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If you look at the development of Russian industry since the breakup of the Soviet Union, you gain a better understanding of its current situation and the decisions and measures being taken by the Russian authorities.

Over its 70-year existence, the Soviet Union learned to produce most of the necessary high technology and basic stable goods and services itself. While supporting the industrial development of other socialist countries such as China, for example, the Soviet Union also proved in the 1950s and 1960s that it could independently develop products and know-how in full measure and successfully export them.

The country’s political structures, society and market experienced radical change at the end the 1980s, which gave rise to chaos in the countries left after the breakup of the USSR. This event was followed by deindustrialization caused primarily by the breakdown of the production chains that had been built over the past 70 years inside the USSR and the socialist camp as well as by competition and gradual capture of the market by Western products that started at the same time.

The neoliberal doctrine of the Yeltsin era in the 1990s was focused exclusively on the power of the free market and, therefore, did not leave any room for traditional industry, which was fighting with the consequences of the disintegration of industrial ties, new competition and privatization. The inefficiency of state structures, corruption and the brain drain merely aggravated the situation. It is safe to say that the ramifications for the affected industrial regions and for the country as a whole were catastrophic.

By the early 2000s not only had the existing industrial base been destroyed, but a psychological deindustrialization had started to take hold. This coincided with the international spirit of the times, as the entire world strove to reduce added value and earn a fast buck through trading in commodities and financial services. Russia followed this example, and its healthy value creation structure was disrupted. The entire country learned that trade and services, and not production, are the path to easy money.

This trend is still having a profound effect today. That being said, the psychological effect may be even deeper than the impact on the national economy and technology.