Russia, East-Central Europe,
and Central Asia:
Overview and Economic History
I. Overview of Central Eurasia
Diversities of geography, economy, and culture.
Dominance of Russia—36% of population, 41% of
production, 73% of surface area (Russia's land area is 84%
larger than the United States). Abundant reserves.
Demographic trends—population losses associated
with WWI, Russian revolution, Russian civil war,
collectivization, and WWII. Fastest population growth in
GDP growth—Russian share of regional GDP
declined from about 45 percent in 1940 to 41 percent in 1993.
Most countries experienced slower growth between 1980 and
1993, due to decline of planning, difficulties of transition,
and with regional hostilities.
Early settlements—tribes in Caucasus area before
20,000 B.C. Slavic tribes date to 2,000 B.C. in eastern
Carpathians, spread west to Czech area, east to Russia, south
Greek realm united after 359 B.C. by Philip
of Macedon, and his son Alexander
conquered most of Persia, spreading Greek culture through an
Romans conquered Alexander’s western empire and
much of Europe. Empire administratively divided East-West in
Roman Empire After 285AD
preserved classical civilization after Rome fell in 476 A.D.
Eastern church adoption of Greek liturgy and other issues led
to the Eastern Schism from Rome in 1054, followed by a Western
Schism from 1378-1417 with competing Popes in Rome and
Byzantine Empire in 814
Bulgaria—first Slav state in the 6th
Kievan Rus—On trade route, Kiev became capital
of Russian city-states during 9th century. Kievans were
cosmopolitan, but adoption of Eastern Orthodoxy in 980
contributed to Eastern separation.
Principalities of the Kievan Rus (1054-1132)
conquests after 622 spread Islam into regions that included
Central Asia, and then the Ottoman Empire spread into
southeastern Europe after the fall of Constantinople/Istanbul
in 1453, and dominated the region until the end of World War
I. The Czechs, Slovaks, Poles, and Slovenes avoided Ottoman
domination; Hungary and Croatia were liberated early. Today,
these have higher per capita incomes.
Spread of Islam, 622-750
the Mongol conquest in 13th-15th
centuries devastated Central Eurasia, severed Western ties,
and caused Russian capital to move to Moscow, which became the
“Third Rome” after the fall of Constantinople.
The Ottoman Turks defeated the Byzantine Empire in 1453 with
the conquest of Constantinople, and ruled over a large area in
Southeastern Europe, including Greece, former Yugoslavia, and
Romania until the end of World War I.
Ottoman Empire, 1798-1923
Peter the Great and Russian Expansion (18th-19th
After Russian independence from Mongols in 1452, isolationism
and feudal institutions.
Early in 18th century, Peter the Great:
Introduced Western science, technology, art, and architecture.
Moved capital to St. Petersburg.
Avoided Western political and economic philosophies.
Levied heavy taxes and imposed forced labor.
Mounted territorial expansion and industrialization.
Emancipation and Industrialization (1853-1900)
Long maintenance of feudalism thwarted Russian
development, led to defeat in Crimean War
(fought during 1853-1856 against the British and French, who
were protecting the Ottoman Empire from destruction by the
Emancipation Decree of 1861 nominally abolished
Serfs freed from the arbitrary rule.
Land given to serfs, but:
Better land kept by gentry.
Serfs required to pay redemption payments and taxes.
Land held collectively by village communes, responsible for
tax collection and apportionment. Handled by inefficient strip
Tax and redemption payments forced agricultural sales and
exports, monetized the economy, and supported railroad
construction boom, which supported production of iron,
steel, and petroleum
Emancipation and industrialization caused little improvement
in the living standards. Revolutionary movements began.
V. The Russian Revolutions and World War I
Russian Social Democrats, first congresses in
1903 called for overthrow of monarchy and the adoption of
Mensheviks—Russia not ready for socialism; party should be
Lenin's Bolsheviks—Russia was ripe for socialism; membership
restricted to elite revolutionaries.
1905 Revolution—Bloody Sunday precipitated
demonstrations and general strike in October. Tsar granted
formation of Duma, and Stolypin reforms helped agricultural
World War I arose from Balkan struggle for
independence. Before the war, the Russian empire stretched
through Finland and Poland. The map below is the empire
in 1920 - Finland and Poland have declared independence.
