Industrialization of The Russian Empire in The Nineteenth Century in A Quest For The Regional Convergence

Submitted by:
Artem Kochnev
Submitted at:
Department of
Economics
Supervisor:
Univ.-Prof. Dr.
Michael Landesmann
Submitted:
September, 2016
Industrialization of the Russian

Empire in the Nineteenth Century:
In a Quest for the Regional
Convergence
Master Thesis
to obtain the academic degree of
Master of Science
in the Master’s Program
Management and Applied Economics
JOHANNES KEPLER
UNIVERSITY LINZ
Altenberger Str. 69
4040 Linz, Austria
www.jku.at
DVR 0093696
STATUTORY DECLARATION
I hereby declare that the thesis submitted is my own unaided work, that I have not used other than the
sources indicated, and that all direct and indirect sources are acknowledged as references.
This printed thesis is identical with the electronic version submitted.
Linz, 15 August 2016
Signature
ii
Abstract
The neoclassical model of economic growth implies a convergence of the standards of living across
regions given the same access to technology and equal savings rate. In this paper, I test the presence of
the regional convergence in the Russian Empire in the nineteenth century. I reveal the economically
significant regional convergence of approximately 1.6% per annum in the Russian Empire from 1795
- 1897 in terms of the gross industry production per capita.
Keywords: industrialization, regional convergence, economic growth, economic backwardness.

JEL Codes: O47, O14, N13
iii
To my parents, Raida and Alexei, who made my journey to Linz possible.
iv
Table of Contents
I. Introduction ................................................................................................................................... 1
II. Historical Context and Methodology ............................................................................................ 3
II.A Industrial Development in the Nineteenth Century Russia ................................................... 3
II.B On Preferences and Markets .................................................................................................. 7
II.C The Solow Model and Its Linear Parametrization ............................................................... 11
III. Data and Descriptive Statistics .................................................................................................... 12
III.A Description of the Sources .................................................................................................. 12
III.B Data Adjustment ................................................................................................................. 12
III.C Descriptive statistics ........................................................................................................... 14
IV. Regression Results ...................................................................................................................... 18
IV.A Basic Regressions ............................................................................................................... 18
IV.B Spatial Regressions ............................................................................................................. 20
IV.C Discussion........................................................................................................................... 24
V. Conclusion ................................................................................................................................... 31
References .......................................................................................................................................... 32
Appendix I. Log-linearization of the Solow Model around the Steady State..................................... 37
Appendix II. List of the Adjustments of the Regional Districts. ........................................................ 40
Appendix III. Additional Statistics ..................................................................................................... 46
Appendix IV. Additional Estimations and Robustness Checks ......................................................... 47
v
List of Tables
Table I. Implied Industry Growth Rate, by Sectors .............................................................................. 7
Table II. Population and Output of the Regions of the Russian Empire. In Borders of 1795. ........... 15
Table III. Inequality Measures of the Regional Gross Industry Output Per Capita ........................... 16
Table IV. Coefficient of Vatiation of the GDP Per Capita in 1960, by Database .............................. 17
Table V. Regional Convergence in the Russian Empire, 1795 - 1897 ............................................... 19
Table VI. Estimated Convergence Rates and Half-Life Periods ........................................................ 20
Table VII. Testing for the Spatial Effects in the Convergence Regressions ...................................... 23
Table VIII. Savings and State Expenditures in the Late Imperial Russia .......................................... 24
Table IX. Regional Convergence Estimated with Population Growth, 1795 - 1897 ......................... 28
Table X. Estimated Changes in the Administriative Borders of the Regions on the

