ECONOMIC EXPLOITATION OF NON-RENEWABLE RESOURCES IN A CENTRALLY PLANNED ECONOMY: AN INVESTIGATION OF THE USE OF NATURAL RESOURCES IN THE U.S.S.R. (USSR

The non-renewable nature of mineral resources raises the question of how consumption of a given endowment of such resources should be allocated over time. The time pattern of extraction and consumption chosen in the centrally-planned Soviet economy is the result of decisions made at many levels of the economic hierarchy in response to a variety of signals. In this dissertation, the conditions for the optimal exploitation of non-renewable resources first derived in Harold Hotelling's classic article are used as a standard against which to judge Soviet practices. The familiar Western theory is adapted to describe the decision-making process in the Soviet extractive branches in order to investigate the hypothesis that a number of features of the Soviet economy are likely to lead to a sub-optimal time pattern of extraction from the country's mineral endowment. The consequences of Soviet policies for the depth of extraction and the volume and allocation of exploration activity are also examined.;The particular institutional and economic arrangements that are considered in the dissertation are the process by which output targets are determined; the structure of the managerial reward system; the cost-of-production approach to pricing; the rental and exploration charges levied per unit of output; and the absence of any charge for ore in situ. The focus is on the decisions made at the project-making institutes and those made at the extractive enterprises.;Although the analysis yields no definite conclusions about the net effect of Soviet resource policies and practices on the time pattern of extraction, there are nonetheless strong reasons for believing that the Soviets have not carried out sufficient conservation. In addition, they appear not to have used their mineral deposits sufficiently intensively, nor to have carried out the right kinds of exploration. These tendencies seem likely to persist despite the reform of investment decision making currently under way in the extractive branches in connection with the recently-adopted Provisional Methodology for the Economic Valuation of Mineral Deposits.