ABSTRACT
The rate of capital return and marginal capital product in Soviet industry are estimated by geographic areas to discover whether the regional allocation of investment, particularly industrial capital, in the 1960s was guided by considerations of capital and labor productivity or by other motives. The underindustrialized western regions, where capital and labor productivity are satisfactory or high, have been slighted in favor of more easterly provinces. Regional investment allocation in recent years has been a subject of considerable disagreement. Proposals for regional specialization and large-scale projects for the exploitation of natural resources tend to divide Soviet scholars into pro-Siberian and pro-European factions.