World War I and the political and social scandals added to the prevailing mood of discontent. This ultimately resulted in the socialist revolution in 1917, and a long period of economic growth under the authoritarian regime denying democracy and freedom continued until 1991. (1911) 6931 5451 1480 (1912) 7900 6194 1706 (1913) 8832 6882 1950 Production data are in million rubles. The average annual growth rates were 3.8%, 4.8%, and 1.1% for total, large industry, and handicraft, respectively. The signs of growth rates were different between large and small industries only in 1901, 1902, 1903, and 1905 because of slumps in small industry. The nominal growth rates of small industry were around one-fifth of those of large industry; the standard deviations in the log-transformed growth rates were 0.047, 0.106, and 0.054 for large industry, small industry, and the total industry, respectively. Thus, the volatility increases if small industry is included. This result does not provide a clear conclusion because the data are nominal gross production data. It nevertheless indicates that more data and further investigation are necessary before it can be accepted that small industry moved countercyclically to large industry.

354 

M. KUBONIWA ET AL.

11.2   GDP Growth of the Russian Republic in the Soviet Period 11.2.1  Challenges Sect. 11.2 aims to estimate the real GDP of the Russian Republic, in the Soviet Union for 1917–1990. The Russian Republic’s territory generally overlaps with the territory of present Russia after 1990.9 The period from 1913 to 1922 was the first period of deterioration or confusion caused by the first systemic transformation in the twentieth century for Russia: World War I started in 1914, the socialist revolution occurred in 1917, and the Russian Civil War and war communism followed that. During that period, the Russian GDP was almost halved. After the first period, a market-­oriented New Economic Policy enabled the economy to recover. Stalinist industrialization through the FiveYear Plan and collectivization characterized the following inter-war period from 1928 to 1940. The 1950s were a recovery period after the mass destruction of war, and then the stagnant years continued until the collapse of the Soviet regime in 1991. The decrease in industrial production after the collapse was larger than the decreases caused by the Great Depression in the capitalist countries in the 1930s and comparable to the decrease after the socialist revolution in 1917. The transition to a market economy also dramatically changed the statistical systems, from the Material Product System (MPS) to the System of National Accounts (SNA). This systemic change also made it easier to access archival materials, most of which were kept secret. All of these changes renewed interest in and increased the possibility of quantitative analysis of the economic developments in the Union Republics constituting the Soviet Union. 11.2.2  Outline of the Estimation Method Literature directly addressing the estimation of GDP in the Russian Republic is scarce. Kuboniwa (1996, 1997), Kuboniwa, and Ponomarenko (2000), and Rosefielde and Kuboniwa (2003) estimated the GDP of the Russian Federation for 1960–1990. We basically use their estimation for 9  Russian GDP includes GDP of the Crimean Republic from the second quarter of 2014 and after. This means the territory of the Russian Republic returned to the territory before the cession of the Crimean Republic to Ukraine in 1954.

11  GROSS DOMESTIC PRODUCTS 

355

1960–1990. For the period before 1960, we estimate real GDP using the production approach. The production approach requires (1) data on nominal GDP (value added) and its structure by sector for benchmark year(s) and (2) data on real growth rates by sector. The following explains the data used in this section in detail. (1) Nominal GDP and its sectoral structure For the period from 1913 to 1961, the nominal GDP of the Russian Republic in 1961 was used as the benchmark nominal GDP. We estimated the 1961 nominal GDP based on the nominal Net Material Product (NMP). NMP is understood as the net national income generated or net national products produced in the material production sphere. The reason for the choice of 1961 is simple: it is difficult to estimate the nominal GDP for earlier years due to lack of relevant data. However, using one benchmark year at the end of a period of nearly 50 years may cause an underestimation bias. We tried to evaluate the intensity of the bias by simulation. For the period from 1961 to 1990, we used estimations of the nominal GDP of the Russian Republic for 1961, 1965, 1970, 1975, 1980, and 1985 as benchmark years and employed the chain method to link the benchmark GDP figures using the estimated sectoral growth rates. We estimated two additional GDP series using each of the sectoral value-­added data in the 1982 and 1990 input–output table as a single benchmark. Mainly to identify the underestimation bias for the early period, another GDP series was estimated using nominal GDP in 1913 as a single benchmark. The nominal GDP and its sectoral structure for 1913 were estimated based on the GDP of the entire Soviet Union in 1913 by Falkus (1968) and the service production estimated by Markevich and Harrison (2011). (2) Sectoral real growth rates For the period from 1928 to 1990, the GDP series (Estimation A ) was calculated using the real growth rates of industry and the real growth rates of agriculture estimated by Suhara (see Chaps. 5 and 6). Another GDP series (Estimation B ) was estimated using the CIS (Commonwealth of Independent States) statistical committee’s official agricultural production index at the 1983 constant price and the industry growth rates estimated by Kuboniwa and Ponomarenko (2000) for 1960–1990. For both A and B series, the real growth rates of services are newly estimated for 1928–1990, as explained later in this section.

356 

M. KUBONIWA ET AL.

For the period from 1913 to 1928, we used the real sectoral growth rates of industry, construction, and other sectors for the Soviet Union estimated by Markevich and Harrison (2011). For real growth in agriculture in the said period, Suhara’s estimation lacks a real agricultural production index for 1914–1939. We used a simple method to adjust the available figures of the agricultural production index for the entire Soviet Union in 1917, 1920–1922, and 1926–1939 to the Russian Republic by considering that the production indices were 126 and 141 (100 in the year 1913) in the Russian Republic and the Soviet Union, respectively, in 1940. The missing figures were interpolated. 11.2.3  Conversion from MPS to SNA From the late 1950s to 1990, the Soviet Union and its Union Republics used the MPS economic accounting methodology that was fundamentally different from the SNA. The MPS divides all economic activity into two classes: material production and non-material services. The former is productive, and thus, constitutes produced national income (i.e., NMP), while the latter only uses the national income created by material production. Material production included almost all of industry, agriculture, and construction. The parts of transportation and communication services that were used for material production were included in material production, while the other parts, such as passenger transportation and personal communication, were included in the non-material services, and thus, did not constitute national income. Retail and wholesale trade (material and equipment supply and procurement of agricultural products) and restaurant and catering were included in material production. Additionally, foreign trade taxes were included in material production as a part of the value-added of foreign trade. Non-material services included four major sectors: (1) health, education, culture, and social security; (2) housing and communal services; (3) science and research; and (4) banking, insurance, and administration. Sector (2) included the non-productive transportation and communication services. Balance tables (supply and use) of non-material services and household consumption table of goods and services were compiled; those statistical materials included data on the value-added component of non-material services and the consumption of non-material services by households. If the material production and non-material services are combined, they are equivalent to the economic activities that SNA includes. The data on

11  GROSS DOMESTIC PRODUCTS 

357

non-­material services were, however, compiled separately from the data on material production without considering the relation between them. It was the methodological foundation of the MPS to separate material production and non-material services. NMP is the key indicator of the MPS.  To estimate the GDP of the Soviet Union and its Union Republics, we need to adjust the NMP data to the GDP data. The main differences in NMP and GDP are as follows: (1) GDP includes the value-added component to produce non-­material services, while NMP does not. (2) GDP includes the consumption of fixed capital (capital depreciation), while NMP does not. (3) Material production generally needs to use non-material services. The SNA counts them as intermediate inputs. NMP does not count them as intermediate inputs but includes them in the total net value added. From these, the formula to convert NMP data into GDP data is given as follows: GDP = NMP + consumption of fixed capital in material production −non-material services used for material production + the value-added component in non-material services. Following this equation, we first need to collect data on the consumption of fixed capital. The MPS provided data on the consumption of fixed capital both in material production and non-material services; however, some adjustments and amendments are necessary. Second, we need to know the amount of non-material service input to material production. However, we omitted this from our estimation because the data are unavailable, and the amount must be negligible. Third, we need to estimate the value-added component in non-material services; the details of the estimation method are explained in the next sub-section (See also Kuboniwa ed. 2000). 11.2.4   Estimation of Nominal Value Added and GDP The data on NMP and Gross Social Product (GSP) published in the official statistical yearbook served as the basic data for GDP estimation. GSP includes intermediate inputs, consumption of fixed capital, and NMP. Data on retail sales and household expenditures on non-material services were

358 

M. KUBONIWA ET AL.

used to estimate the non-public consumption part of non-material service production. Government expenditure data on non-material services, excluding military expenditures, were used to estimate the public consumption part of non-material services. For military service, only data on the entire Soviet Union are available. We used the official Soviet military expenditure data for 1989 and 1990, input–output data (final demand for “other expenditures”) and CIA (Central Intelligence Agency) estimations. More accurate data on m ­ ilitary expenditures in the Russian Republic are necessary; that problem, however, remains unsolved. In relation to military expenditures, it should be noted that it is methodologically difficult to extract the parts used only for the Russian Republic from the total public non-material services of the Soviet Union, such as military services. We used the ratios of population, space, and intermediate inputs in the government service production of the Russian Republic to those of the Soviet Union to calculate the public services used in the Russian Republic. An assumption that all public services produced in the Russian Republic were consumed in the Russian Republic was also used for alternative estimations. This assumption means, for example, that the Soviet Army in the Russian Republic served only the Russian Republic, and there was no inter-republican flow of public services. One other difficulty in separating the Russian Republic from the Soviet Union is foreign trade. If we treat the Russian Republic as an independent economic entity, the foreign trade of the Russian Republic should include the Russian part of the Soviet foreign trade and the inter-republican trade of Russia and the other Union Republics. It is methodologically difficult to separate the Russian part of the foreign trade. Moreover, data on inter-­ republican trade were unavailable except for 1987. Net exports of the Russian Republic were, therefore, calculated as the difference between the total production and the total consumption of the Russian Republic. The estimated net export series are valued at foreign trade prices, and thus, include  Special foreign trade earnings (SFE) (see Chap. 12). Only the archive materials, the 18-sector input–output tables for 1980–1990 and the 111-sector input–output table for 1987, give official foreign trade data in domestic prices. These data were used to check the robustness of the estimated net exports of the Russian Republic. Gross value added according to the SNA definition was calculated by subtracting the intermediate inputs from the gross output (i.e., GSP). The archive materials of the Russian statistical agency showed the data on material intermediate inputs in material production and non-material

11  GROSS DOMESTIC PRODUCTS 

359

services and on the consumption of fixed capital. Additionally, nominal expenditure GDP series were estimated using the data on household consumption of goods and non-material services and on state budget expenditures, fixed capital stock and investment, and inventory investment in archival materials of the Russian statistical agency. Nominal GDP is also calculated as follows: nominal output – intermediate inputs + net taxes on products. Nominal output for the Russian Republic is defined as the sum of material production and non-material services. The MPS data show the amount of material production. Non-material services are calculated as the sum of (A) non-material services excluding collectively consumed public services, (B) collectively consumed public services, and (C) own-use services. The non-­ material services excluding collectively consumed public services (A) are the sum of (1) market and non-market personally consumed services for households and (2) housing services. Market services for households can be estimated using official data on the income and outlay balance of households and the shares of non-market services in the total household expenditures, which were officially published from 1985 to 1990. For the other years, the share was extrapolated. The non-market personal services for households, including healthcare, sports, social security, education, culture, and the arts were calculated as the sum of expenditures of government and non-profit organizations on personal services. Housing services were calculated as the sum of costs of material intermediates, wages, and amortization of housing stocks. The data for these calculations were available in archive materials of the statistical agency. The collectively consumed public service (B) was the sum of the government expenditures on collectively consumed public services (excluding military services) and on military services. Own-use services (C) represent the housing services of proprietary houses. These were estimated using the official data on amortization of proprietary houses and on the amount of construction materials purchased by households. The household expenditures on construction materials were calculated using the share of construction materials in total retail sales in 1970, 1980, 1986, and 1987. The shares for the other years were extrapolated. The result showed that households purchased about a half of the construction materials. Intermediate inputs for material production and non-market personal services were estimated, basically, by subtracting the consumption of fixed capital from the total material inputs; the data were available in the archive material of the state statistical agency. The intermediate inputs for

360 

M. KUBONIWA ET AL.

collectively consumed public services were estimated as the sum of material inputs of public service organizations and intermediate inputs for defense. The archive materials of the state statistical agency show only the data on the former. The latter were estimated based on the officially published data on military expenditure structure for 1989 and 1990. The ­intermediate inputs for own-consumption services were assumed equal to the household expenditures on construction materials for current usage. NMP data published by the state statistical agency included data on net taxes on products, defined as the balance of taxes and subsidies on products, and data on net import taxes, which were a part of special foreign trade earnings. Summing up all of these original and processed data, we obtained the nominal produced value-added series at basic prices estimated using the production approach. Note that the relation between GDP at market prices and at basic prices is defined as follows: GDP at market prices = Value added at basic prices + net taxes on products Value added atfactor prices = Value added at basic prices – net other taxeson production. Because the Soviet statistical methodology did not include the concepts of “other taxes and subsidies on production,” those amounts were fixed, and thus, did not vary with quantities and amounts of goods and services; the formula can be simplified:

Value added at factor prices = Value added at basic prices.

Table 11.12 shows the estimated nominal GDP by sector both at market prices and at basic prices of the Russian Republic for 1961, 1982, and 1990. The GDP at market prices includes net taxes on products and foreign trade taxes, while the GDP at basic prices excludes them. The GDP at market prices, therefore, is much larger than that at basic prices in sectors such as industry and trade, where those taxes are high. Note that the transportation and communication sector includes the non-material service part; accordingly, the service sector excludes that part in the table. Hereafter, the “service sector” in this chapter means non-material services

11  GROSS DOMESTIC PRODUCTS 

361

Table 11.12  Nominal GDP of the Russian Republic, 1961–1990 (Billion current ruble, %) Agriculture Industry Construction T & Trade Other Services GDP C material branches Nominal value at market prices  1961 17.2 57.2 9.6 10.0 9.4 1.6  1982 40.5 203.7 36.0 38.0 54.5 2.4  1990 101.5 241.5 65.0 59.2 77.4 7.6  1990 official Nominal values at basic prices (GDP is gross value-added at basic prices)  1961 17.2 36.8 9.6 10.2 5.8 1.6  1982 40.5 158.6 36.0 38.6 21.9 2.4  1990 101.5 230.7 65.0 60.2 33.0 7.6  1990 99.6 228.1 57.3 60.2 37.6 7.6 Official Share (GDP at market prices, %)  1961 13.9 46.5 7.8 8.1 7.6 1.3  1982 9.7 48.8 8.6 9.1 13.0 0.6  1990 16.7 39.8 10.7 9.7 12.7 1.2 Share (GDP at basic prices, %)  1961 17.3 37.1 9.7 10.3 5.9 1.6  1982 11.9 46.6 10.6 11.4 6.4 0.7  1990 18.4 41.8 11.8 10.9 6.0 1.4  1990 16.6 38.0 9.6 10.0 6.3 1.3 official Reference  GDP (GNP) of the Soviet Union in 1982 estimated by CIA   at 109.2 361.1 47.8 65.7 32.8 2.9 market prices  Shares (%) 15.3 50.6 6.7 9.2 4.6 0.4   at 133.4 209.3 50.6 67.3 41.9 1.7 adjusted factor prices  Shares (%) 20.6 32.4 7.8 10.4 6.5 0.3

18.2 42.6 55.3

123.1 417.8 607.3 644.2

18.0 42.0 54.3 109.2

99.2 340.2 552.2 599.6

14.8 10.2 9.1

100.0 100.0 100.0

18.2 12.3 9.8 18.2

100.0 100.0 100.0 100.0

92.8

713.7

13.0 142.4

100.0 646.7

22.0

100.0

(continued)

362 

M. KUBONIWA ET AL.

Table 11.12 (continued) (Billion current ruble, %) Agriculture Industry Construction T & Trade Other Services GDP C material branches  GDP (GNP) of the Soviet Union in 1982 estimated by the author   at 75.3 393.7 59.5 64.8 37.9 3.5 market prices  Shares (%) 10.6 55.2 8.3 9.1 5.3 0.5   at 97.9 244.9 59.5 64.8 37.7 3.5 adjusted factor prices  Shares (%) 16.7 41.7 10.1 11.0 6.4 0.6

78.9

713.7

11.0 78.9

100.0 587.3

13.4

100.0

Sources: Appendix Tables 11.2.1 and 11.2.2, JEC (1990, Table  5, Table A-1, Table C-2). Interstate Statistical Committee of the CIS (1996, Part 2. p. 147) for the figures of 1990 Official. Chapter 10 for the Soviet Union being based on MINECON (1994) Notes: The official figures excluded 31  billion rubles of FISIM (Financial Intermediation Services Indirectly Measured) from the service value-added. For the figures of the Soviet Union, the food subsidies of 49 billion rubles are transferred to the agriculture, and the estimated foreign trade taxes of 2 billion rubles and 54.5 billion rubles were added to the agriculture and the mining and industry, respectively. The value-added of the transportation and communications at market prices is that estimated by CIA excluding the indirect taxes, and the value-added at basic prices is that at market prices plus the transportation and communication subsidies. The value-added of service is the sum of the value-added of the public service consumption sector, the consumption of fixed capital in the military sector, and the military personnel services estimated by CIA

excluding non-material transportation and communication services; the “service sector” does not include material services.10 The service output in 1990 was two times larger at market prices than at basic prices. This difference reflects the problem of how much subsidies, which mostly financed the service production, were valueadded. Table 11.13 shows the 1982 nominal GDP of the Soviet Union  Appendix Tables 11.2.1 and 11.2.2 show all data on the nominal value-added structure. The former shows the series at market prices and the latter at basic prices. 10

11  GROSS DOMESTIC PRODUCTS 

363

Table 11.13  Net taxes on industrial products in the Russian Republic (Shares in GDP, %) Net taxes on products

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

12.1 12.4 10.8 7.1 7.0 5.6 3.6 3.3 1.4 1.9 1.8

Turnover taxes

Subsidies

Food subsidies

15.7 16.0 14.7 14.3 13.6 12.3 11.0 11.7 11.2 11.6 11.6

−3.6 −3.6 −3.9 −7.2 −6.8 −6.7 −7.4 −10.3 −9.8 −9.7 −9.9

−2.9 −2.9 −3.1 −6.5 −6.0 −6.0 −6.4 −9.3 −8.8 −8.7 −9.1

Sources: Appendix Table 11.2.6, Goskomstat Rossii (1992)

estimated by the CIA (JEC 1990). The CIA’s “established prices” are conceptually identical to market prices, while “adjusted factor prices” are not factor cost prices. “Adjusted factor prices” excluded net taxes on products and included profits distributed proportionally to the capital stocks. “Adjusted factor prices” may serve well to identify unbalanced economic growth under the unbalanced relative prices proportional; however, they cannot give the actual picture of economic growth. Table 11.14 shows how heavily subsidies and taxes on products impacted economic growth. In the Soviet period, taxes on products were mostly “turnover taxes,” and subsidies on products were “compensations of price differences.” Turnover taxes were levied mainly on light industry products for households, and compensations for price differences were given to food producers to reduce the retail prices of food products. At the beginning of the 1980s, the amount of compensation for price differences was far greater than that of turnover taxes. Then, the spread got smaller and smaller and finally was inverted by a large margin in 1990. The tax system that intended to collect taxes by taxing (relatively luxury) light-industry consumption by households and return them to households by subsidizing food consumption became completely out of the point at the end of the Soviet regime.

