Russia

Manufacturing

Beginning in 1921, Lenin's Soviet government made industrial modernization a priority. But it was under Stalin that the system of central planning was fully developed and the industrialization of the Russian Republic reached its peak. Throughout the Stalin period, investment resources were directed into heavy manufacturing at the expense of consumer or light industry.

During the later Soviet period, economic reformers such as Nikita Khrushchev attempted to shift some resources to the consumer industries, but the emphasis eventually shifted back to heavy and military industries. This emphasis was especially strong while the Soviet Union was building its military base during the Cold War. In the 1970s, manufacturing productivity declined. As part of his perestroika program in the late 1980s, Gorbachev redirected resources to consumer goods, but the effort proved insufficient to forestall the decay of the manufacturing sector.

In the 1990s, Russia urgently needed a revival of the manufacturing sector to provide employment and steer the restructuring of industrial priorities away from the impractical Soviet emphasis on subsidized heavy industry and the military-industrial complex (MIC). Although a substantial share of Russia's MIC enterprises underwent full or partial conversion to civilian production and most manufacturers were partially or fully privatized, manufacturing output continued a general decline in the mid-1990s (see table 18, Appendix). This trend had slowed by 1995, when the decrease in total industrial production was 4 percent compared with 1994; the 1994 total had been 23 percent below that of 1993.