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Was the USSR the Second Largest Economy or was it Japan?

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Post 09 Feb 2018, 17:50
Some sources claim that Japan, in 1968, replaced the USSR as the Second Largest Economy (measured in GDP). Is this true? Does someone has relliable data about Soviet and Japanese economies? Some articles on Wikipedia and many books claim the USSR to be the Second economy in 1990, while on other sites in the internet, while mentioning the "Japanese economic miracle", mention that in the sixties or seventies Japan surpassed the Soviet economy.

I ask because there is a big difference between having a larger GDP (which is basically a more productive and efficient economy) and having a larger ECONOMY (which is measured by virtue of how many factories or industries has a country, even if said economy has a very low productivity compared to the other).

In case that Soviet GDP was actually surpassed at some point, does that mean that its economy size was ALSO surpassed by Japan or not?
Post 12 Feb 2018, 05:37
Welcome to the forum El Kaiser!

Economists seem to have found it difficult to measure the economic performance of a planned socialist economy like the USSR's using indicators created for market economies. Many economic principles taken for granted in capitalist economies just didn't exist in the USSR, and this applies to everything from pricing to motivation, mobilization of labor, debt & credit, ideas of economic solvency and efficiency, etc. In effect, apart from direct comparisons on things like industrial and agricultural output, resource extraction, construction of infrastructure, etc. it's very hard to compare the economies of the two very different systems using one overall indicator. This Wikipedia article explains part of the problem:

According to the State Statistics Committee of the USSR's 1990 Yearbook, based on figures from 1988 and 1989, the country had a 'net material product' of one trillion rubles, and a 'net social product' (accounting for non-material production) of 1,631,600,000,000 rubles. Converting that to dollars at a rate of 0.6 dollars per ruble, you get $2.7 trillion. Based on that, Japan's GDP of $3.14 trillion in 1990 according to the World Bank does make the latter's economy bigger.

One problem worth noting with this estimate was the lack of a single exchange rate, since the Soviet system used both convertible and non-convertible rubles.

By PPP calculations (again a market-oriented measurement tool) observers still tend to rank the USSR second. According to a 2003 study by researchers from the Moscow-based Institute of World Economy and International Relations, Soviet PPP GDP in 1990 in 2000 dollars was 3.325 trillion, compared with 7.475 trillion for the US and 3.115 trillion for Japan.

In his book "The USSR and the Countries of the World in Figures", statistician I.G. Kalabekov discusses a few of the mechanisms of the Soviet economic system which resulted in its undervaluation in GDP terms. He notes for example that market prices existed only for a small segment of goods sold at the consumer level, with most goods sold for just above production cost (which eventually became one of the reasons for shortages for some goods in stores). The state also set prices for most services, including things like legal fees. The USSR also essentially had no housing market, with the vast majority of apartments provided free and not allowed to be resold. The same is true for the commercial real estate market. Furthermore, things like energy prices were heavily subsidized, and often sold for below production cost. Finally, things like health and education were completely free, or more accurately, their price was absorbed by the state through what in market terms may be seen as an invisible tax. (page 60)

P.S. Even Grigory Khanin, the statistician who famously condemned official Soviet statistics in a 1987 article as being "false" and gained widespread recognition and praise among Perestroika's supporters and Western economists, has estimated in his 2010 magnum opus The Economic History of Russia in Modern Times Vol 2 that by PPP, the Soviet economy remained second in the world in the mid-late 80s.
Post 13 Feb 2018, 16:05
The Topic is resolved. Thanks for your welcome! Thank you for your answer and data!

However, i managed to find 3 editions of a very well-known CIA book “The World FactBook”.

The editions are from 1981, 1986 and 1990.

For more accurate measurement, the CIA measured (and perhaps keeps measuring) the countries’ economies by the GNP system instead of the GDP system. GDP is the sum of all products and services produced by a Nation in a one-year period. The GNP is the same as GDP PLUS all income earned from inversions a country has in foreign nations, LESS all income earned within the country which belongs to foreign nations.

The numbers for Japan and the USSR in the 1981 edition are the following (in U.S. billion dollars):

Japan: 1.011 – USSR: 1.378

In the 1986 Edition:

Japan: 1.233 – USSR: 1.957

For the 1990 Edition a clarification is made: That certain countries are measured by the system of “GNP at Purchasing Power Parity (PPP)”. No reasons are given for this. Those countries are: Members of the O.E.C.D (The Organization for Economic Cooperation and Development, such as Japan), certain developing countries (such as Latin America), the Eastern Block (by this year no longer Socialist and close to disintegrate) and the USSR (also not Socialist by this time):

Japan: 1.914 – USSR: 2.659

In the case of Japan a special note is made: that despite having few resources, Japan’s growth since the end of WWII is spectacular, replacing West Germany in 1971 as the Third Largest economy of the World, only surpassed by the U.S. and the USSR.

The numbers given and the clarification made for Japan shows that in fact the Japanese economy never surpassed nor reach the Soviet economy.

Post 17 Feb 2018, 19:33
The last Link you gave me, the PDF book that's in russian, do you have it in English? It seems VERY informative
, but of course i can't understand anything...
Post 17 Feb 2018, 23:21
No problem, glad to be of service. As for the CIA World Factbook figures, I deliberately avoided using them due to claims made by some economists in the 1990s that the CIA deliberately overestimated the Soviet economy to get more money for their budget. But as your figures show, they aren't far off from the 2003 study by the Russian economists.

About the book, nah, don't have an English version, unfortunately. If I were a millionaire I swear I'd open up a publishing company to translate stuff like this into English for university libraries and such.
There are so many good monographs done recently about the Soviet period in Russia which are just lost to foreign readers. And the stuff that does get translated is usually utterly biased anti-Soviet trash.
Post 07 Mar 2018, 01:27
During 60s and until mid 70s USSR was the 2nd largest economy. But Japan had the more developing and even they were 3rd economists predicted that they would pass in the upcoming years both USSR and USA
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