364 

M. KUBONIWA ET AL.

Table 11.14  GDP structure at market prices adjusted to the sectors receiving the subsidies (Billion current ruble, %) Agriculture Industry Construction T & Trade Other C material branches Russia  1982  1990 Shares (%)  1982  1990 Soviet Union  1982  Shares (%)

Services

GDP

27.7 46.0

216.5 296.9

36.0 65.0

38.0 59.2

54.5 77.4

2.4 7.6

42.6 55.3

417.8 607.3

6.6 7.5

51.8 48.1

8.6 10.5

9.1 9.7

13.0 5.3

0.6 1.2

10.2 17.7

100.0 100.0

73.4 10.3

339.2 47.5

59.5 8.3

64.8 9.1

92.6 13.0

3.5 0.5

80.6 11.3

713.7 100.0

Notes and Sources: Appendix Tables 11.2.1 and 11.2.3, Kuboniwa (1992) for Russia. The food subsidies of 12.8 billion rubles in 1982 and 18.3 billion rubles in 1990, respectively, were transferred to the agriculture. Appendix Table 11.2.1 and the material on the trade taxes of the Interstate Statistics Committee of the CIS for the Soviet Union. The trade includes the official trade taxes of 54.7 billion rubles The difference of the Soviet GDP in Tables 11.12 and 11.14 of 1.756 billion rubles is the difference in the official and estimated trade taxes. The estimated trade taxes include those on the agriculture and the industry sectors only.

A closer look at the Soviet system of subsidies shows that the subsidies were given to the food industry so that the food industry could buy agricultural products with high prices. The intermediate inputs of the food industry were increased accordingly, while the recorded valueadded of the food industry was decreased by the amount of the subsidies following the statistical methodology. If we record the subsidies given to the food industry as the subsidies, then we can obtain more accurate amounts of value added in the agriculture and food industries. Table 11.14 shows the result. Comparing Tables 11.12 and 11.14, the amount of value added of agriculture decreases sharply, and in contrast, that of the food industry increases.

11  GROSS DOMESTIC PRODUCTS 

365

11.2.5  Sectoral Growth Rates (1) Agriculture and industry for 1928–1990 From Suhara (Chap. 5), we calculate the real growth rates of agriculture for the entire period, although the annual figures are missing for the period from 1928 to 1939. The real growth rates of industry, construction, and others were the real growth rates in Markevich and Harrison (2011) from 1913 to 1928. Estimation A used the growth rates of industry estimated by Suhara (Chap. 6) for 1928–1990, while Estimation B uses the growth rates estimated by Suhara (Chap. 6) for 1928–1959 and those estimated by Kuboniwa and Ponomarenko (2000) for 1960–1990. There is no decisive reason to determine which is better, Estimation A or B . Chapters 5 and 6 explain the details of Suhara’s estimation method. The rest of this section, therefore, explains the estimation method of industrial real growth in Kuboniwa and Ponomarenko (2000). Kuboniwa and Ponomarenko (2000) used the official, fully disaggregated input–output tables of the Russian Republic for 1972, 1977, 1982, and 1987 in their estimation. The 96 sub-sectors of industry are aggregated into a single industry sector. For some sub-sectors, the sub-sectors are aggregated to the 11 sub-sectors at the first stage following the industry classification used for 18 sector input–output tables. First, the weights of the sub-sectors in the aggregated industry sector were calculated as their value-added shares in the total industry value added for 1972, 1977, 1982, and 1987 based on the data on NMP and consumption of fixed capital by sector in the input– output tables. The weights for the years between those listed above were extrapolated and interpolated using the weights of the benchmark years. Second, the 117 products representing the outputs of the sub-sectors were selected; their outputs are available in physical terms. The output series at constant prices were also used for the 4 sub-sectors, such as precision machinery, in the 96 sub-sectors. It is methodologically difficult to measure the outputs of those 4 sub-sectors in physical terms. Those 4 sub-­ sectors accounted for 3.5% of the total value added of machinery sector and 15% of that of the timber and pulp sector. Third, the output growth rates of the 96 sub-sectors were assumed to be the growth rate of each of the sub-sectors. For the 24 sub-sectors that had more than 2 representative products, their growth rates were set to the growth rates of those products averaged with the weights of output values at 1997 prices.

366 

M. KUBONIWA ET AL.

Fourth, the growth rates of 9 sub-sectors were calculated using the real growth rates of non-aggregated sectors and their shares. The real growth rates of non-ferrous metallurgy and unclassified industry were not calculated due to the total lack of relevant data. The CIA index of real expenditure on armament was used for the real growth of other machinery, that is, military production; the other machinery sector accounted for about 21% of the total value added of machinery. The real growth of the other 23 sub-sectors of industry for which any output data in real terms were unavailable was assumed to be equal to real growth of the total industry; the value added of these 23 sub-sectors was excluded from the total value added of industry. Fig. 11.5 shows the real outputs of industry in the official series and the series estimated by the CIA in addition to those in Estimations A and B . The real growth in both Estimations A and B is far lower than that in the official series and close to that in the CIA series. Estimation A indicates the lowest real growth. Estimation B and the CIA series show smooth growth paths, while Estimation A indicates relatively large ups and downs around 1978. 

(VWLPDWLRQ$ (VWLPDWLRQ% 2IILFLDO &,$6RYLHW8QLRQ

   













Fig. 11.5  Growth in Russian industry, 1960–1990 (1960 = 100). Sources: Suhara (Chap. 6) for Estimation A . Kuboniwa and Ponomarenko (2000) for Estimation B . The Interstate Statistical Committee of the CIS (1998) for Official data. JEC (1990) for CIA (Soviet Union)

11  GROSS DOMESTIC PRODUCTS 

367

(2) Construction The real growth of construction output was assumed to be real growth in construction work, the official data of which are available from 1928 to 1990 (see Appendix Table 11.2.5 for detailed data). Fig. 11.6 shows the official series of real construction work and real construction NMP. The figure indicates that construction NMP and construction work increased in parallel from 1956 to the mid-1970s. After that, the construction NMP grew much higher than the construction work. It is highly probable that the official construction NMP series had an upward bias. (3) Transportation and communication The real growth rates of transportation for the Russian Republic for 1913–1927 were assumed to be equal to those estimated by Markevich   

&RQVWUXFWLRQZRUN &RQVWUXFWLRQQDWLRQDOLQFRPH

     























 







Fig. 11.6  Official construction work volume and national income, 1928–1990 (1960  =  100). Sources: Appendix Table 11.2.5 and the Interstate Statistical Committee of the CIS (1998)

368 

M. KUBONIWA ET AL.

and Harrison (2011) for the Soviet Union. Their estimation has problems, such as being based only on railway transportation, ignoring maritime transportation completely, and aggregating passenger transportation in person-km units and freight transportation in ton-km units, with a 1-to-1 weight. However, we used their estimation because our own estimation method explained in the following text could give only data for four years in the period due to lack of relevant data. The real growth of ­communication was assumed to be equal to that of transportation for the period from 1913 to 1928. In the period before 1956, few official data on transportation are available for the Russian Republic in comparison with the Soviet Union. Therefore, the real growth rates of transportation for 1928–1956 were estimated in the way to break down the Soviet Union total to the Russian Republic’s with the Russian Republic’s share in the total transportation service. The official figures of the Russian Republic’s share are available for 1940, 1950, and 1952; the shares for the years missing from the official data are extrapolated. The shares fell between 56% and 58% (see Appendix Table 11.2.5 for details). The years from 1928 to 1950 are still missing in the figures, so the real growth rates were extrapolated again from the available real growth rates. The aggregation of freight transportation in ton­km units and passenger transportation in person-km units was done using their value-added ratio of 71.4 to 28.6 in the Russian 1991 input–output table. The value-added generated by communications was small relative to that of transportation. The real growth in communications was assumed to be equal to that in transportation. Fig. 11.7 shows the estimated real growth in freight and passenger transportation as well as the official real NMP of freight transportation from 1950 to 1990. The official NMP grew slightly faster than the estimated freight and passenger transportation did. (4) Trade Real growth in trade was assumed to be equal to that in official retail sales for 1928–1990. Wholesale trade existed in the forms of material and equipment supply and of procurement of agricultural products; however, these were dropped from the estimation because their value added was far smaller than that of the retail trade. Real growth in foreign trade was also dropped because it was difficult to estimate foreign trade value-added including foreign trade taxes, except those in oil and gas trade.

11  GROSS DOMESTIC PRODUCTS 

369

        

9ROXPH























1DWLRQDOLQFRPHJRRGVWUDQVSRUWDWLRQ

Fig. 11.7 Transportation volume and national income, 1950–1990 (1960  =  100). Sources: Appendix Table 11.2.5 and the Interstate Statistical Committee of the CIS (1998)

Fig. 11.8 shows the real retail trade sales in Russia after 1928 and the trade NMP in Russia after 1956 (see Appendix Table 11.2.7 for details of the retail trade sales series). The NMP grew more quickly after the mid-­ 1970s and then became inverted during the end period of the Soviet regime. Our use of the real retail trade sales for the GDP estimation partly accounts for the fact that our estimated GDP growth was higher than the official NMP growth. This implies that the official statistics underestimated the Russian real growth, and thus, overestimated the recession in the end period of the Soviet regime. A similar underestimation occurred in the transition period from 1991 to 1994. The state statistical agency and the World Bank revised GDP growth rates upward, giving more weight to the retail trade sales statistics and applying a method like ours (Goskomstat Rossii and World Bank 1995a; Kuboniwa 1997). (5) Services For 1913–1928, the real growth rates estimated by Markevich and Harrison (2011) for the Soviet Union were used for the Russian Republic. Their estimation was based on the employment series in the service sector.

370 

M. KUBONIWA ET AL.

 

5HWDLOVDOHV



7UDGHQDWLRQDO LQFRPH

     























 







Fig. 11.8  Retail sales volume and national income, 1928–1990 (1960 = 100). Sources: Appendix Table 11.2.5, and the Interstate Statistical Committee of the CIS (1998)

We also used this method to measure real growth in service value-added based on employment numbers in the service sector. This estimation method is often used for the construction of historical series for service production other than transportation and communication. The method assumes that the productivity in service production was constant. This assumption is inappropriate for a growing and rapidly modernizing economy, such as the Chinese economy after 1978. However, this estimation method is appropriate for the Russian Republic in the Soviet period, when the development of non-material services never had priority. For some years from 1928 to 1975, service employment data are missing; after 1958, an annual average figure of enrolled workers in the service sector exists. The missing figures were extrapolated. Fig. 11.9 compares our real service growth series and the CIA’s. Both series moved similarly for 1950–1980. After that, the CIA series shows faster growth than our estimation does.

11  GROSS DOMESTIC PRODUCTS 

371

     























(VWLPDWHGE\WKHDXWKRU &,$IRU6RYLHW8QLRQ

Fig. 11.9  Growth in service GDP, 1950–1990 (1950 = 100). Sources: Appendix Table 11.2.5 and JEC (1990)

11.2.6  GDP Growth Rates of the Russian Republic This section discusses the estimation results of the real GDP growth rates shown in Table 11.15. Figures 11.10 and 11.11 visualize the results. The real GDP growth rates were the weighted average of the sectoral growth rates that Sect. 11.2.4 discussed in detail with the weights of the sectoral shares of value added. There are several GDP growth series according to several different assumptions of the weights. Appendix Tables 11.2.1 and 11.2.2 show the details of the estimation. The baseline estimation is the growth rate series of nominal value added by sector at basic prices that were linked by the fixed weight method before 1961 and by the chain method after 1961. In this estimation, growth rates are supposed to be equal between GDP at basic prices and at market prices on the assumption of a fixed proportion of real net taxes on products to real value added at basic prices. We also assumed that the value added of the other (material) sector grew in parallel with the growth in total GDP at basic prices. These assumptions followed the estimation of the CIA. Estimation A in Table  11.15 uses the growth rates of industry estimated by Suhara (Chap. 5) for the period after 1960, while Estimation B uses those estimated by Kuboniwa and Ponomarenko (2000) for the same

Chain, basic prices   Estimate B Chain, basic prices Mean of estimates A and B Other estimates   Estimate A Chain, market prices   Estimate B Chain, market prices   Estimate A 1990 official basic prices   Estimate B 1990 official basic prices   Estimate A 1990 adjusted market prices   Estimate B 1990 adjusted market prices   Estimate A 1982 basic prices   Estimate B 1982 basic prices   Estimate A 1982 market prices

Base line   Estimate A

Periods 4.0 4.1 4.1 4.2 4.3 3.8 3.9 4.4 4.5 4.1 4.2 4.2

3.6 3.7 3.6 3.7 3.9 3.4 3.4 3.9 4.0 3.7 3.8 3.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

0.7

2.6

2.4

2.5

2.6

2.7

2.6

2.7

2.5

2.5

2.5

2.5

2.5

7.5

7.2

7.5

7.9

8.3

6.2

6.5

7.3

7.5

6.8

6.7

6.9

4.2

4.4

4.1

4.6

4.2

4.1

3.8

4.5

4.2

4.2

4.3

4.0

7.4

7.1

7.2

7.5

7.5

6.4

6.6

7.2

7.2

7.0

7.0

7.0

(continued)

3.2

3.6

3.1

3.6

3.1

3.3

2.9

3.6

3.2

3.2

3.4

3.1

1913–1990 1917–1990 1913–1928 1917–1928 1928–1940 1950–1990 1950–1960 1960–1990

Table 11.15  Estimates of GDP growth rate in the Russian Republic, 1913–1990

372  M. KUBONIWA ET AL.

4.2 7.0

3.7

2.8

4.3

3.8

0.0 0.6

2.7

2.6

2.9

0.7 0.7

2.5

0.7

5.1

7.4

8.4

7.1

3.5

4.1

5.2

6.0

5.2

3.5 3.8

7.1 9.6

7.3

4.2 5.9

4.5

2.9

3.4

3.2

2.9

4.9

3.3 4.8

3.6

1913–1990 1917–1990 1913–1928 1917–1928 1928–1940 1950–1990 1950–1960 1960–1990

Sources: Appendix Tables 11.2.1, 11.2.2, 11.2.3, the various issues of Statistical Year Book of the Russian Republic, the Interstate Statistical Committee of the CIS (1998), JEC (1990), CIA (1991), and Markevich and Harrison (2011) Notes: See the text for the calculation methods of Estimations A , B , and C . MH: Markevich and Harrison. The Soviet official figures are calculated from the official index that set the 1913 figure to 1 published in the 70th jubilee issue of Statistical Yearbook of the Russian Republic

  Estimate B

1982 market prices   Estimate C 1913 market prices Mean of all estimates above Official NMP Chain, market prices Chain, basic prices Reference: Soviet Union  CIA 1982 adjusted factor costs From the beginning to 1987  CIA 1982 established prices From the beginning to 1987  Maddison  MH 1913 market prices

Periods

Table 11.15 (continued)

11  GROSS DOMESTIC PRODUCTS 

373

374 

M. KUBONIWA ET AL.

 (VWLPDWLRQ$EDVLFSULFHV&KDLQ



(VWLPDWLRQ%EDVLFSULFHV&KDLQ 0DGGLVRQ6RYLHW8QLRQ

     























Fig. 11.10  Russian GDP growth, 1913–1990 (1913 = 100). Sources: Appendix Tables 11.2.1 and 11.2.2, Maddison (2010)

period. The average annual growth rates in Estimations A and B are 3.6% and 3.7%, respectively, for 1913–1990, and 4.0% and 4.1%, respectively, for 1917–1990. Our growth rates are higher by about 1 percentage point than that estimated by Maddison (2010) for 1913–1990 and lower than the official growth rates of the Russian Republic by 3 percentage points for 1917–1990. Our estimated growth rate of 0.7% for 1913–1928 is higher by 0.1 percentage points than that of Markevich and Harrison (2011), while our estimated growth rate of 2.5% for 1917–1928 is lower by 0.2 percentage points than theirs is. Our estimated growth rate of 6.8% to 6.9% for Stalin’s industrialization drive period from 1928 to 1940 is higher by about 2 percentage points than Maddison’s (2001). For the post-war period of 1950 to 1990, the growth rates are 4% in Estimation A and 4.3% in Estimation B . They are lower by about 2 percentage points than the official growth rate, while they are higher by 0.5 to 0.8 percentage points than the CIA’s growth rates. Table 11.15 shows the estimation series using the value-added structure in 1982 and 1990 as the fixed weight for the entire estimation period. The estimation using the 1990 value-added structure at basic

11  GROSS DOMESTIC PRODUCTS 

375

3DQHO7KHSHULRGIURPWR        



























(VWLPDLRQ$ %EDVLFSULFHV&KDLQ (VWLPDWLRQ&PDUNHWSULFHV 0+6RYLHW8QLRQPDUNHWSULFHV

3DQHO7KHSHULRGIURPWR      

(VWLPDLRQ$EDVLFSULFHV&KDLQ



















(VWLPDLRQ%EDVLFSULFHV&KDLQ

Fig. 11.11  Russian GDP growth before and after World War II.  Sources: Appendix Tables 11.2.1, 11.2.2, 11.2.3 for estimations A , B , and C , and the Interstate Statistical Committee of the CIS (1998) for official figures. Markevich and Harrison (2011) for MH (Soviet Union)

376 

M. KUBONIWA ET AL.

prices as the fixed weight gives the lowest growth rate. If we use the 1982 and 1990 value-added structure at market prices, the estimated growth rate remains unchanged for the 1982 weight and increases insignificantly for the 1990 weight. The estimation results show that the estimated growth rates tend to be greater if we use the weights at market prices, which give more weight to industry for Stalin’s industrialization period of 1928 to 1940. Table 11.15 and Fig. 11.11 indicate that the growth rate of 8.4% estimated using the weight at 1913 market prices is the highest estimated growth rate for the period; the growth rate of 8.3% estimated using the weight of 1990 adjusted market prices follows. Note that the estimated growth rates for Stalin’s industrialization period differ little between the estimations using the weights at 1913 and 1990 market prices. If we extend Estimation C to 1990 using the annual growth rates in Estimation B (chain method using weights at market prices), the calculated average growth rates are 4.0% and 4.6% for 1913–1990 and 1917–1990, respectively. They turned out to be only slightly higher than 3.9% and 4.3% for the respective periods in the estimations using the weights at 1961 prices. Therefore, it is plausible to link Estimation C for 1913–1950 and Estimation B or C for the later period to obtain the estimation series covering 1913–1990. We chose Estimation A as the baseline estimation because the value-added structure in 1913 reflects the relative prices of the Russian Empire, which are very different from those in the post-war period. This argument applies inversely to the estimation using the weight at 1961 prices: the 1961 prices do not reflect the economic structure in the early Russian economy. The possibility of an underestimation bias for the pre-war period exists; however, the bias may not be significant as discussed previously. 11.2.7  International Comparison Table 11.16 compares economic growth in Russia with that of other major countries for 1913–1990. The estimated average annual economic growth of 3.6% for Russia is lower than that of 4.6% for Japan but generally higher than those of European countries and the USA. For the period from 1913 to 1928, including World War I, the socialist revolution, and the Russian Civil War, the annual economic growth rate of 0.7% for Russia is lower than the growth rates of other countries, excluding the growth rate of 0.7% for Germany, which was

11  GROSS DOMESTIC PRODUCTS 

377

Table 11.16  International comparison of the GDP growth rates, 1913–1990 (%) 1913–1990 1913–1928 1928–1940 1950–1990 1950–1960 1960–1990 Russia, Baseline USA Japan France Germany Italy UK Europe 12

3.6

0.7

6.8

4.2

7.0

3.2

3.2 4.6 2.6 2.2 3.0 1.9 2.7

2.9 3.7 1.5 0.7 1.6 0.6 1.9

1.3 4.5 −0.8 3.0 2.1 2.6 1.4

3.5 6.9 3.9 4.0 4.4 2.5 3.6

3.5 8.8 4.6 7.7 6.1 2.7 4.5

3.5 6.3 3.7 2.8 3.9 2.5 3.3

Sources: Appendix Tables 11.2.1 and 11.2.2 for Russia, and Maddison (2010) for the others Note: See Table 11.7 for Europe 12

defeated in World War I. For the period from 1928 to 1940, when the other countries were in the Great Depression, Russia showed an annual growth rate of 6.8%; the Russian growth rate was far higher than those of the other countries, even excluding the growth rate of 8.4% in Estimation C . It is notable that Japan recorded 4.5% growth, which was also much higher than the 1.3% growth in the USA. For the entire period after 1950, the Russian growth rate of 4.5% was not bad, but not outstanding. For the period after 1960, the Russian economic growth of 3.2% was clearly slow relative to the economic growth in the other countries. If we consider the quality of goods and services, the level of economic welfare in Russia was inferior to those in the other countries. Table 11.17 gives the estimated series of Russian GDP per capita; Table 11.18 compares it with those of the other countries. The growth rates of GDP per capita in Russia were much higher than those in other countries for 1913–1990. The Russian growth in GDP per capita was higher than Germany’s in the period from 1913 to 1928. The GDP per capita growth in Russia was outstanding in the international comparison. In contrast, Russia’s growth in GDP per capita was not bad but was not remarkable in the period after 1950. The growth in GDP per capita does not change the fact that the level of Russian economic welfare was lower than that of the other countries. If we consider the quality of goods and services, the differences are enlarged.

