Russia CPE Content •I. Russia + USSR A.Russia before 1914 B.Period from 1914 to WWII C.USSR during the war D.USSR after the war E.Russia today • •II. Centrally planned economies A.Political development B.Economic development • Two groups of themes: Russia before 1914 • A. Russia before 1914 • underdeveloped + agrarian + feudal • 19th century – worsening situation •expansion – Caucasus, Central Asia, Persia … •military defeats: • Crimean War (mid-19th century) • Japan (1904) •revolution (1905) •backward, BUT large population è large army Agriculture • backwardness - technologies + feudalism + lack of capitalð low productivity • 1861 – emancipation of serfdom BUT •need to redeem •obshchina instead of private ownership •ð still semi-feudal system •Stolypin reforms 1906 – 1910 •as a reaction on the revolution in 1905 •from obshchina to private ownership if the majority agree •kulaks – agricultural labourers •land for sale and purchase • before WWI agriculture still backward Industry • industrialization •reforms of Peter the Great - 18th century •1830s – Moscow, Ukraine, Poland •after 1861 – state support • construction of railway network •crop •coal and iron •ñ industry • mainly at the end of the 19th century • BUT before WWI industry only small portion Investments • before WW1 1/2 of the capital from abroad •+ increasing tendency •mainly FR and GB •FR help of allies •direction •railways •industry •FR also government bonds Foreign trade •import – manufacturing industry •export – mainly natural resources •1897 joined the gold standard •did not join the Cobden-Chevalier treaty •return to protectionism •1868 – protective tarrifs •further ñ tarrifs in 1891 + 1893 + beginning of the 20th century The most protectionist country Period from 1914 to WWII •1. political development •2. economic development •- War Communism •- New Economic Policy (NEP) •- Socialistic industrialization B1. political development •Sarajevo ... ð ... mobilization in Russia •serious losses •positive impact of captives •technology and policy •1917 disobedience of generals ð Tsar abdicated = February revolution • ð Provisional Government - Kerensky •freedom of speech, print and worship •willingness to introduce a land reform •recognition of obligations to the allies •BUT disintegration of the army •Germany ð Lenin •all power to the soviets •Bolsheviks´coup - 6/7. 11.1917 •only temporary? •democratic elections •Bolsheviks defeated (Esers won) ð •Bolsheviks disbanded the Assembly dictatorship of the proletariat • Bolsheviks ð end of the war - Decree on Peace •support of navy and army •Brest-Litovsk peace – march 1918 •very harsh conditions •foreign interventions •objectives: to keep Russia in the war + X military equipment GER + X transporting of troops •civil war •At the beginning success of the White Army ð spring of 1919 turnover ð early 1920s most of the former territory •1920 Polish–Soviet War •Polish victory •Bolshevic state not recognized •unacceptance of the tsarist loans • Ist regognized by Germany (1922) –Rapallo Treaty • the end in 1922 – establishment of the USSR •period of „peaceful cohabitation“ • 1924 Lenin V ð Stalin •worsen relations with western countries • fascism • ñ tension (Anti-Comintern Pact + creation of the Axis) • ñ threat • 1934 USSR joined the Leage of Nations •23.8.1939 Treaty of Non-Aggression with GER •division of Poland •Estonia, Latvia, Lithuania •November 1939 USSR attacked Finland •expelled from the League of Nations •22.6. 1941 USSR atacked by GER •end of 1930s - Stalin purges in the army B2. economic development • 1st Revolutionary government - November 1917 •80 % of the population on agriculture + the majority illiterate + poverty • ð gender equality + ê working hours • land reform = the Decree on Land •nationalization without compensation ð obshchinas, peasants and landless •kulaks kept •fast implementation = + in civil war •nationalization: •State Bank + gold and foreign reserves •private commercial banks + merger with the State Bank •nullification of claims from shareholding •railway and ship transportation + foreign trade •industry: •at first property of emigrants •mid- 1918 nationalization of large-scale industry •11/1920 the rest with > 10 employees • War Communism • civil war= „everything for the front“ • peasants obliged to supply their • production to the state • cities - rationing • obligatory employment • hyperinflation ð naturalization of the economy •money as evil ð to destroy ð maximal printing • abolition of certain fees • liquidation of the market system ð planning •economy organized by the state •Suppliers and customers prescribed •+ no payments for materials+ no payments for products •results: • economic disaster •ò production •ò motivation and effectiveness •collapse of agriculture – decrease of agricultural production ð famines + migration from cities