Russian Reforms and Its Consequences

When the Soviet Union came into being after the 1917 Revolution Russia was a very poor, backward, agricultural country. The immediate priority of the government was to encourage economic development and introduce socialist economic management with economic planning as the central pillar of that system. Despite civil war, invasions, and repression the economy experienced rapid growth so that by 1938 the Soviet Union had become an industrialized country with industrial production levels matching those of Germany and Britain. After the destruction of World War II, the economy revived very quickly and throughout the 1950s and 1960s it experienced impressive growth under the leadership of Khrushchev, who made some attempts to allow some flexibility for the rural economy and small industries (Gomulka, 1971). Khrushchev was replaced by Brezhnev in 1964, who started the debate about possible reforms in prices and structure of production in order to sustain the growth rate of the economy. However, the economic reforms in the Soviet Union had to be postponed due to the great diversion of resources to the defense sector as a result of a number of international conflicts in which the Soviet Union was involved.