378 

M. KUBONIWA ET AL.

Table 11.17  Estimated growth rates of GDP per capita in the Russian Republic, 1913–1990 (%) Periods 1913–1990 1917–1990 1913–1928 1917–1928 1928–1940 1950–1990 1950–1960 1960–1990

Baseline, Estimation A

Baseline, Estimation B

Mean of A and B

3.0 3.4 0.6 2.4 5.6 3.1 5.4 2.3

3.1 3.5 0.6 2.4 5.4 3.4 5.4 2.7

3.0 3.4 0.6 2.4 5.5 3.2 5.4 2.5

Population growth 0.6 0.6 0.0 0.1 1.3 0.9 1.6 0.7

Source: Appendix Table 11.2.4 Note: See the text for the calculation methods of Estimations A and B

Table 11.18  International comparison of the growth rates of GDP per capita, 1913–1990 1913–1990 1913–1928 1928–1940 1950–1990 1950–1960 1960–1990 Russia, baseline estimate USA Japan France Germany Italy UK Europe 12

3.0

0.6

5.5

3.2

5.4

2.5

1.9 3.4 2.1 1.9 2.4 1.6 2.1

1.4 2.4 1.6 0.8 1.1 0.6 1.4

0.5 3.1 −0.8 2.3 1.3 2.1 0.8

2.2 5.9 3.1 3.6 3.9 2.2 3.0

1.7 7.6 3.6 7.1 5.4 2.2 3.7

2.4 5.3 2.9 2.5 3.4 2.2 2.8

Sources: Appendix Table 11.2.4 for Russia and Maddison (2010) for the others Note: See Table 11.7 for Europe 12

11.2.8  Economic Background of the Soviet Collapse Table 11.19 shows the international comparison of GDP volatilities in the Soviet period. Volatility is defined as the standard deviation of log-­ transformed growth rates. During this period, in contrast to the Empire period, Russia’s GDP volatility was clearly lower than those of Japan, Germany, and France, and not different from those of other European

0.077 0.076 0.063 0.097 0.088 0.119 0.069 0.036 0.067

0.035 0.036 0.031 0.045 0.025 0.022 0.030 0.019 0.027

0.007 0.007 0.029 0.037 0.015 0.007 0.016 0.006 0.018

Mean 0.148 0.146 0.056 0.056 0.116 0.114 0.076 0.057 0.079

S.D.

1913–1928

0.069 0.067 0.013 0.044 −0.008 0.030 0.021 0.025 0.014

Mean 0.035 0.035 0.086 0.055 0.077 0.062 0.040 0.037 0.053

S.D.

1928–1940

0.039 0.042 0.035 0.067 0.038 0.039 0.043 0.025 0.035

Mean 0.026 0.024 0.024 0.033 0.018 0.029 0.023 0.019 0.023

S.D.

1950–1990

0.068 0.067 0.034 0.085 0.045 0.074 0.059 0.026 0.044

Mean

0.011 0.012 0.031 0.025 0.016 0.017 0.010 0.019 0.022

S.D.

1950–1960

0.030 0.034 0.035 0.061 0.036 0.027 0.038 0.025 0.032

Mean

0.023 0.021 0.022 0.034 0.018 0.021 0.024 0.019 0.021

S.D.

1960–1990

Sources: Calculated from Appendix Tables 11.2.1 and 11.2.2 for Russia and Maddison (2010) for the others Notes: The volatility is defined as the standard deviation (S.D.) of the log-transformed gross growth rates of GDP: log ( GDPt / GDPt−1 ) . Russia A and B are calculated from the series at basic prices using the chain method. See Table 11.7 for Europe 12

Russia A Russia B USA Japan France Germany Italy UK Europe 12

S.D.

Mean

1913–1990

Table 11.19  International comparison of Russian growth volatility: 1913–1990

11  GROSS DOMESTIC PRODUCTS 

379

380 

M. KUBONIWA ET AL.

countries and the USA. For the period from 1928 to 1940, Russian GDP volatility under the planned economy was less than half that in the USA during the Great Depression and far smaller than those of the other countries, although the GDP volatility was about two times higher than those in other countries during the period of confusion from 1912 to 1928. After the war, the GDP volatility of Russia was a bit higher than those of Japan and Germany and negligibly higher than those of the other countries. In terms of GDP growth rate and GDP volatility, the Russian Republic in the Soviet period followed a stable growth path and did not show ominous signs of distraction. It should be noted, however, that there was a decreasing trend in real growth (Fig. 11.12). An estimation using the GDP series of Estimation B for 1951 to 1990 and the model including a first-order autoregressive term indicated annual trend rate of −0.2% :  

5HVLGXDO $FWXDO )LWWHG



 







































Fig. 11.12  Estimation of the trend in Russian economic growth. Note: See the estimation equation in the text. The left axis is residuals, and the right axis is log (GDP index). GDP in 1950 is set to 100. Source: Estimation B in Appendix Tables 11.2.1 and 11.2.2

11  GROSS DOMESTIC PRODUCTS 

381

log ( GDP ) = 1.004 log ( GDP( -1) ) − 0.002trend + 0.761,



( 0.0000 )



( 0.0179 )

( 0.0000 )

where the figures in presences show the p-values, and the adjusted R 2 is 0.999. Similar negative trends were identified using the series of official NMP and estimated GDP per capita. A negative trend can be observed in productivity growth as well. The Cobb–Douglas production function estimated using the canonical cointegration regression method indicated annual trend rate of −1% : log (Y L ) = 0.492 log ( K L ) − 0.01TFP + 1.954,



( 0.0000 )



( 0.0025 ) ( 0.0000 )

where Y , K , and L are the official annual series of NMP, capital stock, and average number of employment, respectively, in the period from 1971 to 1987 (Fig. 11.13). The figures in presences show the p-values, and the adjusted R 2 is 0.998. The capital income share is estimated to be about

 1DWLRQDOLQFRPH &DSLWDO



/DERU 

















Fig. 11.13  National income, capital, and labor growth in the Soviet Union, 1970–1987 (1975 = 100). Sources: See the text

382 

M. KUBONIWA ET AL.

50%; this relatively large capital income share implies that productivity growth stagnated despite heavy capital input. It is likely that the Russian economy faced decreasing economic growth and productivity, and these problems were the economic background of the collapse of the Soviet regime. However, Russia faced neither a large-­scale famine, nor a total war, nor a large drop in its economy. These quantitative problems, therefore, cannot completely account for the systemic collapse. The more decisive causes were probably the qualitative or political aspects of the economic structure, such as forcing a shortage economy on the people without giving the freedom of consumption choice, business, trade, travel, communication, or external economic relations. 11.2.9  Comparison of the Growth Paths of Japan and Russia Fig. 11.14 shows a comparison of the long-term economic growth in Russia and that in Japan. The series in the figure are linked by a chain method using the estimated economic growth series for the Russian Republic in the Imperial and the Soviet period and the official economic growth series of the Russian Federation after the collapse of the Soviet Union by the chain method. Note that the vertical axis is scaled in common logarithm and setting the GDP figures in both countries in 1913 to 100. In the period from 1870 to 1913, the indices of the Russian GDP and the Japanese GDP grew similarly, increasing from 34 to 100 and from 35 to 100, respectively. In 1940, Estimations A , B , and C for Russia show indices of 252, 247, and 293, respectively, while Japan shows an index of 293. This implies that Stalin’s industrialization drive achieved, at best, as much as Japan achieved. In 1945, the end year of the war, Russia’s GDP decreased by 25% from the 1940 level, while Japan’s GDP was almost half what it was in 1940. The year Japan surpassed Russia was 1963: Estimation A for Russia was 667, Estimation B was for Russia 661, and estimation for Japan was 693. Afterward, the difference between the two economies increased almost monotonously, even after the two oil shocks that were positive shocks for Russia and negative shocks for Japan. In 1990, the GDP level of Japan was over 2 times higher than that of Russia. From 1990 to 2016 (Table 11.20), GDP volatility of Russia was almost 4 times greater than those of the other countries, while Russia recorded low growth. If we look at the chaotic period from 1990 to 1999, GDP

11  GROSS DOMESTIC PRODUCTS 

383

FRPPRQORJVFDOH 







 

































5XVVLD(VWLPDWLRQ$ 5XVVLD(VWLPDWLRQ% 5XVVLD(VWLPDWLRQ& -DSDQ

Fig. 11.14  Long-term economic growth of Japan and Russia, 1860–2017 (1913 = 100). Notes and Sources: the Russian GDP for 1860–1990 are calculated by linking the estimates in Sects. 11.1 and 11.2. Interstate Committee of the CIS (1996, Part 1, p.  12) for Russia from 1990 to 1995. Rosstat (www.gks.ru, last accessed on January 1, 2019) for Russia from 1995 to 2017. Maddison (2010) for Japan from 1870 to 1970. UN (https://unstats.un.org/unsd/snaama/dnllist. asp, last accessed on 30 March 2017) for Japan from 1970 to 2014. Cabinet Office (www.esri.cao.go.jp, last accessed on March 1, 2019) for Japan from 2014 to 2017

384 

M. KUBONIWA ET AL.

Table 11.20  International comparison of the GDP volatility of present Russia, 1990–2016 1990–2016

Russia USA Japan France Germany Italy UK Europe 12

1990–1999

1999–2016

Mean

S.D.

Mean

S.D.

Mean

S.D.

0.005 0.024 0.010 0.015 0.015 0.007 0.020 0.017

0.069 0.017 0.019 0.014 0.020 0.019 0.017 0.020

−0.055 0.033 0.012 0.019 0.019 0.014 0.009 0.022

0.068 0.014 0.015 0.012 0.015 0.010 0.012 0.017

0.037 0.019 0.009 0.013 0.013 0.003 0.019 0.014

0.045 0.016 0.020 0.015 0.023 0.021 0.016 0.020

Sources: calculated for the sources of Fig.  11.14 for Russia and Japan, and the World Development Indicator (https://data.worldbank.org/products/wdi, last accessed on April 1, 2018) for the others Notes: The volatility is defined as the standard deviation (S.D.) of the log-transformed gross growth rates of GDP: log ( GDPt / GDPt−1 ) . Russia A and B are calculated from the series at factor prices using the chain method. See Table 11.7 for Europe 12

volatility of Russia was 4 to 5 times greater than those of the other countries. In the period after 1999, that included the oil boom of 2000, to the first half of 2008, and the sharp drop in oil prices and the Lehman shock in the fall of 2008, the average economic growth rate of Russia in the period was higher than those of the other countries because of a good growth performance from 2000 to the first half of 2008 thanks to historically high oil prices and recovery from the effect of the reverse oil shock. The GDP volatility in Russia fell within the range of 2 to 3 times those in the other countries in the period, although the volatility of Russia was still high relative to those of the other countries. During the entire period from 1991 to 2016, the Japanese economy experienced a long stagnant period, including “the lost 20  years.” The difference between the Japanese and Russian economies, however, had increased during that period because Russia was also in the transition depression and the 1998 crisis in the period. In 2016, the GDP level of Japan was about 2.5 times higher than that of Russia. After the oil price boom ended, there were few positive factors to promote Russian ­economic growth. It is highly improbable that the Russian economy will catch up with the Japanese economy in the foreseeable future, even though the Japanese economy will continue to record very low growth rates.

11  GROSS DOMESTIC PRODUCTS 

385

11.3   Russia’s Informal Economic Growth, 1960–1990 11.3.1  Informal Economy in the Soviet System The informal economy or the so-called second economy served as an essential part of the Soviet command economy. It is said that the informal economy made up for the shortcomings of the dysfunctional planning system while having had an overall detrimental effect on the economy. According to Grossman, the fundamental contradictions inherent to centrally planned economies caused the informal economy to emerge already at the time of its establishment, and the deterioration of a functioning system, accompanied by losing the dedicated and enthusiastic support for the socialist system, made room for the informal economy to develop (e.g., Grossman 1977; Ericson 2006). Owing to its importance, researchers paid great attention to the informal economy in the Soviet period, though suffered either from methodological deficiencies or from limitations as to the considered time periods and regions mainly due to data unavailability. (e.g., Schroeder and Greenslade 1979; Rutgaizer 1992a, b; Kim 2003; Shida 2015). This section aims to evaluate the economic performance of Soviet Russia for the period from 1960 to 1990, focusing on informal GDP. Access to previously unpublished materials enables us to measure informal GDP. Our primary statistical sources are two: archival materials on household budget surveys and on monetary balances of incomes and expenditures of the population. Both materials were collected by the author at the Russian State Archive of Economy. We use these materials and apply the expenditure-­side approach to estimate informal GDP. Generally, the expenditure side of GDP can be decomposed into four components: household consumption (C), investment (I), government expenditures (G), and net exports (NX); GDP = C + I + G + NX . It is likely that informal economic activities permeated every sector of the Soviet economy but to a widely varying degree. Therefore, the statistical treatment should be differentiated accordingly. First, the component with the least informality is likely to be government expenditures (G). Expenditures from the state budget were always reported to the statistical authority, even if they were partly misappropriated, embezzled, or stolen for private gains. Hence, illicit uses of the state budget do not change the size of the government expenditures. Second, all foreign trade operations (NX, exports

386 

M. KUBONIWA ET AL.

minus imports) were also reported to the authority because Soviet foreign trade was operated solely by foreign trade organizations under state monopoly. This institutional setting made it difficult for citizens and for private firms (if there were any) to engage in trade.11 Third, investments (I) by state and cooperative enterprises as well as collective farms were centrally planned and then reported to the authority, even though informal operations including illegal procurement of materials and intermediate goods via pushers (tolkachi) or connections (blat) were used in the course of plan execution to fulfill the plan targets.12 Fourth, household consumption (C), in contrast, had closer connections with the informal economy. Households, free from the state’s direct control and commands, were able to buy goods and services from the state and cooperative sectors if these goods and services were available. Households, however, sometimes resorted to informal channels when they faced shortages. Hence, household consumption is the most important part of the informal economy. It is very likely that, in using the expenditure approach to estimate informal GDP, final consumption by households can capture informal economic activities. In Sect. 11.3.2, we describe and discuss our primary data sources and compile a statistical dataset to be used to estimate the informal GDP. Next, in Sects. 11.3.3 and 11.3.4, we estimate the nominal GDP and its growth rate in real terms, respectively, and provide an overview of the estimation results in Sect. 11.3.5. 11  Due to the nature of smuggling, it is difficult to measure its volume. These activities may be, however, reflected at least in household incomes (earned from illegal exports) and expenditures (spent on illegally imported goods). It is also difficult to separate domestic and import components of consumption goods from household expenditures, although here we assume that the consumption of illegally imported goods was marginal compared to the total volume of consumption. Net exports in the 1970s ranged from 1 to 5 billion rubles (Ministerstvo vneshnikh ekonomicheskikh sviazei SSSR 1991, p. 6), which accounted for, at most, 1% of Soviet net material products. According to Alexeev and Sayer’s (1987) study using an immigrant survey, the goods brought from abroad by friends or family members accounted for another 3–5 billion rubles; the size of the illegal market for foreign-made goods in the late 1970s is estimated to have been 13–15 billion rubles per year. 12  State enterprises settled their payments on books and cash transactions were strictly regulated. They were permitted to procure only a limited amount of materials via an officially approved small-scale wholesale trade system (melkii opt). It is possible that they illegally obtained goods without permission and increased their inventories. These illicit transactions in the consumer markets are called the “siphoning effect,” that is, unplanned spillover of effective demand from the planned sector to the consumer sector (Kim 2002, pp. 111−115). Although enterprises engaged in these activities, the total amount of retail turnover reported to the authority did not change. Measurement problems are, thus, undetectable.

11  GROSS DOMESTIC PRODUCTS 

387

11.3.2  Compiling the Household Expenditures Dataset (1) Primary statistical sources Researchers had a limited access to household-related statistical materials during the Soviet period. Information on household incomes and expenditures rarely appeared in official statistical publications. The household budget surveys were finally published, for the first time, at the end of the Soviet era (Biuro sotiologicheskikh obsledovanii 1990). After the collapse of the USSR, the availability of a wide variety of previously inaccessible and unpublished sources increased dramatically, which now stimulate new, quantitative research on the economic history of the USSR (e.g., Kim 2003; Osipov 2009; Shida 2015). One of our two main primary sources is archival materials on household budget surveys. However, as mentioned below, household budget surveys contain several measurement problems that warrant cautious treatment. Therefore, we complement this source with archival materials on monetary balances of incomes and expenditures of the population (balans denezhnykh dokhodov i raskhodov naseleniia, hereafter referred to as balance). Using the balance data ensures that the household budget survey data are consistent with other macroeconomic statistics. Soviet statistical authorities constructed balances for the purpose of macroeconomic planning and controlling cash flows. Hence, they needed balances that most comprehensively and correctly tracked money flows between the state and household sectors; from enterprises and organizations to workers in the form of, for example, wages and social security payments; and from citizens to the state in the form of, for example, retail sales, fees for public utilities, taxes, or deposits at savings banks. In spite of this advantage, balances failed to capture private transactions, especially those within the population (Shida 2015, Appendix 1). The disadvantages of household budget surveys and balances are mitigated by combining the two types of data. We describe household budget surveys and briefly discuss problems related to their representativeness and reliability below. (2) An overview of household budget surveys Soviet household budget surveys were conducted on a regular basis since the early 1950s (El’fterov 2010). The total number of surveyed

388 

M. KUBONIWA ET AL.

households was around 30,000 per year since 1952, and it reached 50,000 at the time the socialist system ended. Survey investigators regularly visited people at their homes to interview them, while households themselves recorded their incomes and expenditures and reported them to investigators in the form of household account books. To ensure the reliability of interviews and reports, investigators collected certificates and receipts on wage payments, rents, fees for public services, and so on (Dumnov and Riik 1978; Belova and Dmitrichev 1990). Sample households were selected via a systematic sampling method (metod tipicheskogo proportsional’nogo otbora s mekhanicheskoi vyborkoi. See Belova and Dmitrichev 1990, pp. 19–28). Prior to the selection, the number of households to be surveyed in each sector and region was allocated proportionally according to the size of industrial sectors and regions. All organizations to which workers belonged were ordered according to their average wage in order to select “representative” enterprises, organizations, and collective farms. Next, several organizations were selected at regular intervals, and then households to be surveyed were selected from these organizations, also at regular intervals. The representativeness of the organizations and of the surveyed households was examined by applying the criterion that their average wages should not differ by more than 3%–5%. Actually, sample households were selected mostly from relatively large organizations to facilitate the survey process. Soviet household budget surveys were conducted on a workplace basis. Those who were not strongly linked to an employer organization at the time the survey was conducted, such as pensioners, households with only one worker, and single persons, were possibly outside of the scope of these surveys.13 Households ­participated, in principle, voluntarily in the surveys. The group of participating households changed partially every year and in every census year. (3) Reliability of household budget surveys The issues with the surveys’ reliability can be summarized in three points. First, certain industrial sectors (e.g., food, services, trade), regions 13  The systematic sampling method reduced the probability that those who are not in the list, such as students, pensioners, or families with single workers, are selected as the object of the survey (Matiukha 1967, pp.  11−40). For example, the probability of a single-worker family (including single persons) to be selected was half of that of a two-worker family (Belova and Dmitrichev 1990, p. 26).

