552 



which inhibit Western businessmen from dealing with Soviet foreign 

 trade organizations. 49 



Soviet economic reforms center on adoption of modern mathematical 

 methods, improved computer capability, and new management tech- 

 niques. Systems analysis in regional planning, and input-output analy- 

 sis in national economic planning, are examples of the new trend. More 

 computer capability is required to support the more sophisticated eco- 

 nomic analysis. If, or as, the change proceeds, more application of 

 Western techniques, analysis, and hardware will become relevant. The 

 professional bridge between Soviet and Western economists, statisti- 

 cians, and management science specialists will likely follow economic 

 reform in the Soviet Union. At the same time, industrial cooperation 

 or joint ventures of industrial nations with the Soviet Union may 

 encourage and facilitate these reform trends. 



In this early stage of expanding U.S.-Soviet commercial relations, 

 the correlation between domestic economic reform and foreign eco- 

 nomic policy cannot be tested empirically. It could be argued that 

 the trends are offsetting rather than complementary. Thus, it may be 

 that Soviet awareness of a need for technological change and improved 

 efficiency in the domestic economy has convinced the leadership that 

 thev should turn to foreign technological assistance as a substitute 

 for domestic reform. Only future experience in East-West economic 

 cooperation will resolve the question of the interrelationship of foreign 

 involvement and domestic reform in the Soviet economy. 



Changing Priorities in Resource Allocation: Growth. Versus Defense 

 The technological priorities in the Ninth Five- Year Plan, which are 

 designed to modernize the civilian economy, improve the quality of 

 living, and raise the efficiency of planning and management, imply a 

 shift in resource allocation policy from military to civilian invest- 

 ment and consumption. These goals are suggested in the detailed pub- 

 lication of planned targets. An increase in civilian programs above 

 past levels suggests a decrease in the prior defense priorities. The 

 specific goals for increased energy output — focusing on the West Si- 

 berian oil-gas complex — provide evidence of a reordering of priorities. 

 The Soviet leadership's commitment to new priorities in resource 

 allocations, if sustained, will have important implications for Soviet 

 foreign economic relations. Increased expenditures on major invest- 

 ment projects, such as oil and gas exploration, and on consumer goods, 

 such as quality foods and automobiles, will increase Soviet demand 

 for imports of foreign technology. Presumably, Western technology 

 is needed less during a defense-priority period, since Soviet military 

 technology is widely considered to be near parity with that in the 

 West, and, in any event, military technology is not generally trans- 

 ferred to the Soviet Union in normal commercial transactions. Thus, 

 in assessing future Soviet needs for U.S. technology, it is important 

 to evaluate the prospects for a reorientation of Soviet priorities. 



A firm commitment to new priorities runs counter to the traditional 

 policy of the Party and is also uncharacteristic of Party Secretary 



49 See below, pp. 62-64. 



