Russian Economy

From Bunge to Stalin and the five-year plans

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  • Created on: 14-01-12 19:16
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Alexander III:
Russia the most economically underdeveloped in Europe
o Mainly based on agriculture
o Difficult to sell enough grain at export to raise money for large-scale industrial
o Needed to improve to maintain position as a Great Power
o Only small areas of industry ­ Ukraine, Moscow & St Petersburg
Ivan Vyshnegradsky introduces a financial incentive for peasants to migrate to the Eastern
lands of Siberia
Vyshnegradsky began to finance Russian economic development from foreign loans (France
& Britain)
1892-1914 (Mainly Tsar Nicholas II)
In the 1890s Russia experienced an industrial expansion "Great Spurt", Count Sergei Wittte
o 5,800 km between 1961-1890 but rate accelerated to produce a national system of
59,616 km by 1905
o Trans-Siberian Railway
o 1908-13 slowest rate of growth since 1880s
o Railway network totalled 62,200km compared with USA 411,000km
o Other forms of communication inadequate
o Only major inner-city roads matched up to European standards
o Merchant Marine was small - meant most of Russian trade travelled in foreign ships
Foreign Trade
o Major feature of pre-1914 industrialisation
o Steady increase in exports & imports
o Exports mainly agricultural produce
o Balance in industrial goods was to Russia's disadvantage
o Heavily involved with Germany, followed by Great Britain
Impact on living condition
o By 1900 half of industrial workforce was employed in factories
o Large cities grew quickly
Heavy Industry
o Not very industrially developed
o 1910 ­ only 30% of Russia's national production was industrial
Had increased rapidly
o During 1890-1912 faced serious foreign & domestic disruptions
o Different Russian areas developed differently
o Textile production produced 40% of Russia's industrial output in 1910
Foreign Investment
o Vast amounts of foreign powers and individuals involved themselves in Russian
o About half went into mining & metallurgical industries
o By 1900 as much as 90% of the finance behind these sectors came from foreign

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Oil production & banking were the next largest recipients of foreign funds
o France's input was 33%
o Great Britain 23%
o Germany 20%
o Belgium 14%
o USA 5%
The Counter-Revolution 1906-14 (Stolypin's)
Land reforms to encourage higher production, aimed to encourage Kulaks to become
efficient producers
o Allowed them to consolidate their land into one holding & buy up the land of poorer,
less efficient peasants
o Production increased, leading to record harvests by 1913
1906 ­ freed peasants from control of the…read more

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City population decreasing
o Wages less
o Black market grew
o Transport collapsed
Impact on life
o Cheka
o Fuel short ­ no heating
o Sanitary conditions poor
o Black market & bagmen
o Townhouses taken over
o Revolts/strikes
o Mutinies e.g.…read more

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More appealing to the left0wing than importing grain
Ideological reasons:
Essential if peasants were to embrace socialism
Economic reasons:
Prospect of economic benefits
Greater efficiency meant less people needed to work, releasing manpower for developing
Promised significant increase in production
Economic Success:
By 1941 all farms were collectivised
The amount of grain procured and exported by the state increased
Economic failures:
Economic chaos
Labour productivity in rural areas declined
Failed to raise agricultural production
Number of animals dropped
Cost was astronomical
Value of wages…read more

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Ideological causes:
Socialism was only possible in a highly industrialised nation
Believed revolution should serve working class (wanted workers to prosper)
Political causes:
Inspired by collectivisation
Want a reputation to surpass that of Lenin
Concerned Russia unable to defend self
The First Five-Year Plan: (1928-32)
Aims: heavy industry
Economy grew
In terms of iron, steel, coal & oil plan outperformed any previous economy
Urban population trebled
Members of working class promoted
Meetings targets (unrealistic targets)
o Large scale fraud
o Officials demoted if…read more

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Defence spending rose
Little cooperation between different branches of industry
Factory managers hoard resources
Poor coordination
Fear lead to lying
Shortages of essential items
1931 Govt outlawed private production of shoes
Housing & amenities failed to improve
Social inequalities
The Third Five-Year Plan: (1938-41)
Aims: heavy industry, rearmament & creation of a war economy
o Initiated a number of important innovations in Soviet technology
o Stalin took direct control of defence industry
o Central committee decreed all of the country's resources should…read more


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