11  GROSS DOMESTIC PRODUCTS 

389

(e.g., less populated areas), and minor social groups (e.g., pensioners, students receiving scholarship) were less likely to be included in the survey samples; preference was given to conducting surveys more easily, and to heavy industry sectors with higher average wages (Shenfield 1983). Second, counter to the principle of rotating sampling, the authority recommended that households continue to participate in the survey for a longer period. In line with the rotating principle, 15%–20% of households in the sample should have been replaced every year; the entire sample would thus be replaced in 5–7 years. In fact, a lot of households participated in the survey for 10–20  years.14 Third, households and organizations to which the households were linked as well as statistical authorities were closely tied. Not only households but also their superiors at the workplace, officers from statistical authorities, members of labor unions, or communist party members supported surveys. This might affect the reliability and anonymity of the surveys. Some regional statistical offices held meetings and awarded households for their long-term cooperation.15 Furthermore, committees to support surveys were sometimes established at the workplace (V.B. 1964). These findings imply that households were monitored not only by investigators but also by their colleagues and other organizations. Very close interactions among those concerned were likely to affect the reliability of the surveys and households might have provided distorted information when deciding on what would be reported to the authority. As a result, there would be bias: either those opposing the government were not selected to participate in the survey, or selected households would not report what was not desirable for the government or they reported what the authority desired.16 These three points raise issues concerning the representativeness and reliability of Soviet household budget surveys. High-income groups would be represented more. Subjects of the surveys would be monitored by the authorities, which motivated households not to report the undesirable and 14  One-fourth of households surveyed in Kharkov Oblast (Ukraine) participated in the survey for more than 10 years. In Lviv Oblast, 20% of households participated for more than 20 years (Babaev 1972; Kuz’menkova 1988, etc.). 15  For example, such meetings were held in Moscow City in 1965 and in Moscow Oblast in 1982 (Rovinskaia 1965; Panina 1983). Reports on such meetings can be found in the journal Vestnik statistiki. 16  One of the key differences between Soviet surveys and other European countries’ surveys is that the response rate in the former is almost 100% (Dumnov and Riik 1978).

390 

M. KUBONIWA ET AL.

to behave more in line with what was expected of them. The informal economy added incomes and enabled households to obtain shortage goods informally, although such activities tended not to be reported to the authority. In sum, it is highly likely that using household budget surveys leads to downward bias in the estimation of informal economic activities, and we thus obtain only the lower boundary on the volume of these activities. (4) Compiling the household budget survey database The household budget surveys we use come from archival materials aggregated at the republic level and provide average data for 100 households for several categories of households.17 The classification of households varies according to when the survey was conducted: industrial workers ( RP : rabochie promyshlennosti, about 8,000–10,000 households) for 1960–1968; workers and employees ( RS : rabochie i sluzhashchie, about 20,000–37,000 households) for 1969–1989; collective farmers ( K : kolkhozniki, about 10,000–13,000 households) for 1960–1989. The total number of households surveyed ranges from 20,000–50,000. This corresponds to 0.1% of the entire population excluding one-person households; there were 402.5 million households in Russia in 1989 (Interstate Statistical Committee of the CIS 1993, p. 5). The statistical authority also prepared aggregated data to represent “all of the population,” these are available only for the period 1979–1989 (All: vse naselenie, about 32,000–49,000 households). Integrating the different household categories gives us an aggregated and “representative” Russian household database: household categories RP , RS , and K are merged into one category, which is then adjusted so that it can be consistently linked to category All.18 As reporting formats vary according to time periods and household categories prior to the introduction of a uniform format in 1979, we reorganize them so that they are consistent with each other. Next, statistical items in our newly constructed dataset are classified into official and informal ones. Budget survey results are reported in two forms, each of which serves a different purpose. The first form is the total  The list of archival materials used in this paper is shown in Appendix Table 11.3.1.  RP, RS, and K can be disaggregated into more detailed groups according to industrial sectors and regions (location). The data integration and adjustment process is described in Appendix Table 11.3.2. 17 18

11  GROSS DOMESTIC PRODUCTS 

391

expenditures series (sovokupnye: TE ), which captures how the population consumed, distinguishing monetary transactions (monetary expenditures: TEm ) and in-kind expenditures (self-consumption: TEn ) in 43 statistical categories of commodities. The latter pertains to the informal economy in its natural form. The second reporting form is the money expenditures series (denezhnye: ME ), which captures where consumers spent their money on 46 categories of commodities, and distinguishes between state and cooperative trade networks ( MEo ) and other places, especially direct payments to other citizens (private transactions among citizens, MEi ). The former component is considered official economy, the latter pertains to informal market transactions because these transactions were conducted by citizens, not centrally planned nor reported to the authority. Money expenditures as a whole ( ME ) correspond to the monetary part ( TEm ) of the total expenditures series ( TE ) . The informal economy in our dataset has two components, namely self-consumption ( TEn ) and monetary expenditures (transactions) among citizens ( MEi ) . Based on these two different data series, household expenditures can be decomposed into three components (Fig. 11.15): official money expenditures (official, Em ,o or MEo ), informal money expenditures (informal, Em ,i or MEi ), and informal expenditures in kind (self-consumption, En ). The latter two components correspond to informal economic activities conducted outside the centrally planned economic system. Informal money expenditures ( Em ,i ) capture informal market transactions not included in the sales of state and cooperative retail shops. It is difficult for the authority to monitor self-consumption ( En ) . There are two points we need to be cautious about. First, monetary expenditures from the total expenditures series, that is, TEm , do not correspond to monetary expenditures, ME , because the reported expenditure items (the format of reports) are structured differently. Therefore, it

VSHQWDW 7RWDO

0RQH\H[SHQGLWXUHV ( P 6WDWHDQGFRRSHUDWLYH DPRQJFLWL]HQV WUDGHDWPDUNHWSULFHVL RUJDQL]DWLRQV WUDGHDWRIILFLDOSULFHVR >@( PR

2IILFLDOH[SHQGLWXUHV

>@( PL

,QIRUPDOHFRQRP\

6HOIFRQVXPSWLRQ ( Q >@( Q

,QIRUPDOPDUNHW

Fig. 11.15  Classification of household expenditure items. Source: compiled by the author

392 

M. KUBONIWA ET AL.

is difficult to replace TEm with ME without altering the structure of expenditures. In other words, combining TEm with ME would change the ratios of monetary and natural expenditures to total expenditures. We, thus, adjust self-consumption data as follows: TEn’ = ME × ( TEn / TEm ) . Second, self-consumption ( TEn ) is evaluated at official retail prices (centrally set prices do not reflect scarcity), which underestimates its size. We thus re-evaluate this expenditure component using market prices. The price gap ( g ) between official prices and market prices is calculated as g = pk / po , where po and pk denote average price levels in the state

and cooperative retail shops ( o ) and in collective farmers’ markets ( k ) , respectively. The availability of these price data is rather limited. The Statistical Yearbooks of National Economy of the USSR only provide retail turnovers of state and cooperative shops (in rubles) and their share (%) in the total retail turnover, which includes sales in collective farmers’ markets. R denotes retail turnover of state and cooperative retail shops, while S denotes its share in the total turnover. Note that S is evaluated at two different price systems: the official prices (“the same price,” po ), and the effective prices ( po and pk , respectively.). In other words, S is evaluated at either the official prices ( S1 ) or the effective prices ( S2 ) , depending on the distribution channel ( qk denotes quantity traded in collective farmers’ markets):

S1 = R / ( R + po qk ) , S2 = R / ( R + pk qk ) .

(11.1)



(11.2)



The turnover in the collective farmers’ markets is obtained by transforming Eqs. (11.1) and (11.2):

pk qk = R × (1 − S2 ) / S2  , po qk = R × (1 − S1 ) / S1  .



(11.3) (11.4)

From Eqs. (11.3) and (11.4), we calculate the price gap ( g ) as follows.

g = pk qk / po qk = (1 − S2 ) / S2  / (1 − S1 ) / S1  .

(11.5)

11  GROSS DOMESTIC PRODUCTS 

(

393

)

Self-consumption expressed in official prices TEn’ can be transformed

into self-consumption in effective market prices ( En ) by using the price gap data ( g ) as follows: En = g × TEn ’ . (5) Adjustments to household budget survey data

( Em ) correspond to values per household ( x ) . The macro-aggregate of

The estimated money expenditures member of a “representative”

this data ( X : a composite commodity item of Em ) equals x multiplied by the “total household population,” that is, it is a product of the average number of family members (member) and total number of households (family): (11.6)

X = x × family member.



As mentioned above, we distinguish money expenditures in two sectors: (1) official money expenditures at state and cooperative retail shops

( X ) ; and (2) private transactions among citizens, that is, the informal market ( X ) . The usefulness of the above compiled household budget m ,o

m ,i

survey dataset is subject to the degree of consistency of its macroaggregate with other macroeconomic statistics, such as national incomes, net material products (NMP), and so on. This can be judged by how consistent it is with balances. Balances have higher reliability and are more consistent with macroeconomic statistics because they correctly evaluate the official component of money flow between organizations and the population.19 The problem is whether official money expenditures in household budget surveys ( X m ,o ) correspond to balances’ official money expenditures (Y ) :

X m ,o = ( xm ,o × family × member ) = α Y .



(11.7)

If α = 1 there is no need to adjust the data because the two series are perfectly consistent with each other.

19  Money expenditures in the balance data comprise two sectors: (A) monetary expenditures at state and cooperative retail shops; (B) transactions among citizens.

394 

M. KUBONIWA ET AL.

Two points should be noted. First, the total number of household members or “total household population” ( family × number ) is based on the size of households, which do not include one-person households. Hence, “total household population” is smaller than the actual total population by the number of singles (the ratio of “total household population” to the total population is β ). As a result, macroaggregates of household budget survey data are probably smaller than the actual ones. Second, the surveys’ reliability is affected by sampling bias and survey implementation. It might be difficult to remove these biases and the balance data might not be equal to the macroaggregate α ≠ 1 . Y can be expressed in the same way as the budget survey, Y is a product of per capita money expenditures (y) and total population (population): Y = y × population



(11.8)

From Eqs. (11.7) and (11.8), it follows that

xm ,o / y = α / β .



(11.9)

Table 11.21 shows the calculated values of α , β , and α / β (see also Appendix figure 11.3.1). The overall difference between the two macroaggregates (α ) is, on average, −16.3% for 1960–1989, while the differ-

ence in the demographic structure ( β ) is −12.6% .20 α can be explained mainly by demographic inconsistency

( β ) : 12.6 / 16.3 = 77.2% .

On the

other hand, the reporting bias (α / β ) is 4.3% on average. It follows that household budget surveys underestimated official money expenditures ( y > xm ,o ) .

Using balance data, we adjust the constructed database in order to make it consistent with other macroeconomic aggregates. Instead of 20  Balance data used here is author’s own estimation. Estimation methodology and primary sources are described in Shida (2015, Appendix 1). Appendix Table 11.3.3 shows official data and author’s estimation results based on balance data for 1960−1990. Appendix Table 11.3.4 shows the estimated results based on household budget survey. Appendix Table 11.3.5 shows population and “total household population.” Appendix Table 11.3.6 shows the estimated balances and the constructed household budget survey data.

11  GROSS DOMESTIC PRODUCTS 

395

Table 11.21  Reliability of household budget surveys 1

2

3

Macroaggregates

Average Max Min S.D. Cov

Money expenditures (estimates based on balance data)

Household budget survey Total money Official money expenditures expenditures

(Y) compared with official data, ratio

(Xm) (Xm,o) compare with compare with balance balance estimates, ratio estimates, ratio α

0.999 1.009 0.993 0.004 0.004

0.979 1.065 0.904 0.039 0.040

0.837 0.868 0.802 0.018 0.021

4

5

Ratio of “total household population” to the population (%) (xm,o/y)

β

α/β

0.874 0.881 0.862 0.007 0.008

0.957 0.985 0.920 0.019 0.020

Notes: (1) Estimates using data for 1960–1989. (2) Column [5] is calculated as the ratio of column [3] to column [4]. Source: author’s estimation based on Appendix Tables 11.3.3, 11.3.4, and 11.3.5

calculating (α / β )t for year t and for each commodity item, we use a single coefficient. The data are reported differently in the balances and household budget surveys, so it is impossible to compare commodity items one by one. Even if we attempted to compare them, adjustments using a coefficient for each item would distort the structure of household budget surveys and transform them into the same structure as in the balances; the proportions of X m ,o , X m ,i , X n would be altered. Taking

into account these issues, we calculate coefficients (α / β )t for each year based on balances’ official money expenditures (Y ) and official monetary expenditures from the household budget surveys ( X m ,o ) . This gives the same result as multiplying the estimates with (α / β )t . The figure for 1990 was extrapolated. Appendix Tables 11.3.7 and 11.3.8 show the results of figure per capita figures and macroaggregates, respectively.

396 

M. KUBONIWA ET AL.

11.3.3  Estimating Nominal GDP Including Informal Economy (1) Estimation methodology. Generally speaking, existing alternative estimates of Russia’s GDP or gross national product (GNP) are either based on NMP (Kuboniwa and Ponomarenko 2000), or similar to balances’ officially published data (CIA 1975, 1983; JEC 1982, 1990). Balance is a component of NMP and both of them employed the expenditure approach. As mentioned above, balances were affected by measurement problems because they failed to consider households’ informal economic activities outside the planned sectors in their entirety. It follows that NMP as well as GDP/ GNP estimates based on NMP are likely to be affected by the same kind of measurement problems. In fact, the ratio of private transactions among citizens to the total money expenditures in the Soviet balance (Sector B in the balance data) is, on average, only 1.4% for 1960–1990 (with a maximum of 2.8% and a minimum of 0.8%).21 In contrast, this ratio is 14.4% (with a maximum of 21.7% and a minimum of 10.7%) according to estimates based on household budget surveys. Existing GDP/GNP estimates based on NMP and balances do not seem to properly capture the size of the informal economy. The CIA estimated that the ratios of private expenditures to total household expenditures were only 1.10% in 1970 and 1.91% in 1982 (CIA 1975, 1983; JEC 1982, 1990). As the CIA follows a methodology similar to balance compilation, the volume of informal economic activities is underestimated. In contrast, our estimates are simultaneously more valid and consistent with macroeconomic statistics. Consumption components of existing GDP/GNP estimates can be replaced by our alternative estimates of household consumption, and then the newly integrated official and informal GDP (hereafter the sum of official and informal GDPs is referred to as integrated GDP) can be estimated. To estimate nominal informal GDP, we proceed as follows: 21  Author’s calculations using data from Kashin and Mikov (2006) who, using Bank of Russia’s archival materials, compiled data from balances at the USSR level.

11  GROSS DOMESTIC PRODUCTS 

397

We extract consumption components from our database following the CIA’s (1983) nominal expenditure GNP.  The CIA’s estimates comprise household consumption, investment, and other governmental expenditures. Household consumption consists of goods and services, where goods are food, light products, and durables. Our database provides data on goods consumption according to the following classification: food (see Appendix Table 11.3.8, item no. 1), non-food goods (item no. 2), livestock and poultry (item no. 3), agricultural and fishery tools, and similar (item no. 5). The CIA estimates concerning services consist of housing, public utilities, transportations, communication, repair and personal services, entertainment, education, and healthcare, while our database contains items such as housing (item no. 4), rents and public utilities (item no. 10), transportation and communication (item no. 9), services (item no. 8), other services (item no. 11), leisure (item no. 7), and fees for facilities (item no. 6). For convenient summation, items that are difficult to categorize are included in “other” or “unidentified” (item no. 15). We replace the household final consumption in the existing estimates of GDP/GNP by our estimates as follows. There are two alternative estimates of nominal GDP/GNP, Kuboniwa and Ponomarenko’s (2000) estimates of expenditure GDP for Russia and the CIA’s (1983) estimates for the USSR. (a) Revision of Kuboniwa and Ponomarenko’s (2000) estimates. As they do not distinguish between final consumption by households and other government expenditures, we add only informal household expenditures ( Em ,i and En ) to their estimates. We assume that they did not take the informal economy into account at all. (b) Revision of the CIA’s (1983) estimates. Before we include the informal economy, we extract Russia’s GNP from the CIA’s estimates of Soviet GNP. The CIA’s estimates of Soviet GNP are distributed among the Union republics, including Russia, according to the size of the nominal NMP (officially published data), the size of the mid-year population, and the size of the macroaggregate of money expenditures (our estimates of balance at the republic level). We replace the extracted share of Russia in households’ final consumption entirely by our estimates of Em ,o , Em ,i , and En .

