To What Extent Did the Russian Economy Improve in the Period 1894-1914?

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In 1890, Russia encouraged a ‘great spurt’ as their industry grew rapidly. A major reason for the exceptional growth was the increase in the output of coal in the Ukraine and of oil in the Caucasus. However, the motives of the tsarist government were military rather than economic. Economic expansion attracted the tsar and his ministers because it was a means of improving the strength of the Russian armed forces, as a growing industry would produce more and better guns, equipment and ships. An outstanding individual involved in Russia’s development was Sergei Witte. As minister of finance from 1892 to 1903 he set himself the huge task of modernising the Russian economy to compete with the advanced nations of the West. It was Witte’s belief that modernisation could be achieved only through state capitalism. He was impressed by the results of the industrial revolutions in the West, and argued that the same ideas could successfully modernise Russia. However, given the backwardness of the Russian economy particular difficulties were presented. For example Russia needed to decolonise itself and begin trading as an equal. Witte judged that Russia’s greatest task was to acquire capital for investment in industry. To raise this, Witte negotiated large loans and investments from abroad while introducing heavy taxes and high interest rates at home. At the same time as encouraging inflow of foreign capital, he limited the import of foreign goods leading to protective tariffs being set up as a means of safeguarding Russia’s young domestic industries, such as steel production. However, given its backwardness Russia was starting from a much lower level of production compared to many Western societies. Likewise, Russia was experiencing a massive growth in population and so Per capita production was quite low. Also, while Witte’s policies had a great impact on the expansion
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