to countryside • foreign trade has perished uprisings change of policy The world industrial production, 1913-1925 New Economic Policy (NEP) •shift in March 1921 •releasing •also international - “peaceful cohabitation” •from natural to market economy •agriculture •from foodstuff requisitions to fixed foodstuffs tax •possibility to sell surplus production •since 1923 again EX crop •ñ production • industry: •releasing of the centralized management •supply and demand executed by means of purchase and sale •khozrastchot – motivation principles •private ownership accepted •BUT determining role of the government •rationing ð money wages •1924 monetary reform – new rouble • ñ involvement to WE rapid recovery •since mid-1920s demand for industrialization •Stalin •goal: westward expansion ð militarization • mainly heavy industry •1927 NEP abandoned •October 1928 – 1st five-year plan (1928 - 32) •after 1929 - „ Socialistic industrialization“ Socialistic industrialization •to build heavy and power industry at any cost •agriculture: • mass colectivisation •deportaation of kulaks and others •purchasing prices < production costs •administrative constraints - demotivation •ò crop areas and killed off livestock •famine 1931-32 •lack of foodstuff in cities ð rationing •+ restriction on EX -> lack of money for IM •changes in power engineering since 1920s •GOELRO – electrification plan •ñ industry •administrativelly directive management •ñ centralization ð administrative costs •from quality to quantity • •2nd five-year plan 1933 - 37 •ò efficiency + further shift from market mechanisms •consumable goods D>S •emphasis on engineering •agriculture – full collectivization • low productivity • •3th five-year plan 1938 - 42 •goal: shift to consumer industry BUT change in the international situation ð •armament + reallocation of the production to the East Industrial production index in major economies, 1860–1913 (1913=100) 1927 1928 1929 1930 1931 1932 1933 1934 1935 Industrial production 64 80 100 131 161 183 198 238 293 Industrial production in the USSR (1929=100) Level of industrialization per capita in 1880–1938 (UK in 1900=100) 1880 1900 1913 1928 1938 1 UK 87 100 115 122 157 2 2 USA 38 69 126 182 167 1 3 France 28 39 59 82 73 4 4 Germany 25 52 85 128 144 3 5 Austria-Hungary 15 23 32 - - 6 Italy 12 17 26 44 61 5 7 Russia 10 15 20 20 38 7 8 Japan 9 12 20 30 51 6 USSR during the war C. USSR during the war •initially GER victories •turnover after the battle of Moscow and mainly Stalingrad •labour shortage •women + youth + pensioners + involuntary work + ... •ò industrial production •since 1942 again ñ •reallocation of the production behind the Urals • serious ò agriculture •ð rationing • very large portion of military enpenditures USSR after the war D. USSR after the war • enormous losses • conversion of military production + ò army • disassembles •Manchuria and GDR • after-war aid • August 1945 end of the program „Lend and Lease“ • BUT UNRRA • Marshall Plan NO 4th five-year plan (1946 - 50) • shift to consumption • 1946 crop failure ð famine • BUT already in 1947 – rationing abandoned • common retail prices • monetary reform • after 1948 hardening of the system ð censorship • ñ production •heavy industry (Stalin) •extensive - ñ inputs - no ñ productivity • • 1953 death of Stalin è N. S. Khrushchev • 1956 denunciation of cult of personality • Development under the next plans •changes in EP - agriculture •ñ industrial production •ñ real incomes • 1959-1960 agricultural reforms - mistakes è livestock elimination+ shortage of grain • + Cuban Crisis 1964 - Brezhnev Growth rates of real GDP in 1950–1991 •Brezhnev •changes in agriculture •in mid-1960s – attempt to make a reform •1970s •ñ production (BUT extensive) •2nd ½ poor results • shortage of resources • moderation of the plans •1980s •stagnation + backwardness + debt + ò oil prices + Afghanistan + SDI è weakness Gorbachev + Perestroika Real growth of GDP in 1955 – 1988 Real GDP per capita (USA=100) Confrontation of official and alternative measures of Soviet growth performance (annual average compound growth rates) Official estimates Alternative estimates 1913-50 1950-78 1978-90 1913-50 1950-78 1978-90 NMP*/GDP 6.1 7.7 2.4 2.1 4.4 1.2 Population 0.4 1.3 1.9 0.4 1.3 0.9 Product per capita 5.6 6.3 1.5 1.8 3.0 0.4 Labour productivity 5.6 6.0 2.1 1.7 2.7 1.0 Agriculture Gross output/value added 0.9 3.5 0.8 0.3 2.4 -0.1 Product per capita 0.5 2.1 -0.1 -0.1 1.0 -1.0 Labour productivity 1.9 4.2 1.5 1.3 3.1 0.6 Industry Gross output/value added 7.2 9.2 3.1 3.7 6.5 1.5 Product per capita 6.8 7.8 2.2 3.3 5.0 0.6 Labour productivity 4.5 5.9 3.2 1.0 3.3 1.5 Economic productivity in the USSR (average annual changes in %) and GNP 1961–70 1971–80 1981–85 Labour productivity 3.1 2 1.2 Capital productivity -2.3 -3.1 -3.5 Total productivity 0.2 -0.6 -1.2 GNP 