398 

M. KUBONIWA ET AL.

(2) Estimation results. Appendix Table 11.3.9 presents our main estimation results (based on (a): revision of Kuboniwa and Ponomarenko’s estimate). Fig. 11.16 shows the ratio of informal economy to integrated GDP in the period 1960–1990. Table  11.22 compares the estimation results in 1960, 1970, 1976, and 1980. According to our estimation, the share of informal GDP in nominal terms exhibits a decreasing trend. The share of the informal economy is 17.7% in 1960 (the base year for our estimates), and then it sharply decreases throughout the 1960s to reach 12.5% in 1970. Its further decline is relatively moderate as it continues to decrease and reaches 12.4% in 1980, 10.5% in 1985, and 9.9% in 1990. As household purchases increased with the development of retail distribution networks, the share of in-kind expenditures (self-consumption) decreased. The share of self-­consumption is 9.2% in 1960 and 5.1% in 1990. At the same time, the share of informal market trade decreases from 8.5% to 4.7%, respectively. The share of the informal economy excluding self-consumption is, on average, 6.5% for the entire period, and in particular, 10.0% in 1960, 6.1% in 1970, 6.9% in 1980, and 5.4% in 1990. The average size of the informal economy in Russia ranges from 6.5% to 12.6%. This trend is also confirmed by results 

LQIRUPDOPDUNHWWUDGH



VHOIFRQVXPSWLRQ





 LQIRUPDO*'3        

  





















Fig. 11.16  Dynamics of informal GDP: its share in the integrated GDP (%). Source: Compiled by the author based on Appendix Table 11.3.9

11  GROSS DOMESTIC PRODUCTS 

399

Table 11.22  Russia’s integrated nominal GDP/GNP: estimates 1960

1970

1976

1980

(a) Russia’s informal GDP (nominal rubels): revision of Kuboniwa and Ponomarenko’s (2000) estimates  1 Final consumption 91.4 168.2 221.4 263.9 (original data)  2 Household informal 24.4 32.1 38.8 51.6 consumption  3 Investment 21.8 54.0 82.5 101.1  4 Net exports 0.3 1.6 −1.4 0.5  5 = 1 + 2 + 3 + 4 Integrated GDP, total 137.9 255.9 341.3 417.1 Informal GDP, share 17.7% 12.5% 11.4% 12.4% (b) Russia’s informal GDP (nominal rubels): revision of CIA’s (1983) estimates  1) Estimates based on 0.62 0.60 0.59 GNP (CIA) distributed by nominal NMP   1 Consumption (revised 74.6 126.2 166.1 data) Informal household 24.4 32.1 38.8 consumption   2 Investment 30.5 65.4 90.6   3 Other government 16.4 37.7 53.9 expenditures   4 = 1 + 2 + 3 Integrated GNP, total 121.5 229.3 310.7 Informal GNP, share 20.1% 14.0% 12.5%  2) Estimates based on GNP (CIA) distributed by population   1

  2   3   4 = 1 + 2 + 3

0.56

Consumption (revised data) Informal household consumption Investment Other government expenditures Integrated GNP, total Informal GNP, share

0.59

203.2 51.6 104.3 67.2 374.7 13.8%

0.54

0.53

0.52

74.6

126.2

166.1

203.2

24.4

32.1

38.8

51.6

27.5 14.8

58.7 33.8

80.8 48.0

91.9 59.2

116.9 20.9%

218.6 14.7%

294.9 13.1%

354.3 14.6% (continued)

400 

M. KUBONIWA ET AL.

Table 11.22 (continued)

 3) Estimates based on GNP (CIA) distributed by money expenditures   1

  2   3   4 = 1 + 2 + 3

Consumption (revised data) Informal household consumption Investment Other government expenditures Integrated GNP, total Informal GNP, share

1960

1970

1976

1980

0.63

0.60

0.60

0.59

74.6

126.2

166.1

203.2

24.4

32.1

38.8

51.6

31.1 16.7

65.5 37.7

91.4 54.4

104.0 67.0

122.4 19.9%

229.4 14.0%

311.9 12.4%

374.2 13.8%

Sources: Appendix Table 11.3.9, CIA (1983), Shida (2015) Notes: 1) Values in italics are Russia’s share in the Soviet Union. 2) Estimates (a) are based on Appendix Table 11.3.9. 3) CIA (1983)’s GNP data for the USSR is used for estimates (b). 4) NMP data were provided by Professor Kuboniwa. Data on population are from the Statistical Yearbooks of National Economy of the USSR (various years). Money expenditures is author’s estimates based on balance data (Shida 2015)

obtained with alternative estimates ((b): Revision of the CIA’s (1983) estimates). As the CIA’s GNP is smaller than Kuboniwa and Ponomarenko’s (2000) GDP estimate, the share of informal GNP increases. The ratios of nominal informal GNP to Russia’s nominal GNP, calculated using nominal NMP, population, and money expenditures, are, on average, 20.3% in 1960, 14.2% in 1970, 12.7% in 1976, and 14.0% in 1980. The ratios calculated with estimation results from (a) are 17.7%, 12.5%, 11.4%, and 12.4%, respectively. The shares of informal GDP in the main results (a) are smaller than those in the alternative results; (b) the differences between them, in percentage points, are 2.6, 1.7, 1.3, and 1.7, respectively. Results based on (b) also show an increasing trend in the period between the late 1970s and the early 1980s. 11.3.4  Estimating Real GDP (1) Estimation methodology We first calculate the official and informal GDP in 1960 rubles separately, then sum them to obtain the real integrated GDP. Real GDP and deflators to be used are computed using Kuboniwa and Ponomarenko’s

11  GROSS DOMESTIC PRODUCTS 

401

(2000) nominal GDP (in rubles) and growth indices.22 They estimated four alternative GDP growth indices as follows: the official deflator (A), chain volume indices and an updated industrial output index (B), chain volume indices and the official industrial output index (C), and fixed weight volume indices and the official industrial output index (D). The informal GDP values in real terms are computed by these four cases and an alternative one. The alternative price index for deflating informal GDP is calculated as pk ,t = po,t × gk ,t , based on Eq. (11.3) in Sect. 11.3.2. The price index (1961 = 1) becomes I k ,t = pk ,t / pk ,1961 = I o,t × ( gk ,t / gk ,1961 ) . (2) Estimation results The calculated growth indices (1961=100) and real growth rates are shown in Appendix Tables 11.3.10 and 11.3.11, respectively. Panel A of the tables show the results case for deflators A–D, and Panel B for our alternative price index. Figures 11.17 and 11.18 depict the dynamics of growth indices and growth rates according to Panel B of Appendix Tables 11.3.10 and 11.3.11, respectively; both plots trace Kuboniwa and Ponomarenko’s (2000) estimates. Notably, integrated GDP exhibits relatively modest growth only in comparison with official GDP. This is because Kuboniwa and Ponomarenko’s (2000) nominal GDP in the benchmark year of 1960 not fully considered the informal economy, and the informal economy grew more moderately than the official economy did after 1960. The growth indices in 1990 (1961=100) of the integrated GDP and the informal economy are 450.0 and 252.2, respectively. The values of the four deflators A, B, C, and D in 1990 are 131.5, 210.1, 149.8, and 171.7, respectively, whereas our alternative price index is 186.4 in 1990. The growth indices being based on the official GDP figure for 1990 are 375.2, 234.8, 329.3, and 287.4 for A, B, C, and D, respectively. If the official GDP included our estimated informal GDP fully in 1990, the growth indices for A, B, C, and D decrease to 336.3, 219.1, 298.0, and 263.1, respectively.23

 See also Kuboniwa (1997).  The growth indices of informal GDP deflated by the four deflators A, B, C, and D used for the official GDP in 1990 are 346.0, 216.5, 303.7, and 265.0, respectively. All estimates except B are biased upward. 22 23

402 

M. KUBONIWA ET AL.





. 3 V*'3HVWLPDWH$ $ % & '



 











Fig. 11.17  Russia’s growth index of official and informal integrated GDP (1961 = 100). Note: A is based on official deflators; B is based on chain volume indices and updated industrial output index; C is based on chain volume indices and official industrial output index; and D is based on fixed weight volume indices and official industrial output index. Source: compiled by the author based on Appendix Table 11.3.10 (Panel B) and Kuboniwa and Ponomarenko (2000)

The average annual growth rates of official GDP calculated with deflators A, B, C, and D are 4.7%, 3.1%, 4.2%, and 3.7%, respectively (Kuboniwa and Ponomarenko 2000), whereas our estimates considering the informal GDP are 4.3%, 2.7%, 3.9%, and 3.4%, respectively (Table 11.23).24 This means that when the informal economy is taken into consideration, the real GDP growth rates decrease by 0.24–0.38 percentage points per annum. 11.3.5  Remarks on the Informal Economy This section estimated the nominal and real informal GDP for the period from 1960 to 1990 using the declassified archival materials containing household budget surveys and the monetary balances of incomes and expenditures of the population. The results showed that Russia’s informal 24  The average growth rates, calculated as in footnote 23, for A, B, C, and D are 4.4%, 2.7%, 3.9%, and 3.4%, respectively.

403

11  GROSS DOMESTIC PRODUCTS 





















 . 3 V*'3HVWLPDWH$

$

%

&

'

Fig. 11.18  Russia’s growth rates of official and informal integrated GDP (%). Note: A is based on official deflators; B is based on chain volume indices and updated industrial output index; C is based on chain volume indices and official industrial output index; and D is based on fixed weight volume indices and official industrial output index. Source: compiled by the author based on Appendix Table 11.3.11 (Panel B) and Kuboniwa and Ponomarenko (2000) Table 11.23  Russia’s economic growth: period average (%) 1961–1970 1971–1980 1981–1985 1986–1990 1961–1990 A B

C

D

Official deflator Chain volume indices and updated industrial output index Chain volume indices and official industrial output index Fixed weight volume indices and official industrial output index

6.2 4.8

4.7 2.7

2.9 1.4

1.5 0.5

4.3 2.7

5.6

3.9

2.4

2.2

3.8

4.8

3.1

2.6

2.1

3.4

Source: compiled by the author based on Appendix Table 11.3.11

404 

M. KUBONIWA ET AL.

GDP (including self-consumption) in nominal terms accounted for, on average, 12.6% of the total GDP integrating the official and informal economies. This means that the former estimates of GDP and GNP undervalued the Russian economy during the Soviet period. Even if we exclude the self-consumption, the informal economy’s share is 6.5% of the total GDP on average. Further, our study confirmed that the estimates excluding the informal economy underestimated the cumulative real GDP growth rate for the entire period from 1960 to 1990 by 15–39 percentage points and the annual growth rates in the period by 0.24–0.38 percentage points. This is because the nominal GDP in the benchmark year of 1960 dose not represent the informal economy fully, and thus, is underestimated, and the share of the nominal informal GDP to the total GDP had a decreasing trend in the period after 1961. The price mechanism governing the relationship between demand and supply operated in the informal economy. If consumer prices in informal markets increased, the demands for informal market goods and services decreased. Moreover, supply of materials for the informal economy decreased because of the intensified shortage. In the Soviet economy, shortage problems did not stimulate informal production. Rather, shortages manifested as increasing informal market prices or repressed inflation in the official sector and brought about stagnation in the informal sector. This study provided evidence that the informal economy, in fact, increased Russian GDP in the Soviet period. At the same time, we confirmed that the informal economy grew in parallel to the overall economic activities. This supports Kim and Shida (2017) who concluded that the Russian informal economy was dependent on the official economy. When the official economy stagnated, the informal economy also stagnated. The shortage did not promote growth in the informal economy. Hidden inflation caused by shortages, therefore, most likely resulted in overall economic stagnation. This retrospective analysis of historical statistics focusing on the informal GDP was motivated by the necessity to re-examine factors underlying Russia’s growth path after the transition. Our estimates suggested that the size of informal economy around 1989 and 1990, the last year of the Soviet regime and the year the transition started, was underestimated by 5%–10%. This point is important for determining when the Russian economy recovered from the transition recession. According to the United Nations’ national accounts database, the Russian economy recovered its 1990 GDP level in 2007 and has shown no signs of decline thereafter (United Nations 2016). If we assume that GDP in 1990 was larger by

11  GROSS DOMESTIC PRODUCTS 

405

5.4% to 10.5% than what the UN data suggests, considering the upward revision of the size of informal economy, we find that the recovery occurred around 2007–2008, and as a result of the global financial crisis, the level of GDP in 2009 and 2010 decreased than its 1990 level, again.

11.4   National Income Statistics of the Russian Federation 11.4.1  Transition to SNA The Russian Federation launched a shift to SNA immediately after the start of systemic transformation. Since that was the period of the introduction of the SNA 1993 all over the world, this shift was from the beginning based on the SNA 1993 (Tabata 1999, pp. 25–31). A joint project between Russia’s Goskomstat and the World Bank in 1995 marked an epoch (Goskomstat Rossii and World Bank 1995b). Since measures corresponding to the SNA 2008 have been adopted thereafter, as of 2018, Russian national income statistics are regarded as fundamentally based on internationally adopted SNA. In addition, with respect to their publication, since 1995, a statistical handbook on national accounts, Natsional’nye cheta Rossii (NSR), has been published every year. In principle, all data and publications are open to the public at the website of the Goskomstat (Rosstat) and their renewal has been regularly conducted. With respect to the correspondence with the SNA 2008, the Rosstat made revisions to data in the years 2011–2013 regarding the following points: (1) estimation of housing service in one’s own house is improved; (2) depletion of fixed assets is evaluated at current prices; (3) the balance-­ of-­payment and international investment positions are based on the sixth edition of the IMF’s manual; (4) hidden payments of gross compensation of employees and mixed income are estimated based on financial accounts of households made by the Central Bank; and (5) housekeeping services are estimated.25 Further, there were revisions to data from 2014: (6) R&D is treated as fixed capital formation and (7) expenditures on military equipment are treated as fixed capital formation. Because of these revisions, national income data is now published in three separate tables: a table for the period until 2011, 2011–2013, and after 2014. 25  See the Rosstat’s website (http://www.gks.ru/free_doc/new_site/vvp/letter_vvp.pdf, accessed on November 16, 2016).

406 

M. KUBONIWA ET AL.

Table 11.24 shows SNA data published in Russia. Concerning integrated accounts, following standard SNA practice, the production account, income generation account, allocation of primary income account, secondary distribution of income account, use of disposable income account, and capital account have been published. Data on production and income generation accounts by economic activities and indicators of expenditures and final consumption expenditures have been available since 1989, followed by publications of other accounts in the subsequent years. With respect to data by institutional sector, data on five sectors, including non-­ financial corporations, financial institutions, general government, non-­ profit organizations serving households, and households, are available. Table 11.24 shows that data on the household sector was first published in relation to both institutional accounts and final consumption expenditures, followed by those on the general government sector. We should recall that, even in the Soviet period, sample surveys of households were carried out continuously. As for data by economic activity, data in the detailed classification for 2003 and subsequent years have been published. Concerning data in real terms, available data are still limited, as shown in Table 11.24. In addition, although, for instance, data denominated in 2008 constant prices were available, they were calculated from nominal data for 2008 multiplied by the increase rate against the previous year. As a result, published data of the “total” in real terms are not necessarily equivalent to the sum of data by sector in real terms. Therefore, in this section, we collected increase rates against the previous year as data in real terms. 11.4.2  Notes to Data (1) Classification of industries (economic activities) Since 2002, data by industry (economic activities) have been released according to the classification shown in Table 11.25. This classification, called “all Russian classification of kinds of economic activities” (Obshcherossiiskii klassifikator vidov ekonomichekoi deiatel’nosti, OKVED for short) is the internationally adopted one and follows the Statistical Classification of Economic Activities in the European Community (NACE Rev. 1), according to the Rosstat. This, in turn, is based on the International Standard Industrial Classification of All Economic Activities (ISIC Rev.

11  GROSS DOMESTIC PRODUCTS 

407

Table 11.24  Published data of national accounts in Russia

1 2

3

4

Integrated economic accounts Accounts for institutional sectors General government sector Non-profit organizations serving households Household sector Rest of the world Sectoral accounts Production account by kind of economic activity    Detailed breakdown    Output by kind of economic activity and sectors     Table of goods and services output formation   Intermediate consumption by kind of economic activity and sectors    Gross value added by kind of economic activity and sectors Generation of income account by kind of economic activity and sectors    Detailed breakdown   Compensation of employees by kind of economic activity and sectors   Gross operating surplus (gross mixed income) by kind of economic activity and sectors Use of GDP Final consumption expenditure    General government sector    By functions       Detailed breakdown    Household sector     By goods and services

Nominal terms∗

Real terms∗

1989 1995 1995 Only for 2000 1992 1998

– – – –

1989 2003 2000 2002 2002

1991 2004 – – –

2000 1989

– –

2003 2002

– –

2002

–

1989 1989

1991 –

2005 2009 1994 2004

– – 1991 2005

– –

Sources: Compiled by author from NSR (various years) Note: ∗indicates the first year when data became available

3.1).26 As explained above, since 2003, more detailed data by industry have been released. It should be noted, however, that in the 1990s, Russia used a unique industrial classification, the “all Russian classification of branch of national economy” (Obshcherossiiskii klassifikator otraslei narodnogo khoziaistva, 26  See the national classification on the website of the United Nations for industrial classification of each country (http://unstats.un.org/unsd/cr/ctryreg/default.asp?Lg=1)

408 

M. KUBONIWA ET AL.

Table 11.25  All Russian classification of kinds of economic activities (new classification, OKVED) Name A B C D E F G H I J K L M N O P

Agriculture, hunting, and forestry Fishing Mining and quarrying Manufacturing Electricity, gas, and water supply Construction Wholesale and retail trade, repairs Hotels and restaurants Transport and communication Financial intermediation Real estate, renting, and business activities Public administration and defense, social security Education Healthcare and social work Other community, social, and personal service activities Households

Sources: Compiled by author from NSR (2014, pp. 309–311)

OKONKh in short). This was inherited from the Soviet period and has been frequently revised. In the 1990s, some new branches were even added to this. Table  11.26 shows the classification of OKONKh as of 2004. This classification was unique, based on the notion of material production of Marxist economics (Becker 1972, pp. 71–73). This has been an obstacle to the comparison of the statistical data in the USSR and Russia, including national income statistics, with those of developed countries. Although it is good news that since 2002 new classification data have been available for the analysis of Russia’s national income, the problem is that Russian statistical authorities have not revised the past statistical data into the new classification retrospectively. This circumstance hindered analysis of GDP data from the 1990s. This implies that although in the 1990s, we could obtain a significantly greater amount of data in the old classification than in the Soviet period, we were unable to make an analysis integrating these data with those after the 2000s. Therefore, in this section, I attempted to convert GDP data in current prices by the old classification in the period 1989–2001 into the new classification. I have used explanations by the Rosstat concerning the old and new classifications (especially the website information and RSE Prilozhenie (2004)) and data in the years 2002–2004 available in both classifications

11  GROSS DOMESTIC PRODUCTS 

409

Table 11.26  All Russian classification of branch of national economy (old classification, OKONKh) Name 10000 20000 22000 30000 51000 51123 52000 60000 70000, 80000 81000 82000 83000 84000 85000 87000 90100 90200 90300 91000 92000 93000 95000 96000 97000 97920 98000

Industry Agriculture Organizations serving agriculture Forestry Transport Maintenance of roads Communication Construction Trade (wholesale trade including trade in goods for production purposes, retail trade, and external trade) and catering Procurement Information and computing services Real estate General commercial activities to support market Geological exploration and prospecting and geodesic and hydro-­ meteorological services Other activities producing goods Housing Communal services Personal services Healthcare, physical culture, and social security Education Culture and art Science and scientific services Finance, credit, insurance, and pension General administration Defense Social organizations

Sources: Compiled by author from RSE Prilozhenie (2004, pp. 38–54)

(see Note 11.4 in Appendix). Appendix Table 11.4.3 shows data in the new classification in the period 1989–2016, including data in the period 1989–2001, which were the result of our estimation. The reliability of the method of estimation may be checked by comparison of the converged data from the old to the new classification by this method in the years 2002–2004 with published data by the new classification. Ratio A/B, where A is published data and B is converged data, is in the range 0.92–1.06 on average for industrial branches in the years 2002–2004, which may imply a relatively good estimation.

