The Foreign Investment in Russia before World War I

Abstract

Tsarist Russia, as "the largest borrower in Europe", imported huge sum of foreign capital from western countries during 1861-1914. After 1917, among Soviet historians arose a long debate on the thesis of "semi-colonial subordination of Russia" and on the role of the foreign capital, as a part of it. One important problem to be pointed out from this debate is that two forms of foreign investment (investment in state and state-guaranteed securities on one side and investment in private companies on the other side) were argued separately and independently, and that one-sided argument was made for or against the role of either form of foreign investment. It is, I think, essential to the study of foreign capital to connect it closely with the whole structure ot Russian national economy. From this point of view, it is important to investigate the very correlation between two forms of foreign investment in Russian national economy. Tracing the entire process of foreign investment in Russia, we find that two forms of foreign investment, mentioned above, moved in opposite direction in two major stages with minor two and three periods respectively, and that, through these stages and periods, foreign investment moved its center of gravity step by step from investment in state loan, which at first accounted for the overwhelmingly large portion of foreign capital, to the investment in private companies. I think that these characteristic features of foreign investment represent the logic of the evolution of capital import common to many underdeveloped countries. From this point of view, I examined the role of foreign investment in each stage and period, correlation of the two forms of foreign investment, causes and factors which stimulated their transformation, and significance of this transformation in connection with the whole structure of Russian national economy. As a conclusion, I showed that Russia began her industrial development along the same way as the balkan states, based on the large sum of state loan, and in a half way, with the growth of investment in private companies which financial and economic policy and development of domestic industries accelerated, she parted from them, many of which fell into default because of financial difficulties. I also showed that this transformation process in foreign investment went hand in hand with the changes of relations with the capital export countries, trade cycle, the making of economic structure peculiar to Russia, the growth of industrial and financial monopolies and so on.