The Soviet military R&D sector benefits from a wide range of material, administrative, and other priorities, which impose heavy opportunity costs, expecially on civilian R&D. R&D is relatively more expensive in a command economy, so less of it should be used than in a market system. The Soviet use of much less R&D in its military sector is as rational as the American use of much more R&D where R&D is reltively less expensive. If less military R&D is used in the USSR, a measure of its efficiency derived as a ratio of military output to military R&D is biased upward. The relative efficiency of Soviet military R&D is probably much lower than otherwise assumed because input costs are higher and output lower than usually estimated. The arms race is costlier to the Soviet Union than otherwise believed, both absolutely and as an alternative to economic development.

The authors examine how Russia assesses and applies the correlation of forces and means-the military balance between two opponents at the global, regional, and local levels-and outline recent relevant developments in Russian military thought.

A systematic comparison of the institutions and incentive systems governing the processes of technological invention, innovation and diffusion in advanced market and centrally planned economies.