410 

M. KUBONIWA ET AL.

Figure 11.19 shows the share of the GDP by industry for the period 1989–2016 by the new classification, which includes our estimation. If we compare the period 1989–1991 with recent years, the decrease in manufacturing and agriculture and the increase in trade and real estate is outstanding, which reflects both production dynamics in real terms and price changes. Concerning the share of mining, which includes oil and gas mining, although we observe an increasing trend, it is not very significant despite the tremendous price increases in the 2000s. This problem will be discussed below. Data in real terms by the new classification are available since 2003 (Appendix Table 11.4.4). More detailed data have been obtained since 2004. Prior to 2004, only data by the old classification are available (Appendix Table 11.4.2). Since there is not sufficient information, we have not attempted a conversion of these data into the new classification. Since the beginning of 2017, a shift to a new classification called OKVED2, based on a new version of statistical classification of economic activities adopted by the EU (NACE Rev. 2), has been carried out. This shift started in industrial statistics: new-classification data of 2014 and 

2WKHU



+HDOWK VRFLDOZRUN



(GXFDWLRQ



3XEOLFDGPLQLVWUDWLRQ



5HDOHVWDWH EXVLQHVV



)LQDQFLDOLQWHUPHGLDWLRQ



:KROHVDOH UHWDLOWUDGH



&RQVWUXFWLRQ



(OHFWULFLW\JDV ZDWHU



0DQXIDFWXULQJ 























0LQLQJDQGTXDUU\LQJ 





$JULFXOWXUH IRUHVWU\

Fig. 11.19  GDP by industry in Russia, 1989–2016, in percent. Note: Since in the years 1989–2001, official GDP data by industry include FISIM. I excluded them when calculating these percentages. Sources: See Appendix Table 11.4.3

11  GROSS DOMESTIC PRODUCTS 

411

the following years have been released. In the new classification, instead of “Electricity, gas, and water supply,” two branches such as “Electricity and gas” and “Water supply and waste disposal” emerged, which implied that the coverage of industry changed as well. (2) Value-added of oil and gas While the Russian economy heavily depends on oil and gas, the share of the oil and gas industries is not as large as we expect. For instance, in 2003, the share of the oil and gas sectors (oil drilling, petroleum refinery, and gas mining) was only 6.8%. This was because GDP statistics are calculated in producers’ prices (basic prices). In Russia, producers’ prices of crude oil and natural gas are very much lower than their international prices (export prices). This big difference between producers’ and export prices is recorded as profits of the trade sector (trade margins), profits of the transportation sector (transportation margins), and taxes (especially export duties, which were included in taxes on production in GDP statistics). According to the estimate by Kuboniwa (2008, pp. 114–115) made jointly with the Rosstat staff, the share of trade margins, transportation margins, and net taxes on production related to oil and gas is 7.7%, 0.8%, and 4.5%, respectively, in 2003, which implies that the share of oil and gas sector as a whole reached 19.8%, almost three times larger than the official figure. This practice, in which the value-added produced by oil and gas was recorded in other sectors of the economy, survived afterwards and Kuboniwa continues to make an estimate of its “true” size. (3) Shadow economy (informal sector) The Rosstat classifies the notion of a shadow or second economy as follows (Tabata 1999, p.  28; Goskomstat Rossii 1998, pp.  11–14; Ponomarenko 1997, p. 23): (a) Legal activities that are hidden or underreported in order to decrease tax payments or other obligations; (b) Informal (unofficial, but legal) activities, including agricultural production in subsidiary plots, and activities under individual or family management not in a form of corporation, such as a temporary construction organization (brigade);

412 

M. KUBONIWA ET AL.

(c) Illegal activities, including those that are illegal because of failure to obtain official permission and those prohibited by law, such as narcotics, prostitution, contraband, and so on. Among them, the Rosstat has made an estimate of (a) and (b). The estimation is done for each production (or consumption) activity. Since 2002, estimates of the shadow economy by industrial branch have been published, as shown in Table 11.27, in which “shadow activities by corporates” and “activities of informal sectors and production by households for their own consumption” roughly correspond to activities (a) and (b), respectively. Concerning the difference in informal economy between the Soviet period (Sect. 11.3 of this chapter) and contemporary Russia, in the former period, all private production was regarded as illegal except for agricultural production in subsidiary plots. On the other hand, in the latter period, production activities of (a) and (b) are all legal. In addition, while in the former period informal economic activities were not included in the official statistics, in contemporary Russia, they are estimated and included in it. Except for households, in which the share of the shadow economy equals 100% by definition, this share was almost 50% in real estate and agriculture with a dominant share of activities (b). Besides, this share was larger than 10% in such sectors as construction, hotels and restaurants, fishing, other service activities, and wholesale and retail trade. Among them, the share of activities (a) exceeded 10% in hotels and restaurants, construction, and fishing. Table 11.28 demonstrates the share of the shadow economy as a whole to the GDP in the period 2002–2015. While in 2002 the shadow economy accounted for almost one-fourth of the GDP, this share halved by 2011, decreasing to approximately 11%. Since 2011, when Russia’s GDP statistics began to reflect more explicitly the revised SNA 2008, estimates of the shadow economy became large. In particular, the share of “activities of informal sectors and production by households for their own consumption” almost doubled. If we compare data in 2011, when the old estimates were obtained by the previous method and the new estimates based on SNA 2008 were available, we can see that estimates in real estate became 2.4 times larger in the latter case, having increased from 3.3% to 7.9% of the total GDP. This is considered to be the result of improvement in estimation of housing service in one’s own house.

11  GROSS DOMESTIC PRODUCTS 

413

Appendix Tables and Figures are available at www.ier.hit-u.ac.jp/histatdb/projects/view/2. Table 11.27  Estimates of the shadow economy by Rosstat in 2015, in percent of value-added of each sector

A B C D E F G H I J K L

M N O

P

Total

In which: shadow activities by corporates

Activities of informal sectors and production by households for their own consumption

In percent of GDP

46.6

4.1

42.5

1.8

17.5 0.4 5.5 0.0

10.4 0.4 5.2 0.0

7.1 0.0 0.3 0.0

0.0 0.0 0.7 0.0

18.6 10.7

11.4 8.9

7.2 1.8

1.1 1.6

17.6

17.4

0.2

0.1

9.8

4.9

4.9

0.7

1.1

0.0

1.1

0.0

48.3

10.4

37.9

7.5

0.0

0.0

0.0

0.0

5.7 2.6

1.6 1.4

4.1 1.2

0.1 0.1

Agriculture, hunting, and forestry Fishing Mining and quarrying Manufacturing Electricity, gas, and water supply Construction Wholesale and retail trade, repairs Hotels and restaurants Transport and communication Financial intermediation Real estate, renting, and business activities Public administration and defense, social security Education Healthcare and social work Other community, social and personal service activities Households

13.2

6.8

6.4

0.2

100.0

0.0

100.0

0.5

Total at basic prices GDP at market prices

16.2 14.5

5.7 5.1

10.5 9.4

14.5 –

Sources: Compiled by author from Rosstat’s website

13.7 9.9

23.7

12.9

11.7

24.6

2003

17.2

9.7

7.5

2004

17.1

9.6

7.5

16.8

9.4

7.4

2005 2006

16.4

8.9

7.4

14.1

8.0

6.0

16.0

9.4

6.6

11.1

5.5

5.6

11.3

4.7

6.6

14.6

9.8

4.9

14.8

9.7

5.1

2007 2008 2009 2010 2011∗ 2011∗ 2012

Source: Compiled by author from NSR (various years) Note: ∗Two estimates are available for 2011, since data was revised from that year reflecting 2008 SNA

Shadow activities by corporates Activities of informal sectors and production by households for their own consumption Total

2002

Table 11.28  Estimates of the shadow economy by Rosstat, in percent of GDP

14.3

9.6

4.7

2013

14.4

9.3

4.6

2014

14.5

9.4

5.1

2015

414  M. KUBONIWA ET AL.

11  GROSS DOMESTIC PRODUCTS 

415

References Alexeev, M. & Sayer, A. (1987). The Second Economy Market for Foreign Made Goods in the USSR. Berkeley-Duke Occasional Papers on the Second Economy in the USSR, no. 11. Babaev, L. (1972). Oblastnoe sobranie predstavitelei semei, vedushchikh zapisi lichnykh biudzhetov. Vestnik statistiki, No. 6. Becker, A. (1972). National Income Accounting in the USSR. In Treml, V. G. & Hardt, J.  P. (Eds.), Soviet Economic Statistics (69–119). Durham: Duke University Press. Belova, N.F. & Dmitrichev, I.I. (1990). Semeinyi biudzhet: statisticheskii aspekt. Moscow: Fianansy i statistika. Biuro sotiologicheskikh obsledovanii (Goskomstat SSSR, informatsionno-­ izdatel’skii tsentr, biuro sotiologicheskikh obsledovanii) (1990). Biudzhety rabochikh, sluzhashchikh i kolkhoznikov v 1975–1988 gg., sbornik materialov po dannym biudzhetnykh obsledovanii. Moscow: Informatsionn-izdatel’skii tsentr goskomstata. Central Intelligence Agency (CIA) (1991). Sector of Origin and End Use GNP for the Soviet Union 1950–90, Update of JEC Estimates in 1982 Rubles. Washington, D.C.: CIA. Central Intelligence Agency, Directorate of Intelligence (CIA) (1975). USSR: Gross National Product Accounts, 1970. Washington, D.C.: CIA. Central Intelligence Agency, Directorate of Intelligence (CIA) (1983). Soviet Gross National Product in Current Prices, 1960–80: A Research Paper, Sov 83–10037. Washington, D.C.: CIA. Dumnov, D. & Riik, K. (1978). Mezhdunarodnoe soveshchanie po voprosam metodologii obsledovanii domashchnikh khoziaistv. Vestnik statistiki, No. 12. Edvinsson, R. (2015). The Gross Domestic Product of Sweden within Present Borders 1620–. Version 2.2. Stockholm: Swedish Riksbank. http://www.historia.se/ VolumeIICh4GDP.xls. Edvinsson, R. (Ed.) (2016). Historical Currency Converter. (January 10) Stockholm: Swedish Riksbank. https://www.historicalstatistics.org/ Currencyconverter.html. El’fterov, D.P. (2010). Istoriia isledovaniia biudzhetov domashnikh khoziaistv. Voprosy statistiki, (6), 78–81. Ericson, R. (2006). Command Versus ‘Shadow’: The Conflicted Soul of the Soviet Economy. Comparative Economic Studies, 48(1), 50–76. Falkus, M.E. (1968). Russia’s National Income 1913: A Revaluation. Economica, 35(137), 52–73. Goldsmith, R. (1961). The Economic Growth of Tsarist Russia 1860–1913. Economic Development and Cultural Change, 9(3), 441–475.

416 

M. KUBONIWA ET AL.

Goskomstat Rossii (1992). Tablitsy zatraty-vypusk za 1980–1990 gody. Moscow: Goskomstat Rossii. Goskomstat Rossii & World Bank (1995a). Russian Federation: Report on the National Accounts. Washington, D.C.: World Bank. Goskomstat Rossii & World Bank (1995b). Rossiiskaia Federatsiia: Doklad o natsional’nykh schetakh. Moscow: Goskomstat Rossii. Goskomstat Rossii (1998). Metodologicheskie polozheniia po statistike, Vypusk 2. Moscow: Goskomstat Rossii. Gregory, P. (1982). Russian National Income 1885–1913. Cambridge: Cambridge University Press. Grossman, G. (1977). The Second Economy of the USSR. Problems of Communism, 26(5), 25–40. Gukhman, B. (1927). Promyshlennost’ i narodnoe khoziaistvo. Moscow. Interstate Statistical Committee of the CIS (1993). Itogi vsesoiuznoi perepisi naseleniia 1959 goda: chislo i sostav semei v SSSR, Tom 3. Moscow: Statistika. Interstate Statistical Committee of the CIS (1996). National Accounts of the CIS Member-Countries in 1990–1995. Moscow: Informatsionno-izdatel’skoe upravlenie statkomiteta SNG. Interstate Statistical Committee of the CIS (1998). Soviet National Income Data for 1950–1990. Moscow. JEC (US Congress, Joint Economic Committee) (1982). USSR: Measures of Economic Growth and Development, 1950–80. Washington, D.C.: U.S. Government Printing Office. JEC (US Congress, Joint Economic Committee) (1990). Measures of Soviet Gross National Product in 1982 Prices, A Study Prepared for the Use of the Joint Economic Committee, Congress of the United States. Washington, D.C.: U.S. Government Printing Office. Kashin, Iu I. & Mikov, V.V. (Eds.) (2006). Denezhnyie dokhody i raskhody naseleniia 1924–1990 gg. (Po stranitsam arkhivnykh fondov Tsentral’nogo banka Rossiiskoi Federatsii, vypusk 1). Moscow: CBR. Kaufman, A. (1962). Small-Scale Industry in the Soviet Union. NBER Occasional Paper, No. 80. New York: NBER. Khromov, P.A. (1950). Ekonomicheskoe razvitie Rossii v XIX–XX vekakh, 1800–1917. Moscow: Gosudarstvennoe izdatel’stvo politicheskoi literatury. Kim, B.-Y. (2002). Causes of repressed inflation in the Soviet consumer market, 1965–1989: retail price subsidies, the siphoning effect, and the budget deficit. Economic History Review, 55(1), 105–127. Kim, B.-Y. (2003). Informal Economic Activities of Soviet Households: Size and Dynamics. Journal of Comparative Economics, 31(3), 532–551. Kim, B.-Y. & Shida, Y. (2017). Shortages and the Informal Economy in the Soviet Republics: 1965–1989. The Economic History Review, 70(4), 1346–1374.

11  GROSS DOMESTIC PRODUCTS 

417

Kuboniwa, M. (1992). Structure of the Russian economy (in Japanese). Keizai Kenkyuu, 43(4), 337–360. Kuboniwa, M. (1996). Economic Growth in Postwar Russia: Estimating GDP. Institute of Economic Research, Hitotsubashi University, Discussion Paper, No. D96–10. Kuboniwa, M. (1997). Economic Growth in Postwar Russia: Estimating GDP. Hitotsubashi Journal of Economics, 38(1), 21–32. Kuboniwa, M. (Ed.) (2000). Russian Economic Statistics in Historical Perspectives: An International Workshop. Tokyo: Institute of Economic Research, Hitotsubashi University. Kuboniwa, M. (2008). Profits and Capital in Oil and Gas Industries (in Japanese). In Tabata, S. (Ed.), Oil, Gas and the Russian Economy (101–124). Sapporo: Hokkaido University Press. Kuboniwa, M. & Ponomarenko, A. (2000). Revised and Enlarged GDP Estimates for Russia, 1961–1990. In Odaka, R., Kiyokawa, Y., & Kuboniwa, M. (Eds.), Constructing a Historical Macroeconomic Database for Trans-Asian Regions (109–125). Tokyo: Institute of Economic Research, Hitotsubashi University. Kuz’menkova, L. (1988). Statistika semeinykh biudzhetov. Vestnik statistiki, No. 3. Maddison, A. (1995). Monitoring the World Economy 1820–1992. Paris: Development Centre of the Organisation for Economic Co-operation and Development. Maddison, A. (2001). The World Economy: Vol. 1 A Millennial Perspective. Paris: Development Centre of the Organisation for Economic Co-operation and Development. Maddison, A. (2010). Historical Statistics of the World Economy: 1–2008 AD. Groningen University. http://www.ggdc.net/maddison/oriindex.htm. Maddison project (2013). Maddison Project Database 2013. https://www.rug.nl/ ggdc/historicaldevelopment/maddison/releases/maddison-projectdatabase-2013. Markevich, A. & Harrison, M. (2011). Great War, Civil War and Recovery: Russia’s National Income, 1913 to 1928. Journal of Economic History, 71 (3), 672–703. Matiukha, I. Ia. (1967). Statistika biudzhetov naseleniia. Moscow: Statistika. Ministerstvo vneshnikh ekonomicheskikh sviazei SSSR (1991). Vneshnie ekonomicheskie sviazi SSSR v 1990 g.: statisticheskii sbornik. Moscow: Finansy i statistika. NSR (1995–2015). Natsional’nye scheta Rossii. Moscow: Goskomstat Rossii/ Rosstat. Ohkawa, K., Takamatsu, N., & Yamamoto, Y. (1974). National Income, Long-­ Term Economic Statistics, Volume 1 (in Japanese). Tokyo: Toyokeizai Shinposha. Osipov, V.A. (2009). Chastnaia khoziaistvennaia deiatel’nost’ v zerkale sovetskoi statistiki. In Sorokin, A.K. (Ed.), Ekonomicheskaia istoriia ezhegodnik 2009 (579–636). Moscow: ROSSPEN.

418 

M. KUBONIWA ET AL.

Panina, P. (1983). Sobranie rabochikh i sluzhashchikh moskovskoi oblasti, vedushchikh biudzhetnye zapisi. Vestnik statistiki, No. 3. Ponomarenko, A. (1997). Podkhody k opredeleniiu parametrov ‘tenevoi ekonomiki’. Voprosy statistiki, (1), 23–28. Prokopovich, S. (1931). Memorandum 3, the National Income of the USSR. Birmingham University. Rosefielde, S. & Kuboniwa, M. (2003). Russian Growth Retardation Then and Now. Eurasian Geography and Economics, 44 (2), 87–101. RSE Prilozhenie (2004). Rossiiskii statisticheskii ezhegodnik. Prilozhenie “Otdel’nye statisticheskie pokazateli deiatel’nosti organizatsii Rossiikoi Federatsii po vidam ekonomicheskoi deiatel’nosti. 2004”. Moscow: Rosstat. Rovinskaia, N. (1965). Sobranie semei, vedushchikh biduzhetnye zapis. Vestnik statistiki, (3), 80–81. Russian Ministry of Economy (MINECON) (1994). Input-Output Tables of the USSR, 1966, 1972 and 1975–1990 and Supplementary Tables for 1987–1989 in Current and Constant prices. Moscow. Rutgaizer, V. (1992a). The Shadow Economy in the USSR: A Survey of Soviet Research. Berkeley-Duke Occasional Papers on the Second Economy in the USSR, no. 34, Part 1. Rutgaizer, V. (1992b). Sizing Up the Shadow Economy: Review and Analysis of Soviet Estimates. Berkeley-Duke Occasional Papers on the Second Economy in the USSR, no. 34, Part 2. Saito, O. & Takahashi, M. (2016). Estimating the Shares of Secondary- and Tertiary-Sector Outputs in the Age of Early Modern Growth: the Case of Japan, 1600–1874. European Review of Economic History, 20, 368–386. Settsu, T., Bassino, J-P., & Fukao, K. (2016). Revisiting Economic Growth in Meiji Japan: Industrial Structure, Labor Productivity and Regional Inequality (in Japanese). The Economic Review, 67(3), 193–214. Schroeder, G. & Greenslade, R. (1979). On the Measurement of the Second Economy in the USSR. The ACES Bulletin, 21(1), 3–22. Shenfield, S. (1983). A Note on Data Quality in the Soviet Family Budget Survey. Soviet Studies, 35(4), 561–568. Shida, Y. (2015). Economic Analysis of Shortages and Household Behaviors: Cliometric Approach to the Soviet Economic History (in Japanese). Ph. D Thesis, Hitotsubashi University. Strumilin, S. (1928). Ocherki sovetskoi ekonomiki: risursy i perspektivy. Leningrad: Gosdarstvennoe izdatel’stvo. Strumilin, S. (1963). Statistika i ekonomika. Moscow: Izdatel’stvo AN SSSR. Studenski, P. (1958). The Income of Nations. Theory, Measurement, and Analysis: Past and Present. A Study in Applied Economics and Statistics. New  York: New York University Press.

11  GROSS DOMESTIC PRODUCTS 

419

Tabata, S. (1999). National Income and Economic Growth (in Japanese). In Kuboniwa, M., & Tabata, S. (Eds.), The Russian Economy at Crossroads: Transition to a Market Economy and Statistical System (23–59). Tokyo: Aoki Shoten. Tsentralnoe Statisticheskoe Upravlenie (TsSU) (1921). Sbornik Statisticheskikh Svedenii, 1913–17, Moscow. United Nations (2016). National Accounts Main Aggregates Database. https:// unstats.un.org/unsd/snaama/dnlList.asp. Accessed on 16 March 2016. US Census Bureau (1975). Historical Statistics of the United States, Colonial Times to 1970. https://www.census.gov/library/publications/1975/compendia/ hist_stats_colonial-1970.html. V.B. (1964). Soveshchanie po statistike biudzhetov naseleniia. Vestnik statistiki, No. 10.

