HARVARD UKRAINIAN STUDIES - See also - Harvard University

MOSCOW-UKRAINE ECONOMIC RELATIONS 475basically for the following three purposes: the needs of the centralgovernment, including defense; population consumption, usually ofthe collective type; and investment in infrastructure and productivefacilities. These expenditures, especially investment, can affect theinterregional structure in two ways. First, investment in less developedregions and the consequent increase in productivity can reduce interregionalinequality of output and income per capita. Second, investmentin more productive regions — which are usually the more developed— can maximize the output for the entire country. Assuminggiven population mobility, the latter alternative would lead to anincreased inequality of income per capita among regions. In Westerncountries experience has shown that in the course of economic developmenta tendency toward a widening of interregional inequality is atfirst evident. Only after a certain level of income per capita is reachednationally can a movement toward a reduction of this inequality bediscerned (Williamson, 1965). In capitalistic economies this equalizationprocess proceeds in response to market forces, although governmentalintervention can, and often does, play an important role.With respect to the relationship between budgetary transfers fromthe Ukraine and the equalization trend in Russia /USSR, the followingqualifications should be kept in mind. The Ukraine's budgetary losseswere not large enough so that if used for investment in other regions,pronounced changes in the empire's regional structure would haveoccurred. Moreover, it is very likely "that only a minute part of its [theRussian government's] budget expenditures went directly for purposesof developing the industrial sector" (Kahan, 1967, p. 466). The bulk ofUkrainian budgetary funds, as will be discussed below, must have beenused for other purposes. The share of the Ukraine's national incometransferred to other regions of the USSR, as we saw, was bothabsolutely and relatively larger after the Revolution than before. Still,these funds by themselves were most likely not a decisive factor in thechanges in the interregional distribution of productive facilities, particularlysince Soviet leaders spent only a part of their budget for thispurpose, although a part larger than that spent by their pre-revolutionarypredecessors. Thus no direct, and certainly no pronounced,relationship between the budgetary losses of the Ukraine and theequalization trend in Russia/USSR can be expected. Nevertheless,this trend deserves our attention because its fluctuations imply changesin the utilization of at least a part of Ukrainian budgetary funds.Let us now consider whether there was a tendency toward lessening