Analyzes the major nonbudgetary advantages enjoyed by the military research and development sector in the Soviet economic system. This analysis also investigates to what extent and in what form such advantages are potentially transferable from the military to the civilian sector, thereby constituting a real economic burden on the Soviet economy. The military R&D sector benefits from a high-powered priority system that overrides the planning network. It receives ample resources and facilities; it has first claim on supplies, specially produced items, and scarce resources. Finally, there are no spillover effects to the civilian economy. This disadvantage stems from secrecy, the need to limit new materials and components, and lack of funds to diffuse the achievements of military R&D. This report concludes that the opportunity costs of Soviet military research and development are greater than reflected in the budget, and the investment of so much in military R&D seriously limits R&D in other areas. 50 pp. Ref.
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