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Soviet Union (former) Structural Reform of Industry
Sources: The Library of Congress Country Studies; CIA World Factbook
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    Perestroika called for wholesale revision of the industrial management system and decentralization of policy making in all industries. Elements of the management bureaucracy opposed such revision because it would place direct responsibility for poor performance and initiative on industry officials. Initial adjustment to the program was slow and uneven; in the late 1980s, tighter quality control cut production figures by eliminating substandard items. In mid-1988, eighteen months after perestroika had been introduced in major industries, official Soviet sources admitted that much of the program was not yet in place.

    The Military-Industrial Complex

    Growth in the Soviet economy slowed to 2 percent annually in the late 1970s, and it remained at about that level during the 1980s, after averaging 5 percent during the previous three decades. Because military supply remained the primary mission of industry, the military was protected from the overall slowdown. Thus, in 1988 the military share of the gross national product ( GNP--see Glossary) had grown to an estimated 15 to 17 percent, up from its 12 to 14 percent share in 1970. The actual percentage of industrial resources allocated to military production has always been unclear because of Soviet secrecy about military budgets. Most military production came under the eighteen ministries of the machinebuilding and metal-working complex (MBMW), nine of which were primarily involved in making weapons or military matériel (see table 33, Appendix A).

    Other "military-related" ministries sent a smaller percentage of their output to the military. Among their contributions were trucks (from the Ministry of Automotive and Agricultural Machine Building, under MBMW), tires and fuels (from the Ministry of Petroleum Refining and Petrochemical Industry, outside MBMW), and generators (from the Ministry of Power Machinery Building, under MBMW), plus any other items requested by the military. In overall control of this de facto structure was the Defense Council (see Glossary), which in the 1980s was chaired by the general secretary of the CPSU. Although the Council of Ministers nominally controlled all ministries, including those serving the military, military issues transcended that authority. In 1987 an estimated 450 research and development organizations were working exclusively on military projects. Among top-priority projects were a multiministerial laser program, generation of radio-frequency energy, and particle-beam research--all applicable to future battlefield weapons. In addition, about fifty major weapons design bureaus and thousands of plants were making military items exclusively. Such plants had first priority in resource allocation to ensure that production goals were met. Most defense plants were in the European part of the Soviet Union, were well dispersed, and had duplicate backup plants. Some major aircraft plants were beyond the Urals, in Irkutsk, Novosibirsk, Tashkent, Komsomol'sk-na-Amure, and Ulan-Ude.

    In making military equipment, the primary goals were simplicity and reliability; parts were standardized and kept to a minimum. New designs used as many existing parts as possible to maximize performance predictability. Because of these practices, the least experienced Soviet troops and troops of countries to which the equipment was sold could operate it. But the practices have also caused the Soviet military-industrial complex, despite having top priority, to suffer from outmoded equipment, much of which is left over from World War II. Western observers have suggested that the dated "keep-it-simple" philosophy has been a psychological obstacle to introducing the sophisticated production systems needed for high-technology military equipment. Western experts have assumed that without substantial overall economic expansion, this huge military-industrial complex would remain a serious resource drain on civilian industry--although the degree of that drain has been difficult to establish. To aneliorate the situation, perestroika set a goal of sharply reducing the military share of MBMW allocations (estimated at 60 percent in 1987) during the Twelfth Five-Year Plan. Civilian MBMW ministries were to receive an 80 percent investment increase by 1992. And emphasis was shifting to technology sharing by military designers with their civilian counterparts--breaking down the isolation in which the two sectors have traditionally worked.

    Data as of May 1989

    NOTE: The information regarding Soviet Union (former) on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of Soviet Union (former) Structural Reform of Industry information contained here. All suggestions for corrections of any errors about Soviet Union (former) Structural Reform of Industry should be addressed to the Library of Congress and the CIA.

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