ABSTRACT
This chapter studies the role of the state in dealing with Russian relative backwardness. Russia is used as a case study because of Alexander Gerschenkron’s view that the Russian state substituted for missing preconditions. The chapter considers three forms of state involvement: constitutional change in agriculture, monetary and fiscal policy, and direct entrepreneurial activities. The chapter concludes that Gerschenkron’s assessment of constitutional change in agriculture has proven to be seriously flawed and that the Russian state’s entrepreneurial activities were minimal. The major success of Russian industrialization was the attraction of sufficient foreign investment to achieve high investment rates for a low-income country. While the state provided a stable monetary and fiscal framework, foreign capital was attracted principally by the private profit opportunities in Russia.
