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Measuring the incomes of economies of the former Soviet Union

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  • International Economics Department

Abstract

There is as yet no fully satisfactory way to compare income per capita of the former Soviet Union with that of other economies. Even more problematic is compiling estimates for the separate economies that have emerged with the breakup of the Soviet Union. The main problem is the isolated non-market economy of the country, compounded by the chaotic state of information services. The results presented here, while subject to considerable uncertainty, are considered reliable enough for their primary purpose: to assign the new states of the Soviet Union to income categories for Bank analytical and operational purposes. The main difficulty was choosing a ruble-dollar conversion factor that accords reasonably well with the Bank's Atlas method. Official rates cannot be used because they are as artifical and misleading as any other planned price, meaning that they diverge by a large margin from the rate effectively applied to international transactions. This study investigated three alternative conversion methods, yielding GNP per capita estimates for the former Soviet Union for 1990 ranging from $2,440 to $3,720. The method judged most reliable (referred to as the synthetic Atlas-type conversion factor) gave an estimate of $2,870. The figure is somewhat at odds with Atlas estimates for the former Soviet Union and other members of the Council for Mutual Economic Assistance (CMEA), which may reflect the limited applicability of the Atlas methods for historically planned economies. Income per capita is calculated for each of the states of the former Soviet Union and for the other European members of CMEA. The method developed here relies on a purchasing power parity bridge from planned to market economies. Unlike conventional use of this measure, the study uses the relationship between purchasing power parity and exchange rates for comparator market economies to suggest an Atlas-type conversion factor. The estimations for the state of the former Soviet Union have a suggested margin of error of plus or minus 10 percent. Incomplete reports for 1991-92 show large declines in real GDP in all countries of the former Soviet Union - as much as 25 percent in some cases. It is unlikely that mechanically extending results to 1992 will yield meaningful results, so this study is just a beginning.

Suggested Citation

  • International Economics Department, 1992. "Measuring the incomes of economies of the former Soviet Union," Policy Research Working Paper Series 1057, The World Bank.
    • Handle: RePEc:wbk:wbrwps:1057
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    References listed on IDEAS

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    1. Hee, Michael, 1990. "Conversion factors : a discussion of alternate rates and corresponding weights," Policy Research Working Paper Series 479, The World Bank.
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    Cited by:

    1. Richard Pomfret, 2006. "Coordinating Aid for Regional Cooperation Projects: The Experience of Central Asia," The Institute for International Integration Studies Discussion Paper Series iiisdp163, IIIS.

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