CHAPTER 12

Estimating GDP and Foreign Rents of the Oil and Gas Sector in the Soviet Union and Present-Day Russia Masaaki Kuboniwa

12.1   Introduction Soviet legacies for present-day Russia are found in its resource dependency as well as its implicit exposition of resource rents from foreign trade in the national accounting. We demonstrate that, in the Soviet Union then as well as Russia now, the major part of resource rents has been derived from foreign trade in which rents arise from the differences between foreign trade prices and domestic prices of oil and gas. Here “oil and gas” means crude oil, oil products (gasoline, diesel, etc.), and natural gas. This is one of the Soviet legacies related to natural resource rents in the Soviet Union and present-day Russia. Another Soviet legacy is that rents from exports of oil and gas are not incorporated into the value added of the oil and gas This chapter is a simple reproduction of Kuboniwa (2016) in which we could not make use of Russian input-output data for 2011–2015 released in 2017. See Table 1.4 in Chap. 1. M. Kuboniwa (*) Institute of Economic Research, Hitotsubashi University, Kunitachi, Tokyo, Japan e-mail: [email protected] © The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5_12

421

422 

M. KUBONIWA

sector but rather into the distribution sectors in the official national accountings. These rents should be recorded in the value added and gross domestic product (GDP) of the oil and gas sector, which generates rents as the sole source sector, so that Soviet and Russian resource dependency could be measured correctly. We have already provided an estimate of Russian rents and GDP of the oil and gas industry (Kuboniwa et al. 2005; Kuboniwa 2015). However, in spite of its importance, there is little data of Soviet rents and value added of the oil and gas sector, and so, we have had to make an estimate.1 Presented here is our estimate of Soviet rents and the value added in the oil and gas sector, using 18-sector input-output tables of the Soviet Union at current domestic prices for 1966, 1972, and 1975–1990 (MINECON 1994) in addition to official published data on foreign trade in foreign trade prices (Uegaki 2004). Our estimate of Soviet rents and the GDP of the oil and gas sector could be regarded as the first systematic attempt ever made public in the literature. We also provide an updated estimate of Russian rents and GDP of the oil and gas sector for 1995–2015, employing official Russian data on domestic “producer prices” and foreign trade prices of the oil and gas to synthesize Russian rents. In Soviet and Russian price statistics, “producer price” implies “factor cost” or “basic price” in usual Western statistics, excluding net taxes on products or indirect taxes. This is also a Soviet legacy in the official statistics. See also Alexeev and Weber 2013 and Oxenstierna 2015.

12.2   Methodology and Data 12.2.1  Methodology In the Soviet Union as well as present-day Russia, rents, or foreign rents, of the oil and gas industry from exports are measured by the differences between exports of oil and gas in foreign trade prices and those in domestic prices.2 Denoting R*, Pf, Pd, and Q as rents, foreign trade prices, domestic prices, and quantity of oil and gas exports, respectively, we have

R∗ = Pf × Q − Pd × Q = ( Pf − Pd ) Q.



(12.1)

1  As for specific features of Soviet foreign trade statistics, see Becker (1972). Treml et al. (1972) provided preliminary considerations of Soviet rents of oil and gas from exports. 2  We ignore imports of oil and gas because they are negligible in the USSR and new Russia.

12  ESTIMATING GDP AND FOREIGN RENTS OF THE OIL AND GAS SECTOR… 

423

In the Soviet Union, these rents were fully absorbed into the State budget as net taxes on exports because of the State-monopolized institution of foreign trade, while they were added to the value-added or national income of the trade sector in the national accounting based on the material product system (MPS). In present-day Russia, rents arising from exports are absorbed into (1) net taxes on exports and (2) oil and gas companies’ net income from exports, whereas they are incorporated into the value added of trade or transportation sectors in the national accounting based on the system of national accounts (SNA). This similarity of Soviet and Russian practices is regarded as a Soviet legacy in the institutions of the national accounting statistics and taxation in present-day Russia. Although export taxes can be considered to belong to a category of taxes on products or indirect taxes, here we consider export taxes as corporate income taxes, and rents (oil and gas giants’ net income for foreign trade as well as export taxes) as components of the oil and gas sector’s value added, according to the usual practice in most oil-exporting countries, including Norway. This exposition is essential for capturing the right scale of the oil and gas GDP when export taxes or rents are extremely large. Denoting the GDP * and the GDP o as the oil and gas GDP to be estimated and official oil and gas GDP, respectively, our task is to estimate

GDP ∗ = GDP o + R.

(12.2)

12.2.2  Data for the Soviet Union, Then All published data regarding Soviet foreign trade are expressed in foreign trade prices (rubles). Soviet exports of oil and gas in foreign trade prices are from the Soviet Yearbook of Foreign Trade and Uegaki’s database (2004). Soviet foreign trade data in domestic prices, net national income, and depreciation of oil and gas are available only in Soviet input-output tables. We employ Input-Output Tables of the Soviet Union, 1966, 1972, and 1975–1990 for current domestic prices, which were released in MINECON (1994). Gross value added (GVA) in the material sphere of the oil and gas sector at market prices (“established prices” in the Central Intelligence Agency [CIA] terminology) is given by

GVA = NMP + D  GDP o ,

(12.3)

424 

M. KUBONIWA

where NMP is the net national income in the material sphere or net material product at market prices or established prices and D is a capital depreciation excluding unamortized write-off parts. As conversion from the MPS to the SNA does not significantly influence the measurement of oil and gas GVA, the oil and gas GVA at market prices approximates the official oil and gas GDP, that is, GDPo. The overall Soviet GDP is extrapolated by using the proportion of the CIA’s GNP estimate (CIA 1983; JEC 1990) to the official overall net national income (NMP) in 1980 and 1982. We apply the 1980 proportion of 1.376 for 1966–1978, the 1982 proportion of 1.362 for 1983–1990, and the average proportion of 1.369 for 1981. All data are converted to the terms of current US$ by using official exchange rates for 1966–1990 (Bank of Russia’s website; www.cbr.ru).3 Large appreciations of Soviet official exchange rates for 1986–1990 are likely to be inconsistent with large declines in international oil prices, while they are consistent with large appreciations of European major currencies, including German Mark, against US$ for the same period. Therefore, Soviet official exchange rates should be employed to evaluate the amounts of Soviet foreign trade. It should also be noted that domestic prices in Soviet input-output tables employed here are purchaser prices.4 Exports in Soviet domestic purchaser prices do not include any rents, trade margins, or turnover taxes, while they include large transport margins for 1988–1989, which amount to approximately 20% of the oil and gas exports in domestic purchaser prices (see Table  12.1). If exports in basic prices or factor costs (in Soviet terminology, “producer prices”) are employed, Soviet rents of oil and gas may increase by approximately 0.2 percentage points in their share of overall GDP over cases using exports in purchaser prices for 1988–1989.

3  There are the United Nations estimates for 1985–1990 (AMA exchange rates given in National Accounts Main Aggregate Database; http://unstats.un.org/). These estimates may reflect values of non-tradable goods, and black market rates in consumer markets during the Gorbachev era with large fiscal deficits. However, they do not reflect large appreciations of major European currencies against US$ for 1985–1990. Therefore, they are not appropriate for the evaluation of exports of oil and gas. 4  So far as we know, the 1988 Soviet input-output table in “producer prices” is available in Treml (1989).

1071 2076 8809 11,154 14,217 16,882 25,356 33,404 37,559 43,167 46,434 47,112 42,978 42,481 46,172 42,028 39,280 37,817

1244 2602 3948 4257 4828 5301 6438 7028 6471 10,377 10,864 9814 8769 12,014 15,686 17,431 15,639 13,421

(2)

(1)

(4) 6290 15,832 22,158 21,973 23,579 31,595 35,003 36,149 33,508 42,094 43,715 40,827 39,649 48,448 54,806 58,068 55,883 62,589

(3) = (1) − (2) −174 −526 4861 6896 9390 11,581 18,918 26,375 31,088 32,790 35,570 37,298 34,209 30,467 30,486 24,596 23,641 24,395

mln US$

Official measure

6116 15,306 27,019 28,870 32,968 43,176 53,921 62,524 64,596 74,883 79,285 78,125 73,858 78,915 85,293 82,664 79,523 86,984

(5) = (4) + (3)

mln US$

Estimated measure

317,218 517,514 692,664 703,979 761,507 859,448 925,810 975,423 925,045 984,681 1,004,646 954,446 943,466 1,139,866 1,291,240 1,413,750 1,455,711 1,696,386

(6)

mln US$

Overall GDP

Oil and gas GDP

1.8 2.0 6.2 8.3 10.6 12.8 16.8 21.8 26.4 30.3 33.4 32.8 31.0 26.7 23.8 20.8 18.7 17.9

(7)

US$/bbl

International oil price: 5-year moving average

0.900 0.834 0.722 0.754 0.733 0.683 0.655 0.652 0.720 0.725 0.743 0.814 0.835 0.702 0.633 0.608 0.630 0.585

(8)

ruble/US$

Forex

Sources: MINECON (1994), various issues of Yearbook of Soviet Foreign Trade, Uegaki (2004), CIA (1983), JEC (1990), Interstate Statistical Committee of the CIS database, BP (2016), and Bank of Russia mln =million and bbl = barrel. Notes: Column (1)–(8) are explained in the text of this chapter. Column (7) is author’s estimation by using BP’s historical data on oil prices

1966 1972 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

mln US$

mln US$

mln US$

At domestic Oil and gas prices rents

At foreign trade prices

Oil and gas exports

Table 12.1  Estimates of the Soviet oil and gas GDP and rents 12  ESTIMATING GDP AND FOREIGN RENTS OF THE OIL AND GAS SECTOR… 

425

426 

M. KUBONIWA

Table 12.2  Soviet exports of oil and gas in domestic prices for 1987–1989 Exports in domestic purchaser prices

Transport margins

9922.7 10,595.2 9859.0

49.1 1988.3 1842.9

1987 1988 1989

Re-exported imports Nr 521.9 Nr

Exports in domestic factor costs (basic prices) 9873.6 8085.0 8016.1

Source: Tables for 1987–1989 in MINECON (1994) Notes: For 1988, the last column of Table  12.2 provides the data in Treml (1989, Table  1).

Nr = not recorded

12.2.3  Data for Russia, Now Exports of oil and gas in foreign trade prices for 2000–2015 are taken from foreign trade data in US$ (websites of Customs Services/FTS, Rosstat, and the Bank of Russia; www.customes.ru and www.gks.ru), while those for 1995–1999 are from Russian input-output tables5 in purchaser prices. Unlike those in Soviet tables, exports in purchaser prices in Russian tables fully include foreign rents. Exports of oil and gas in domestic prices or basic prices are calculated by the official data on annual export quantities (ton or cubic meter) and annual averages of monthly “Russian producer prices.” For present-day Russia, domestic prices equal basic prices or “producer prices.” Official data on the GVA of the oil and gas sector at basic prices for 2003–2015 are calculated from the crude oil and natural gas GVA plus the oil product GVA in the disaggregated GVA data on the Rosstat website. The data for 1995–2002 are from the sole source, that is to say, Russian input-output tables for 1995–2002. The “official GDP of the oil and gas sector” is estimated from the official published GVA at basic prices plus net taxes (excise taxes and value-added taxes) on oil and gas, excluding exports. Here “official” indicates data based on the official methodology in which the oil and gas sector is not engaged in foreign trade activities. 5  Published input-output tables and supplementary tables (matrixes of imports, trade margins, transport margins, and net taxes on products) for 1995–2003 are obtained from Rosstat (1999–2006). Tables for 1998–2003 are on Rosstat’s website, www.gks.ru. Rosstat (2010) provides a full set of input-output tables and supplementary tables for 2005, which was compiled upon request of the Institute of Developing Economies, JETRO, for BRICs international input-output table for 2005. Rosstat also released data on the GVA of oil and gas, and total net taxes on the oil and gas products for 2004 and 2006.

12  ESTIMATING GDP AND FOREIGN RENTS OF THE OIL AND GAS SECTOR… 

427

Net taxes on oil and gas, excluding exports for 1995–2006, are obtained from Russian input-output data (matrix tables of net taxes on products or released data), while those from 2007 onward are extrapolated by using the average proportion, 0.3514, of the GVA of the oil products sector to its net taxes on products, excluding exports for 2005–2006, and its official GVA data for 2007–2015. Net taxes on products, excluding exports in present-day Russia, categorically correspond to turnover taxes in the Soviet Union. Export taxes on oil and gas are paid by oil and gas giants from their export revenues. Data regarding export taxes on oil and gas are available from websites of the Ministry of Finance and its related organizations (www.minfin.ru and www.roskazna.ru). Although export taxes can be regarded as a category of taxes on products or indirect taxes, we here consider taxes on oil and gas exports as corporate income taxes, in accordance with the usual practice in most oil-exporting countries. All relevant data are converted to US$ using annual foreign exchange rates on the websites of the International Monetary Fund (IMF)/A Euromoney Institutional Investor Company’s database (CEIC).

12.3   Results of Estimations 12.3.1  Results for the Soviet Union, Then Figure 12.1 shows our estimate of the Soviet oil and gas GDP and rents for 1966–1990 in terms of the per cent of overall GDP. Figure 12.2 shows those in terms of current US$ (for detailed data, see Table 12.1). As can be seen from Fig. 12.1, with rising international oil prices, the share of Soviet oil and gas rents in the overall GDP showed continuous increases from 0.7% in 1975 to 2.7% in 1980 and 3.9% in 1984. Then it showed continuous contractions and accounted for 1.4% in 1990. Concurrently, the share of Soviet oil and gas GDP in the overall GDP also showed continuous increases from 3.9% in 1975 to 6.4% in 1980 and 8.2% in 1984. Then it showed continuous decrease to 5.1% in 1990. As shown in Fig.  12.2, rents in current US$ also increased from 4861 million US$ in 1975 to 37,298 million US$ in 1984, and then fell to 23,395 million US$ in 1990. The estimated oil and gas GDP increased from 27,019 million US$ in 1975 to 78,125 million US$ in 1984 and declined to 73,858  million US$ in 1985. However, it increased again from 1986 onward and came up to 86,984 million US$ in 1990 due to large appreciations (more than 40%) of official exchange rates of ruble against US$, which rightly reflected large appreciations of European major

428 

M. KUBONIWA 86EEO

*'3

 













 



 

















 



 















 



























 





















 







 





 RIILFLDORLO JDV*'3

HVWLPDWHGRLO JDV*'3

RLO JDVUHQWV

,QW ORLOSULFH\HDUPRYLQJDYHUDJHULJKW

Fig. 12.1  Estimates of Soviet oil and gas GDP in per cent of overall GDP. Source: Table 12.1 displayed in this chapter

currencies against US$. These changes in rents and GDP of oil and gas may not be consistent with those of international oil prices for 1986–1990, while they rightly reflect the remarkable devaluation of US$ for the same period. 12.3.2  Results for Russia, Now Figures 12.3 and 12.4 present our estimates of the Russian oil and gas GDP and rents for 1995–2015 in terms of the per cent of overall GDP and US$, respectively (for detailed data, see Table 12.3). As can be seen from Fig.  12.3, with a rapid rise of international oil prices, the share of Russian oil and gas rents in the overall GDP increased from 6.5% in 1998 to 13.4% in 2000. Then it fluctuated between 9% (2013–2014) and 11% (2008) for 2001–2014. In 2015, with a rapid decrease in international oil prices, it contracted to 7.7%. Concurrently, the share of Russian oil and gas GDP in the overall GDP also showed a rapid increase from 13.2% in 1998 to 22.9% in 2000. Then it fluctuated

12  ESTIMATING GDP AND FOREIGN RENTS OF THE OIL AND GAS SECTOR… 

429

86EEO 

POQ86  







 











 







 

 RIILFLDORLO JDV*'3 RLO JDVUHQW

HVWLPDWHGRLO JDV*'3 ,QW ORLOSULFH\HDUPRYLQJDYHUDJHULJKW

Fig. 12.2  Estimates of Soviet oil and gas GDP in current US$. Source: Table 12.1 displayed in this chapter

between 17.7% and 23.6%. However, unlike rents, the share of Russian oil and gas GDP in the overall GDP did not decrease much in 2015, due to constantly high shares of the official oil and gas GDP. Visually, the correlation between the shares of the oil and gas GDP and Urals oil prices is rather low (adjusted R 2 = 0.297 ). As can be seen from Fig. 12.4, rents, in current US$, increased from 18,148 million in 1998 to 24,498 million in 2000. Then they increased continuously until the 2009 Lehman shock. After 2010, they revived well, while, with a sharp drop in Urals oil prices, it showed a large contraction to 153,562 million US$ in 2015. The Russian GDP of the oil and gas sector in current US$ showed movement parallel with rents due to increases in international oil prices as well as domestic oil prices. It jumped from 35,788 million US$ in 1998 to 59,348 million US$ in 2000. Then they showed continuous increases until 2009. After 2010, its level was restored well. However, a sharp drop in Urals oil prices, associated with a large depreciation of the foreign exchange rate of the ruble, brought about a large contraction and accounted for 256,081 million US$ in 2015. Unlike

430 

M. KUBONIWA

86EEO

*'3  

 

 















 



  







  

 

 









  



























 















 





 

 





   







 RIILFLDORLO JDV*'3

HVWLPDWHGRLO JDV*'3

2LO JDVUHQWV

8UDOVRLOSULFHULJKW

Fig. 12.3  Estimates of Russia’s oil and gas GDP in per cent of overall GDP. Source: Table 12.3 shown in this chapter

facts in terms of GDP shares, the correlation between amounts of oil and gas GDP and Urals oil prices is very high (adjusted R 2 = 0.974 ).