What is now Ukraine was depicted as "Little Russia"
and part of "White Russia"
In Russia, WWI exacted horrible price, led to food
riots, forcing Tsar to abdicate. Kerensky’s provisional
government acted slowly, was overthrown by
Bolsheviks with little fighting in November 1917.
Soviet Union (1989)
Treaty of Versailles,
1919, regions of Habsburg empire ceded to Serbian, Czech, and
Russian Civil War Poster
""Have you signed up as a volunteer?"
War Communism (1918-1921)
New Bolshevik leaders faced problems.
Promise of socialism.
Consolidation of Bolshevik rule.
Allied invasion after 1918 Brest-Litovsk Treaty
Provisions of War
Confiscation of private and church land without
Forcibly extracted "surpluses" from agricultural workers.
Goods and food rationed, private trade outlawed.
Most industrial enterprises nationalized and administered by
commissariats headed by Vesenkha.
"Labor armies" rebuilt roads and railways, and worked in
Performance—Production plummeted, arising from
poor work incentives, concealment of surpluses, and chaotic
management, but also from wartime disruption.
The New Economic Policy (1921-1928)
Design—a temporary experiment in market socialism
Progressive agricultural tax.
Private trade was legalized.
Small enterprises leased to entrepreneurs and larger
enterprises operated as public trusts. Only "the
commanding heights of industry" were kept under direct
Freer labor mobility, market-determined wages, and pro-labor
Performance—After 1921, NEP supported rapid recovery, but with
The Industrialization Debate
Stimulated by the Scissors Crisis and Lenin's
death in 1924.
Bukharin and "right-deviation" faction:
Continuation of the market-oriented policies of NEP, following
comparative advantage in agriculture.
Maintain smychka, or alliance,
between agricultural and industrial workers.
Agricultural investments in the short run would most
effectively support industrial development in the long run.
Trotsky, Preobrazhensky, and “left-deviation" faction:
NEP will lead to return of capitalism
USSR, surrounded by enemies, needs heavy industry.
Industrialization accelerated by exploitation of the private
sector and agriculture.
Worldwide socialist revolution versus socialism in one
The Planning Era Begins (1929-1945)
After vacillation, Stalin adopted a leftist and teleological
strategy. The First Five-Year Plan called for rapid rates
growth of all sectors, but highest for producer goods and
lowest for agriculture. Fulfillment of the plan was even more
Falling agricultural production caused by low plan priority
and violent collectivization. Industrialization strengthened
the nation’s military stance, but eventually turned a major
grain exporter into an importer.
X. After World War II (1945-1953)
From “capitalist encirclement,” and Soviet autarky, to the
Adoption of Soviet-style systems throughout region.
Creation of Council
for Mutual Economic Assistance
to answer the Marshall Plan. Redirection of trade.
East German, Romanian, and Hungarian reparations to USSR.
Impact of WWII.
Tito’s hero status.
Initial acceptance of Soviet political/economic system.
Conflicts with Stalin, 1948 expulsion from Comintern.
Reversal in 1950—acceptance of Western aid and adoption
of labor self-management.
After Stalin (1953-1960)
Stalin's death in 1953
Khrushchev's denunciation of Stalin's terror
revolt crushed by Soviet troops
Principles of the International Socialist Division of Labor
called for specialization and integration of production.
abortive attempt to introduce supranational planning.
Early Reforms (1960-1970)
Soviet system inappropriate for small, trade-dependent
countries. Hungary and Poland initiated reforms.
Deterioration of Soviet growth. Kosygin reforms of mid-1960s.
Watershed in 1968— Prague Spring and Hungarian New Economic
Prelude to the Fall (1970-1985)
Food price hikes in Poland lead to strikes, repression, and
resignation of Gomulka.
Nixon visits Moscow, launches détente.
Polish indebtedness culminates again in price hikes, strikes,
Selection of Polish pope.
Birth of Solidarity trade union in Poland.
Polish martial law.
The End and the New Beginning (1985-1991)
Mikhail Gorbachev takes office in the Soviet Union, introduces
glasnost (openness) and perestroika
(restructuring), and repudiates Brezhnev Doctrine.
Mass demonstrations, destruction of Berlin Wall, removal of
Communist leaders throughout the region.
Balcerowicz “shock therapy” in Poland.
Abortive coup against Gorbachev causes Russian President
Yeltsin to suspend Communist Party activities and Gorbachev to