Industry

   Russia’s industrial infrastructure is dominated by the country’s Stalinist experiment in rapid industrialization. During the 1930s, the Communist Party of the Soviet Union (CPSU) transformed the Union of Soviet Socialist Republics (USSR) from a primarily agrarian society into an industrial powerhouse. The use of Five-Year Plans, slave labor, and a command-and-control economy shaped Soviet industry for decades. Western Russia commanded the lion’s share of this development. During World War II, a sizable portion of the country’s industrial base was relocated to the Ural Mountains, southern Siberia, and other locations to avoid the German occupation. Adherence to Marxist-Leninist ideology under Nikita Khrushchev and Leonid Brezhnev dictated that the USSR remain attached to capital-intensive heavy industry (steel, electricity generation, machinery, cement, chemicals, aerospace, military equipment, etc.) as the economies of the First World shifted toward light industry and consumer products (and, later, economies based on finance and information).

   Hoping to institute “acceleration” (uskoreniie>) in the Soviet economy, Mikhail Gorbachev restructured the economy and industry to compete with Japan, the United States, and West Germany. However, structural factors made this transition extremely difficult, particularly given the dependence of the workforce on heavy industry and the military-industrial complex. Boris Yeltsin’s administration oversaw a dramatic transformation of post-Soviet industry. By opening the country up to economic globalization, he rendered many of the country’s factories obsolete. During the 1990s, Russian industry experienced a massive contraction, with concomitant unemployment. This drop was particularly acute in the defense industry, with missiles, tanks, and aircraft manufacturing nearly grinding to a halt. Shipbuilding, rail equipment, and heavy equipment manufacturing also took a tumble.

   During this period, state-owned enterprises were transferred to private control through the controversial loans for shares program and other schemes. While steel production shrank considerably, the industry survived, and Russia remains a major exporter of the product. Russia’s natural resources such as hydrocarbons (particularly oil and natural gas extraction, refining, and transshipment), timber, fisheries, and minerals served to buoy the economy as it recovered from the 1998 ruble crisis. With Russia’s vast deposits of coal, nickel, aluminum, gold, and other metals and ores, metallurgy and mining continue to be important components of the economy. Arms exports and precision instruments also began to recover in the 2000s. Russia’s pharmaceutical industry also experienced a modest revival, though the industry continues to suffer from technological backwardness.

   Owing to a well-educated and Internet-savvy workforce, Russia has also emerged as a player in the computer software and outsourcing industries since the mid-1990s. Production of consumer goods and services, foodstuffs and beverages, textiles, and scientific and communications equipment also increased. The consolidation of the industrial base in the 1990s and foreign investment has allowed Russia to experience a period of moderate growth in the current decade, though many outdated factories are still in operation. Russia’s foreign trade remains robust, particularly given the strength of its oil and natural gas exports. One benefit of the reduction in industry has been a drop in carbon emissions and other pollutants from late Soviet levels; this allowed Russia to easily meet its commitments under the Kyoto Protocol, and even benefit from the “cap-and-trade” system of international environmental regulation. However, such perquisites will be short-lived when new regulations are negotiated.

   See also Fishing; Informatization.