12.4   Observations Across the Soviet Union, Then, and Russia, Now Figure 12.5 shows average shares of estimated GDP and rents of the oil and gas sector and rents in the overall GDP of the Soviet Union and present-day Russia. Average shares of the estimated rents and GDP of the oil and gas sector in the overall GDP in the Soviet Union are 2.3% and 6.2%, respectively, for 1975–1990; meanwhile, in Russia, they are now 9.4% and 19.0%, respectively, for 1995–2015. The Soviet-estimated 6.2% is 1.6 times its official GDP, while the Russian-estimated 19% is twice the official share of 9.6%. These results are rather intuitive. On the other hand, the estimated share for present-day Russia is approximately three times that for the Soviet Union. Both the Soviet Union and Russia have been

12  ESTIMATING GDP AND FOREIGN RENTS OF THE OIL AND GAS SECTOR… 

431

POQ86

86EEO





 

 



 

 



 



 



RIILFLDORLO JDV*'3

HVWLPDWHGRLO JDV*'3

2LO JDVUHQWV

8UDOVRLOSULFHULJKW

Fig. 12.4  Estimates of Russia’s oil and gas GDP in current US$. Source: Table 12.3 shown in this chapter

exposed to, and dependent on, exports of the oil and gas sector, considering that the average shares of oil and gas exports in total exports at foreign trade prices in the Soviet Union for 1975–1990 and Russia for 1995–2015 are 41% and 49%, respectively. However, obviously, Russia’s oil dependence is much stronger than that of the Soviet Union in terms of GDP share. This result may not be so intuitive. We need further analyses of the Soviet GDP in terms of current US$ or rubles, which is derived by applying the single State-regulated exchange rate to tradable goods and non-­ tradable goods. Our estimate of the Soviet GDP of the oil and gas sector with foreign rents is the first time to ever appear in the literature. Our estimate of the Russian share of the GDP of the oil and gas industry presented here is slightly smaller than the results in Kuboniwa et  al. (2005), Ustinova (2010), and Kuboniwa (2012) based on input-output tables, which include additional domestic activities of the oil and gas industry into their estimations. As of 2016, due to the lack of disaggregated input-output tables with tables from 2006 onward, our simple method may be appro-

31,096 42,055 30,038 27,989 31,303 52,835 52,135 56,264 73,720 100,167 148,915 190,761 218,568 310,140 190,710 254,010 341,812 346,807 349,054 324,391 198,885

12,860 13,942 15,914 10,349 9087 17,984 21,279 21,453 26,269 37,845 62,928 80,502 90,387 122,620 79,074 99,694 136,425 148,630 148,381 139,342 96,366

18,237 28,113 14,124 17,640 22,216 34,851 30,856 34,810 47,451 62,322 85,987 110,259 128,181 187,520 111,636 154,316 205,387 198,177 200,673 185,049 102,520

(3) = (1) − (2)

mln US$

Oil and gas rents

23,304 30,819 33,049 18,148 15,788 24,498 23,976 26,209 32,676 60,942 94,595 118,822 142,823 174,551 116,758 151,552 212,875 228,530 251,918 222,169 153,562

(4)

mln US$

Official measure

41,541 58,932 47,173 35,788 38,004 59,348 54,832 61,019 80,126 123,264 180,582 229,081 271,004 362,070 228,394 305,868 418,262 426,707 452,591 407,217 256,081

(5) = (4) + (3)

mln US$

Estimated measure

313,331 392,090 404,941 270,953 195,908 259,718 306,618 345,487 430,348 590,941 764,017 989,931 1,299,706 1,660,846 1,222,644 1,524,917 2,031,771 2,170,146 2,230,628 2,030,973 1,326,015

(6)

mln US$

Overall GDP

Oil and gas GDP

16.9 20.4 18.5 12.0 17.3 26.6 23.0 23.6 27.3 34.6 50.4 60.9 69.5 94.0 60.8 78.1 109.6 110.8 108.3 98.2 51.6

(7)

US$/bbl

Urals oil price

Sources: Databases of Russian Customs Service, Russian Ministry of Finance, Bank of Russia, Rosstat, IMF, CEIC, BOFIT (Bank of Finland), and author’s estimation

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(2)

mln US$

mln US$

(1)

At domestic prices

At foreign trade prices

Oil and gas exports

Table 12.3  Estimates of Russian oil and gas GDP and rents 432  M. KUBONIWA

12  ESTIMATING GDP AND FOREIGN RENTS OF THE OIL AND GAS SECTOR… 

433

*'3 RLOSULFHFXUUHQWDYHUDJH86EEO









 RLOSULFHFXUUHQWDYHUDJH86EEO 











WKH8665WKHQ

RIILFLDORLO JDV*'3

5XVVLDQRZ

RLO JDVUHQW

HVWLPDWHGRLO JDV*'3

Fig. 12.5  Annual average shares of the estimated GDP and rents of the oil and gas sector in overall GDP in the Union of Soviet Social Republics (USSR), then and Russia, now. Source: The author’s estimate

priate. It should also be noted that our estimate only considers formal activities of the oil and gas sector. However, our methodology is rather robust because it can always be reproduced from systematic official evidence. The results may also provide partial evidence of the resource rents suggested by Gaddy and Ickes (2013, 2015). Figure 12.6 shows the estimated rents and GDP of the oil and gas sector in 2015 US$, considering CPI-based deflators of current US$, which are derived from current oil US$ prices and 2015 US$ prices for 1975–2015 as cited in BP (2016). First, in terms of 2015 US$, the average oil price, 60 US$/bbl for the Soviet Union, approximately equals that for present-day Russia. Second, in terms of 2015 US$, the estimated oil and gas GDP for present-day Russia, 197,042 million US$, is 1.2 times or 20% higher than that for the Soviet Union, 161,680  million US$, whereas the estimated rents for present-­day Russia, 102,741 million US$, is 1.8 times those for the Soviet Union, 58,841 million US$. However, it is noteworthy to find that the official GDP of the oil and gas sector in the Soviet Union, 102,840 million US$, is slightly higher (8%) than that in Russia, 94,301 million US$.

434 

M. KUBONIWA

POQ86

  

RLOSULFH86EEO  RLOSULFH86EEO  



  





WKH8665WKHQ RIILFLDORLO JDV*'3

5XVVLDQRZ RLO JDVUHQW

HVWLPDWHGRLO JDV*'3

Fig. 12.6  Annual average amounts of the estimated GDP and rents of the oil and gas sector in US$ 2015  in the USSR, then and Russia, now. Source: The author’s estimate

In terms of 2015 US$, oil dependence of the Soviet Union is close to that of Russia. An adverse difference between the official GDP in the Soviet Union and present-day Russia may reflect the fact: for the Soviet Union, there were two major sources of taxes on products—turnover taxes and rents—and all rents are absorbed by the State. By contrast, for present-day Russia, the major source is taxes on exports, and other taxes on products are rather secondary, while rents were shared with the oil and gas giants and the federal government. In any event, an intertemporal comparison of the Soviet Union with present-day Russia using CPI-based 2015 US$ rather than current US$ may be useful for better understanding the Soviet legacy in present-day Russia. Let us look at the official Soviet GVA at factor costs by sector, which the JEC (1990) preferred (for details, see Table 12.4 shown in this chapter). The average share of official Soviet oil and gas GVA at factor costs in the overall GDP for 1975–1990 was 2.3% less than that of the official GDP, 3.8%, by the average share of net turnover taxes in the overall GDP, 1.5%. Net turnover taxes on oil and gas dominated 40% of the official GDP of the oil and gas sector.

1.4

1.4 1.3 1.3 1.8 2.0 1.9 1.8 1.4 1.5 1.5 1.5 1.4 1.5 1.4 1.4 1.5

1972

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

1.8 1.8 1.8 1.8 1.8 1.8 1.8 2.9 2.8 2.8 2.7 2.8 2.8 2.7 2.5 2.1

1.7

0.8

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Year

5.6 5.9 5.8 5.1 6.5 7.8 6.7 6.6 6.4 8.9 11.4 10.9 10.0 9.5 8.7 9.1 9.5 9.6 10.2 9.9 10.6

Official oil and gas GVA at basic prices 1.9 2.0 2.4 1.6 1.6 1.6 1.1 1.0 1.2 1.4 1.0 1.2 1.0 1.1 0.9 0.8 0.9 0.9 1.1 1.0 1.0

Net taxes on oil and gas products except for exports 7.4 7.9 8.2 6.7 8.1 9.4 7.8 7.6 7.6 10.3 12.4 12.0 11.0 10.5 9.5 9.9 10.5 10.5 11.3 10.9 11.6

Official oil and gas GDP

Russia, now

0.4 1.9 1.0 1.3 1.9 3.0 3.9 3.0 3.3 3.6 6.1 6.9 5.4 6.8 5.2 5.3 6.1 6.1 5.7 5.9 3.4

5.5 5.3 2.4 5.2 9.4 10.4 6.2 7.1 7.8 6.9 5.2 4.2 4.5 4.5 3.9 4.8 4.0 3.1 3.3 3.2 4.4

Net taxes on Oil and gas oil and gas companies’ net exports income from exports

Sources: Tables 12.1 and 12.3 shown in this chapter Notes: The USSR, then: The estimated GDP = official GDP + rents ; official GDP = GVA at factor costs + turnover taxes ; rents = export taxes ; Russia, now: The estimated GDP = official GDP + rents ; official GDP = GVA at basic prices + net taxes on products excluding exports; and rents = export taxes + companies’ net income from exports

1.2

Official oil and gas GVA at factor costs

USSR, then

Turnover taxes on oil and gas

1966

Year

Table 12.4  Oil and gas GVA at factor costs or basic prices (% GDP) 12  ESTIMATING GDP AND FOREIGN RENTS OF THE OIL AND GAS SECTOR… 

435

436 

M. KUBONIWA

The average share of the official Russian oil and gas GVA at basic prices in the overall GDP for 1995–2015 was 8.3% less than that of the official GDP, 9.6%, by the average share of net taxes on products other than oil and gas exports, in the overall GDP, 1.3%. Net taxes on oil and gas, except for exports, occupied only 13% of the official GDP of the oil and gas sector. The average share of net taxes on oil and gas except for exports in the overall GDP for the same period amounted to 4.1%. The relative importance of net taxes on domestically used oil and gas products has diminished in present-day Russia, as compared with the Soviet Union. Even though we may witness many Soviet legacies or path-­dependencies in present-day Russia, we may also see key differences in Soviet and Russian ownership of rents. In the Soviet Union, rents had been totally centralized into the State budget, while they have been decentralized into the federal government budget and oil and gas companies’ incomes in present-day Russia. The average rent-GDP ratios of the federal government and oil and gas giants for 1995–2015 were 4.1% and 5.3%, respectively. This implies that the federal government’s average share of total rents for the same period was 42.5% less than that of the oil and gas giants. However, for 2005–2014, the federal government’s average share was approximately 60%, irrespective of growth fluctuations. With sharp declines in oil prices and the dramatic depreciation of the ruble, the federal government’s share of rents fell from 65% in 2014 to 44% in 2015.

12.5   Concluding Remarks We estimated the GDP of the oil and gas sector, including rents from exports, in the Soviet Union and present-day Russia to synthesize a fundamental question: how large is the GDP of the oil and gas sector in the Soviet Union, then, and Russia, now? The estimation of such oil and gas GDP for the Soviet Union may be the first time in the literature. We also updated our estimate of the Russian oil and gas GDP, focusing on exports. We demonstrated that the estimated measures of the oil and gas GDP are much larger than its official measures in the Soviet Union, then, and Russia, now. This result is intuitive. However, it may not be intuitive that the share of the oil and gas GDP in the Soviet Union was much smaller than it is in Russia now. This may be partly because of an overvaluation of the total GDP through the application of a single official exchange rate to tradable and non-tradable goods in a non-hard currency world. To correct

12  ESTIMATING GDP AND FOREIGN RENTS OF THE OIL AND GAS SECTOR… 

437

this unintuitive outcome, we demonstrated the Soviet oil and gas GDP in 2015 US$ for comparison. Needless to say, resolving these issues will require further investigation.

References Alexeev, M. and Weber, S. (Eds.) (2013). The Russian Economy. Oxford: Oxford University Press. Becker, A. S. (1972). National Income Accounting in the USSR. In Treml, V. G. and Hardt, J. P. (Eds.), Soviet Economic Statistics (pp. 69–119) Durham: Duke U. P. BP (2016). BP Statistical Review of World Energy 2015. London: BP. Central Intelligence Agency (CIA). (1983). Soviet Gross National Product in Current Prices, 1960–80: A Research Paper, Sov 83-10037. Washington, DC: CIA. Gaddy, C. and Ickes, B. (2013). Russia’s Dependence on Resources. In Chapter 13 in Alexeev, M. and Weber, S. (Eds.), (309–340). Gaddy, C. and Ickes, B. (2015). Putin’s Rent Management System and the Future of Addiction in Russia. In Oxenstierna, S. (Ed.), (11–32). Joint Economic Committee (JEC). (1990). Measures of Soviet Gross National Product in 1982 Prices. Washington, DC: US Government Printing Office. Kuboniwa, M. (2012). Diagnosing the ‘Russian Disease’: Growth and Structure of the Russian Economy. Comparative Economic Studies, 54(1), 121–48. Kuboniwa, M. (2015). The Impact of Oil Prices, Total Factor Productivity and Institutional Weakness on Russia’s Declining Growth. In Oxenstierna, S. (Ed.), (113–127). Kuboniwa, M. (2016) Estimating GDP and foreign rents of the oil and gas sector in the USSR then and Russia now, BOFIT Policy Brief 10/2016. Kuboniwa, M., Tabata, S., and Ustinova, N. (2005). How Large is the Oil and Gas Sector of Russia? A Research Report. Eurasian Geography and Economics, 46(1), 68–76. Oxenstierna, S. (Ed.) (2015). The Challenges for Russia’s Politicized Economic System. London: Routledge. Russian Ministry of Economy (MINECON). (1994). Input-Output Tables of the USSR, 1966, 1972 and 1975–1990 and Supplementary Tables for 1987–1989 in Current and Constant Prices. Moscow. Rosstat. (1999–2006). System of “Input-Output” Tables of Russia for 1995–2003. Moscow. Rosstat. (2010). System of “Input-Output” Tables of Russia for 2005. Moscow. Treml, V. (1989). The Most Recent Input-Output Table: A Milestone in Soviet Statistics. Soviet Economy, 5(4), 341–359.

438 

M. KUBONIWA

Treml, V. et  al. (Eds.) (1972). The Structure of the Soviet Economy. West Port: Praeger. Uegaki, A. (2004). Conversion of Soviet Foreign Trade Statistics to SITC rev.3, Hi-Stat Discussion Paper Series No.34, Institute of Economic Research, Hitotsubashi University. Ustinova, N. (2010). Oil and Gas Sector in Russian Supply and Use Tables, Paper presented to the 18th International Input-Output Conference, Sydney, Australia, June 20–25.

Index1

NUMBERS AND SYMBOLS 1917 socialist revolution, 337 1930/32 credit reform, 235 1933 government restructuring, 109 1947 monetary reform, 237, 238 1988 banking reform, 240, 243 2006 Agricultural Census, 177 A Administrative-police surveys, 70 Agricultural organizations, 176 All-Union Central Council of Trade Unions, 109 All-Union Sector Classification of the National Economy, 211 Annual average number of employed persons, 118 Annual standard workhours, 118 Armament, 366

B Balance table of labor resources, 114 Bank loan financing, 238, 240 Basic price, 360, 422 Berg-kollegiia, 184 Biological yield, 162, 168 Brezhnev, 158 Broad Economic Categories (BEC), 292 Budget deficits, 255, 262, 263, 271, 273, 276–278 Bunker weight, 162, 169 Burge-Geary system, 321 C Caucasus, 76 Censuses, 44, 45, 48, 55 Central Intelligence Agency (CIA), 53, 53n10 Centrally planned economies (CPEs), 385

 Note: Page numbers followed by ‘n’ refer to notes.

1

© The Author(s) 2019 M. Kuboniwa et al. (eds.), Russian Economic Development over Three Centuries, https://doi.org/10.1007/978-981-13-8429-5

439

440 

INDEX

Central Product Classification, 213 Central Statistical Committee, 62, 68 Chervonets, 234, 241 Classification of households, 390 Clean weight, 163 Cold War, 8 Collectivization, 133, 155, 310, 354 Collectivization Congress, 154 Commonwealth of Independent States (CIS), 10, 310 Comparative prices, 160 Conjuncture Institute, 191, 196 Consumer durables, 330 Corporate taxes, 263, 279, 286 Cost-insurance-freight (CIF), 292 Council for Mutual Economic Assistance (CMEA), 293, 321 Council for Mutual Economic Assistance Trade Nomenclature (CTN), 292 Crude birth rate, 92 Crude death rate, 92 Customs statistics, 54, 55 D Debt service, 278, 280n24 Decree on Land, 154 Defense expenditures, 281 Definition of industry, 197 Double counting, 200 Dweller-managed operations, 176 E Economically active population (EAP), 112 Economic regions, 63n6 Emancipation, 106, 134 Enrolled workforce, 112, 126 Established prices, 363

European Russia, 75 Exchange rate, 298, 431 Export duties, 285, 286 Export taxes, 427 F Factor costs, 422, 434 Factor prices, 360, 363 Factory industry, 188n4 Factory method, 200 Factory reports, 184, 185 Factory statistics, 186, 187 Far East, 76 Farmer-managed operations, 176 Five-Year Plan (FYP), 106n2, 110, 154, 196, 217, 235, 310, 354 Free on Board (FOB), 292 G GDP deflator, 32 Geary-Khamis (GK), 15, 344 German-Soviet pact, 305 Gerschenkron effect, 201, 343 Gold standard, 228, 233, 241 Gorbachev, 310 Gosbank, 227, 228, 231, 233, 234, 242, 276, 298 Goskomstat, 196n10 Gosplan, 49, 72, 155, 196 Great Depression, 35 Great Purge, 61 Gross Domestic Product (GDP), 14, 19, 55, 331, 337 Gross National Product (GNP), 396 Gross production, 200 Gross Social Product (GSP), 357, 358 Gross value added (GVA), 423

 INDEX 

441

H Harmonised System (HS), 292 Hidden inflation, 404 Household budget surveys, 387 Household censuses, 62, 69 Household incomes and expenditures, 387

Labor Statistics Council, 109 Laspeyres bias, 201 Laspeyres index, 200 Lehman shock, 245 Lend-Lease Act (LLA), 300 Lenin, V. I., 45, 46n2, 48, 154, 186, 194, 233

I Increase in state purchase prices of agricultural goods, 157 Industrial production personnel (PPP), 207 Industrial statistics, 45, 52 Industry census, 109 Infant mortality, 93 Informal GDP, 385, 398 Informal sector, 411 Input-output tables (IOT), 48, 53, 55, 422, 426 Intermediary operations enterprises and organizations, 174 International Comparison Project (ICP), 345 International Standard Industrial Classification (ISIC), 120, 213, 406

M Machine and Tractor Station (MTS), 157 Manufaktur-kollegiia, 184 March wage survey, 110 Market prices, 360 Marshal’s k, 24 Material production, 356 Material Product System (MPS), 50, 55, 317, 319, 331, 354, 356, 423 Metrichekie knigi, 69 Ministry of Finance, 254, 265, 268, 271, 276, 278, 280, 282 Mono-bank, 235, 240

K Kaliningrad, 77 Khrushchev, 155, 156n10, 165 Kolkhoz, 156, 170, 207 Kolkhoz markets, 172 Kondrat’ev index, 190 Kustar, 188n4, 194, 340 L Labor force survey, 111 Labor resource fund, 106, 112

N NACE, 406, 410 Nazi Germany, 299, 300 Net Material Product (NMP), 25, 319, 355–357, 424 Net National Product (NNP), 337 Net taxes on oil and gas, 427 New Economic Policy (NEP), 20, 154, 233, 295, 354 Non-material production, 242 Non-material service, 337, 360 O October Revolution, 295 Oil and gas, 30, 410, 411, 421, 422, 427, 428, 431, 433, 436

442 

INDEX

Oil dependency, 332 OKONKh, 408 OKVED, 177, 212, 406 OKVED2, 410 Orthodox Church, 69n18 Otdel zapisi aktov grazhdanskogo sostoianiia, 73 P Parish registers, 69 Partial workhours, 118 Personal subsidiary operations, 172 Producer prices, 422, 426 Propiska, 74 Pseudo new products, 202, 205 Purchaser prices, 426 Purchasing Power Parity (PPP), 344 R Railroads, 279, 280 Rents, 422, 436 Resmelo, 340 Revenues from foreign economic activities, 251, 263, 287, 287n37 Reviziia, 67–69 Rostrud, 119, 122 Russian Civil War, 233, 295 S Sample survey, 211 Sample surveying, 49, 52, 53n9, 55 Sberkassa, 229, 238, 275, 277 Second economy, 385 Sector classifications within industry, 198 Separatists, 70n19 Service sector, 343, 362 Shadow economy, 411, 412 Shortage, 404

Siberia, 76 Social security, 252, 252n1, 263 Sovkhoz, 156, 170 Sovnarkhoz, 51 Special foreign trade earnings (SFE), 317–318, 358 Stalin, 20, 155, 237, 305 Standard International Trade Classification (SITC), 292 State Bank (Gosbank), 52 State finance, 23 State Property Ministry, 185 Supreme Council of People’s Economy, 71 Supreme Soviet of the National Economy, 109 System of National Accounts (SNA), 1, 55, 331, 354, 405 T Tsental’noe statisticheskoe upravlenie (TsSU), 48–52, 54, 109 Tsentral’noe upravlenie narodnokhoziaistvennogo ucheta (TsUNKhU), 50, 51, 196 Turnover taxes, 263, 282, 283, 363, 434 U Under-employment, 118 Upward bias in the official statistics, 205 US-Soviet Grain Agreement, 159 V Value-added, 170, 343, 358, 360, 423 Virgin Lands Campaign, 155 Volatility, 349, 353 VSNKh, 196

 INDEX 

W Workers and employees, 163n12, 174, 207 Workhours fund statistics, 118 World War I, 1, 3, 61, 195, 229, 233, 293, 353, 376 World War II, 6, 61, 110, 237, 296

Z ZAGS, 73 Zemstvo, 44–46, 48, 106 Zemstvo statistics, 135n1

443