ECONOMIC INDUCEMENTS FOR DISARMAMENT
The Soviet leadership saw compelling economic reasons for engaging in disarmament. Arms reductions create the environment and provide the resources necessary to restructure the Soviet economy, including the defense complex. Since Gorbachev's industrial modernization program and reforms of economic management failed to arrest the decline in Soviet economic growth, he has relied increasingly on military industry to manufacture consumer goods and to supply advanced technology inputs to civilian machine building factories. Cuts in military expenditures, particularly in weapon procurements and in research and development, furnish industrial capacity and technological resources to modernize the USSR's industrial base, to boost productivity, and to stimulate economic growth.
Arms reductions can generate large savings over time. Conversion of defense industry to civilian uses requires initial investments and disrupts output in the immediate term, but it stimulates military reform, putting pressure on defense plants to increase their efficiency to produce higher-quality weapons while cutting costs. Substantial economic benefits can accrue over the long run if the Soviet leadership maintains its commitment to pursue restructuring and disarmament.