Fund for the Expansion of Production

Fund for the Expansion of Production

 

in the USSR, one of the economic incentive funds. The fund for the expansion of production is designed to finance the capital investment required to apply the latest scientific and technological advances to production, to expand and improve production, and to increase efficiency. The fund is also an important internal economic source of finance for decentralized capital investments designed to renovate fixed capital stock in order to lower prime costs, improve product quality and the organization of labor, and increase labor productivity in enterprises (associations). Enterprises can use the fund to repay bank loans that were obtained for setting up and improving production, as well as for raising the output and improving the quality of consumer goods.

The fund for the expansion of production is formed from profits, amortization deductions used to finance the replacement of fixed capital stock, and proceeds from the sale of retired or surplus property. Standard (percentage) contributions to the fund for groups of enterprises or sectors are ratified for ministries (departments) for a five-year period with a breakdown by year. Higher-level bodies allow for differences in the standard contributions made by enterprises (associations) on the basis of the amount of fixed capital stock required by a particular enterprise and the condition of the stock. These bodies are entitled to establish a reserve of up to 10 percent of the total fund. The reserve is earmarked for the general needs of a given sector.

The fund for the expansion of production acquires special importance with the creation of production associations, in which centralization of the fund makes it possible to implement integrated measures for the technological improvement and greater efficiency of production.

Expenditures from the fund for the expansion of production are based on estimates ratified by the director of the enterprise and by trade union organizations.

B. E. PEN’KOV

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