What were the main features of Russian economic backwardness Essay

What were the main features of Russian economic backwardness - Essay Example The more backward the economy is the higher level of production and enterprise is; the higher the dependence on borrowed instead of indigenous technologies is; the higher the prominence of the production of producer groups compared to consumer goods is; the higher the emphasis on capital-intensive rather than labor-intensive production is; the bigger the dependence on productivity growth is (Gerschenkron 1962, p.6). In approaching the economics of Tsarist, Russia one encounters two remarkable and entirely opposite features of the Russian economy at that period, namely: a) the industrial â€Å"boom† of the 1880s and (2) the economic backwardness of 1914. Economic historians attest to the fact that in the period ranging between 1891 and 1900 Russian economy did grow (Spulber 2003, p.33). This period details the period of industrial boom within Russia and featured the period at which the industrial output of Russia rated among the highest. During this period, majority of the indu strial areas were growing speedily whereby the â€Å"Tsarist empire, Europe’s biggest economy has by 1900 displaced France from 4th position within the world iron production and had raked 5th position within steel output (Goldsmith 1961, p.441). The railway system rose in mileage by 87% in the period 1892-1903 while oil extraction tripled in the period 1887-1898. These were evidently significant achievements of Russian economic planning, especially the Russian finance minister of the time. At the period, from 1892-1903, the finance minister attempted to do his best to improve Russia in both fiscal and industrial capacity to be at par with other European powers and the entire government awarded support in this endeavor. Russian government was eager to foster industrialization since (1) the market featured deep control from the state (2) the expansion of heavy industry enabled a speedy catch-up, speedily covering the gap that manifested within the country’s economy, and (3) the industrialization enhanced the overall military capability of Russia. Nevertheless, the massive project demanded enormous investments. The investments demanded entailed: (a) the capital resource investments, (b) workforce investment, and, (c) knowledge capital investments. With regard to capital investments, Russia was unable to avail capital investments in adequate quantities and, as a result, foreign investments were broadly encouraged. Ultimately, some of the industries fell into the hands of the foreigners (Goldsmith 1961, p.442). By the start of the Crimean war, Russia featured as the world’s largest debtor nation. The war can be regarded as one of the core obstructions that hindered the progress of Russia economically. This detailed one of the core reasons for Russia’s further incapability to keep the pace of the â€Å"boom† given that significant energy and finances directed towards supporting the war against Britain and France (O'Brien 1998, p.2 27). With regard, to workforce investments, the rapid pace of industrial development owed much of its accomplishment to the common working people, frequently regular peasant who went to the cities to seek new industrial jobs (Gregory 1973, p.486). The flow of the labor force from the villages to the cities yielded a highly unbalanced economy. The Russian economy at this period cannot be likened to a plan of a system. As Alexander Gerschenkron outlines it, this economy of industrialization was fundamentally a â€Å"powerful spur† out of backwardness (Gerschenkron 1962, p.5). The Main Features of Russian Economic Backwardness The economic successes that Russia experienced then (after 1914)were practically unsustainable owing to a number of reasons, namely: (1) originally, the full-scale Russian industrialization