As you requested, we have reviewed the Central Intelligence Agency's (CIA) methods for estimating the size of the Soviet Union's economy. In this report we discuss how well the Agency has calculated Soviet gross national product, both in rubles and as a percent of U.S. gross national product. We also discuss the prospects for future improvements in the Agency's estimates. The future course of events in the Soviet Union is now very uncertain. It is highly possible that this uncertainty will affect the Agency's future role in and methods for assessing the size of the Soviet economy. Our recommendations for improving the CIA's estimates are therefore conditioned on the need for the Agency's continuing role. The Central Intelligence Agency's (CIA) estimates of Soviet gross national product (GNP) have been increasingly criticized in recent years. By 1990, some non-CiA analysts had variously concluded that Soviet GNP was anywhere from 14 to 33 percent of U.S. GNP rather than the 51 percent as estimated by the CIA and growing at lower rates than estimated by the CIA. The CIA uses adjusted Soviet data to estimate Soviet GNP in rubles for a base year currently 1982. It bases its estimates of GNP for later years on its estimates of the growth of each sector of the economy, such as agriculture, since the base year. In addition to these ruble estimates, the CIA also calculates Soviet GNP as a percentage of U.S. GNP. It uses ruble- dollar ratios derived from the prices of goods and services in each country to convert U.S. GNP from dollars to rubles and Soviet GNP from rubles to dollars. Because the resulting comparisons of the two economies one in rubles and the other in dollars yield different results.

Soviet Economy: Assessment of How Well the CIA Has Estimated the Size of the Economy