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A hierarchical regional system may be defined as a regional international system composed of a single Great Power and a number of relatively small states. This article attempts to clarify the conditions under which member states of a hierarchical regional system, including both the great-power regional hegemon and the relatively small powers, seek to influence the salience that boundaries have for such a system. Scholars and policymakers alike may use several criteria in defining the boundaries of a regional system: 1) A system may be delimited geographically; 2) marked discontinuities in transactional interchanges (language, trade patterns, communication flows) may serve to set it off from the general international system as may common membership in formal international organizations; 3) boundaries may similarly be established by emphasizing behavioral criteria, i.e., by identifying norms especially pertaining to conflict management and resolution which are specific to a group of states. Unless otherwise specified, I employ the last definition throughout this article.

This article describes several techniques for predicting Soviet military expenditures on the basis of an analysis of the annual budget speech by the Minister of Finance. Using the Shishko-Nincic series as an indicator of actual ruble increments in the Soviet defense budget, more than four-fifths of the variance in the change in Soviet ruble expenditures for defense can be explained by an interactive model that combines a) the Finance Minister's changing characterizations of the United States and imperialism, b) his depiction of Soviet military intentions, and c) the planning cycle. This finding suggests that even in a relatively low information system such as the Soviet Union, its leadership believes it must depict the broad contours of the budget even with respect to military expenditures. The result is that the Soviet Union provides more information about important matters than Western analysts have hitherto realized.

THIS ARTICLE DESCRIBES SEVERAL TECHNIQUES FOR PREDICTING SOVIET MILITARY EXPENDITURES ON THE BASIS OF AN ANALYSIS OF THE ANNUAL BUDGET SPEECH BY THE MINISTER OF FINANCE. USING THE SHISKO-NINCIC SERIES ARE AN INDICATOR OF ACTUAL RUBLE INCREMENTS IN THE SOVIET DEFENSE BUDGET, MORE THAN FOUR-FIFTHS OF THE VARIANCE IN THE CHANGE IN SOVIET RUBLE EXPENDITURES FOR DEFENSE CAN BE EXPLAINED BY AN INTERACTIVE MODEL THAT COMBINES A) THE FINANCE MINISTER'S CHANGING CHARACTERIZATIONS OF THE UNITED STATES AND IMPERIALISM, B) HIS DEPICTION OF SOVIET MILITARY INTENTIONS, AND C) THE PLANNING CYCLE. THIS FINDING SUGGESTS THAT EVEN IN A RELATIVELY LOW INFORMATION SYSTEM SUCH AS THE SOVIET UNION, ITS LEADERSHIP BELIEVES IT MUST DEPICT THE BROAD CONTOURS OF THE BUDGET EVEN WITH RESPECT TO MILITARY EXPENDITURES. THE RESULT IS THAT THE SOVIET UNION PROVIDES MORE INFORMATION ABOUT IMPORTANT MATTERS THAN WESTERN ANALYSTS HAVE HITHERTO REALIZED.