The Slowdown in Soviet Defense Expenditures

Abstract

Specialists on the Soviet economy are in general agreement that the expenditures for defense reported in the Soviet Union's budget reflect neither the true volume of, nor the directions of changes in, Soviet outlays for defense. Beyond this, agreement ends. Since the Soviet figures cannot be accepted, western observers have produced independent estimates of Soviet defense expenditures.' The estimates provided by the Central Intelligence Agency (CIA) are the most relevant of these estimates for two reasons. First, the CIA has a relatively clear-cut methodology and access to data generally not available to others.2 Second, and more important for the purposes of this paper, is the fact that it is the CIA estimates of Soviet defense expenditures that play a major role in the United States government's assessment of Soviet defense policies and intentions and consequently in the formulation of the United States' defense and, more broadly, foreign policy.3 It is this second aspect of the CIA's estimates of defense expenditures that is the subject of this paper. The interpretation of the behavior of Soviet defense outlays since the mid-1970s has been the subject of considerable debate both in the United States and abroad. The objective of this paper is to test alternative hypotheses regarding the causes of the slowdown in Soviet defense expenditures that occurred in the mid-1970s. These hypotheses are reviewed in section II. A