4.8 2.4 1.7 Russia today E. Russia today •1991 collapse of thee USSR •attempts for coup d´état •presidential system •problems with internal integriy •huge ò production – since 1999 ñ •growing foreign indebtedness •1998 debt moratorium = in practice national bankruptcy •threat of inflation •distorted market mechanism •oligopols ð oligarchy •econ. growth in recent years – high oil prices … X nowadays econ. crisis Inflation rate (% of change) and GDP per capita according to PPP (USD) GDP and current account balance (% of GDP) Content •I. Russia + USSR A.Russia before 1914 B.Period from 1914 to WWII C.USSR during the war D.USSR after the war E.Russia today • •II. Centrally planned economies A.Political development B.Economic development • Two groups of themes: Political development in cPE • A. Political development •deliberation = sovietisation + influence of communist parties è loss of sovereignty •very harsh regimes in Europe •up to the end of 1948 totalitarian system = European socialistic bloc (Eastern bloc) •1948 clash with Yugoslavia •Albania only up late 1960s • China 1949 •BUT clash at the turn of 1950s and 1960s • dissatisfaction ð unrests: •GDR (1953) – Eastern Berlin •Poland (1956) - greater freedom within the Bloc •Hungary (1956) – revolution suppressed by Soviet troops •Czechoslovakia (1968) – Prague Spring •Poland (1981) – movement Solidarity •since 1960s od 60. let independent policy in Romania • 1955 Warsaw Pact • under the control of USSR • only collective action = Czechoslovakia in 1968 • oficially dissolved 1.7.1991 • 1956 revealing of the cult of personality •impact on satellits BUT slow •releasing (also international) • Brezhnev 1964 – stricter policy x satellits • 1975 Helsinki Protocol • Perestroika • liberalization BUT huge differences among the countries Economic development in CPE B. Economic development • after WW bad economic situation •+ soviet plundering • common features: •land reforms - NOT nationalization BUT collectivization •nationalization of industry until the end of 1948 •planning – reconstruction plans and later five-year plans •+ centralization •after-war inflation overcome •„maximal econ. growth rate “ (extensive) • common features (cont.): •gradual abandonment of the own ways of socialism = adaption of the soviet model •fast industrialization •emphasis on heavy industry •+ preparation for war = militarization of the economies •full dependency (mainly on natural resources) on USSR •changes in trade flows •January 1949 – foundation of Comecon •impulse = Yugoslavia •decline in activities - mid-1950s revival of the Comecon •mutual bilateral trade – never a multirateral system Percentual portion of trade realized with the other side in 1938-53 Year West East The 1950s •early 1950s significant ñ •heavy and arms industry • Khrushchev ð more balanced econ. growth •both agriculture and consumer goods •2nd 1/2 1950s remarkable econ. ñ •extensive •BUT inefficient system •no support for new technologies and industries (genetics) The 1960s • 1st 1/2 1960s – econ. low down • mainly more industrialized countries • 2nd 1/2 1960s – more favourable • attempts to reform •to improve planning zdokonalit plánování •to allow certain degree of company self-management •market relations •to reduce administration •to improve motivation •1964 International Bank for Economic Cooperation + convertible rouble Real growth of GDP in 1955 – 1988 The 1970s •integration in Europe ð program of socialistic integration •objective = creation of an integrated economic bloc •failure •significant differences among RVHP member states • ò differences in Europe • BUT new members • 1962 Mongolia • 1972 Cuba • 1978 Vietnam •backward technologies ð problems with balance of trade •inflation •ñ governmental debt •oil crisisð ñ dependence on USSR •bad results – mainly in the 2nd 1/2 GDP p.c. growth in 1955–1988 The 1980s •stagnation •problems with indebtedness ð need of EX •need of convertible currency for technologies and repayments •2nd 1/2 1980s almost bankrupcy ð reforms •Perestroika •differences among countries •introduction of market mechanisms into some sectors •trade liberalization • 1990 – RVHP disbanded To sum up •40 years = economic catastrophe •inefficiency of central planning x markets •no ownership ð demotivation •isolation = lack of the competition •decreasing dynamics = lagging behind •price control ð suppressed P + black market •extensive growth ð environmental destruction •economic and moral decay Annual chnages of net material product, 1951-1990 (%) Transformation •complicated proces •necessary steps: •equal ownership forms • privatization • price liberalization • demonopolization •two-level banking system •capital market •tax reform •removing barriers for foreign trade and capital Thanks for your attention. 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