District-Level, 1795 - 1897. ........................................................................................................ 40
Table XI. Regional Gross Industry Output and Population in 1795 and 1897. Nominal Prices, in
Borders 1795. .............................................................................................................................. 44
Table XII. Descriptive Statistics of Regions in 1795. ........................................................................ 46
Table XIII. Selected Cross Correlations ............................................................................................. 46
Table XIX. Robustness of the Sea and Capital Dummies .................................................................. 47
Table XVII. Convergence, Capital Cities, and Geographic Position ................................................. 48
Table XVIII. Convergence and Ethnic Factors .................................................................................. 49
Table XIV. Convergence with Human Capital .................................................................................. 50
Table XV. Convergence and Urbanization Rates ............................................................................... 50
Table XVI. Convergence and Agriculture .......................................................................................... 51
vi
List of Figures
Figure I. Dynamics of the Sukhara Industry Index Adjusted for the Population Growth .................... 6
Figure II. Overlay of the Maps for the Kursk Region ........................................................................ 13
Figure III. Drawing the District Perimeter and the Separation Line .................................................. 14
Figure IV. Regional Gross Industry Output Per Capita in Natural Logarithms. Real Prices, in
Borders of 1795 ........................................................................................................................... 16
Figure V. Regional Convergence of the Gross Industry Output in the Russian Empire, 1795 -
1897. Real Prices, in Borders of 1795. ....................................................................................... 18
Figure VI. Annual Industry Growth Rates Per Capita: A Spatial View. Real Prices, in Borders
of 1795 ........................................................................................................................................ 21
Figure VII. Residuals of the Baseline Regression: A Spatial Representation. In Borders of 1795.
..................................................................................................................................................... 22
Figure IX. Regional Industry and Population Growth in the Russian Empire. Real Prices, in
Borders of 1795 ........................................................................................................................... 26
vii
I cannot forecast to you the action of Russia.
It is a riddle, wrapped in a mystery, inside an enigma.
–Winston Churchill, BBC Broadcast, October 1st, 1939
I. Introduction
By the time when Sir Winston Churchill pronounced his famous speech, Europe was in flames of the
Second World War. The war which defined the course of the future events for decades. Economists
usually see a war as an exogenous shock, which has little to do with economic analysis 1, yet a
historian would barely imagine the massacres of the twentieth century without the preceding
technological advances. The mass kill was a product of industrialization – one of the core features in
the process, Simon Kuznets called ‘modern economic growth’ (Kuznets, 1966). The process, which
economists try to understand with efforts similar to alchemists’ strive to find the philosopher’s stone.
Nearly sixty years ago, the neoclassical growth model2 conceptualized by Solow (1956) and Swan
(1956) became one of the pillars in explaining the mechanics of the growth. Later on, it gave birth to a
widely discussed convergence hypothesis (Abreu et.al. 2005; Barro & Sala-i-Martin, 2004; Islam,
2003). By now, there is no supply shortage in alternative frameworks. Even a very exquisite gourmet
may find a theory, which fits his (or her) taste: from the innovation-driven models (Aghion & Howitt,
1992) to the frameworks with an emphasis on informal institutions (Gorodnichenko & Róland, in
press). Nevertheless, the neoclassical framework still produces debates (Rodrik, 2013; Barro, 2015)
and occupies its fair share in policy evaluation and advice (e.g. Rapacki & Próchniak, 2009; Guriev &
Vakulenko, 2015)3.
As Islam (2003, p. 313) mentioned, scholars mostly criticized the neoclassical model because it failed
to explain the income variation across countries, although Solow himself was mainly concerned to
explain the within-country variation (Solow, 1988, p. 3). The seminal studies of the within-country
variation by Barro and Sala-i-Martin (1992) and Sala-i-Martin (1996) produced a result compatible
with the Solow’s initial prediction. Their estimates suggested a rate of convergence close to 2% p.a.
using the sample of the United States, the Western European countries, and Japan4. Nevertheless, a
number of the subsequent studies revealed that the growth pattern within the countries might strongly
1
The things, however, gradually have changed in the recent time. See a survey on the economics of conflict by Blattman
and Miguel (2010).
2
In the following work, I use ‘the Solow model’ and ‘the neoclassical model’ interchangeably.
3
Although one has to admit that a fair share of studies produced questionable results. In the sample of 600 estimates
published in the literature, Abreu et.al. (2005) found that 9% of the regressions imply the half-life period of less than 7
years. If the estimate is true, governments could easily fire thousands of advisors and wait until the economic miracle
happens on its own. Nevertheless, economists registered only a few instances of the extraordinary high growth rates in the
long-run (Barro & Sala-i-Martin, 2004). As it turns out, development economists may breathe out and continue their
(probably endless) search of growth determinants. Lucky them!
4
Barro (2015) ironically labels this result as the ‘iron law of convergence’.
1
deviate from the one the model predicts. A large body of literature found no convergence of the
Russian regions during the transition period (see an overview by Guriev and Vakulenko (2015)). The
estimations of Kholodilin et. al. (2012) for the post-transition years (1998 – 2006) suggested that
convergence was driven by a few high-performing clusters, whereas a large part of regions did not
catch-up. Another great mystery of Russia?
Not necessarily. A careful examination of the theory drops a shadow on the ‘legendary’ 2% story.
Barro and Sala-i-Martin (1992: p. 236) themselves show that the southern states were not catching-up
to their northern counterparts in the U.S. between 1840 and 1880 but were rather approaching a
separate steady state. Stöllinger (2016) obtained similar results with respect to the late Habsburg
Empire, where Hungary approached a separate steady state. The convergence pattern of Eastern
Europe was not steady as well (Good and Ma, 1999) and even the story within Western Europe in the
19th century becomes less clear once we include the southern states into account (O’Rourke &
Williamson, 1997). A natural question is, whether the Solow framework suits the economies in an
initial phase of industrialization. It is not an idle inquiry: if one follows Alvarez et.al. (2016) and takes
the gross domestic product per capita of 2000 U.S. $ as a benchmark for an industrialized nation, he
finds out that nearly 466 million of people still wait industrialization to come5.
In my work, I apply the standard tools for testing the convergence hypothesis (Barro & Sala-i-Martin,
1992) to the figures, which became recently available thanks to the work of Markevich and Kessler
(2014). The study tries to reveal whether the gross industry output per capita increased according to
the neoclassical growth model. If the convergence hypothesis is true, then the poor regions should
catch-up to their richer counterparts in case of the similar steady states. My calculations support the
convergence hypothesis in the industry sector estimating the speed close to 1.6% per year. This result
is lower than the widely regarded 2% GDP per capita catch-up and 2.9% reported by Rodrik (2013)
for the industry sector alone.
My investigation yields two valuable results. First, it provides a partial support of the ‘optimists’ camp
(Crisp, 1976; Gregory, 2003; Mironov, 2012), who suggested a ‘positive’ interpretation of the late
Imperial Russian economic history. Although one has to keep in mind that the pace of convergence
was slower compared to the contemporary standards. Second, it shows that even countries with high
geographic differentiation, underdeveloped markets, and institutional rigidities could deliver regional
convergence in the industry sector. Yet, the results remain to a certain extent indicative due to omitted
variable bias and finite sample properties. To overcome the obstacle, economic historians should
move to a more disaggregated or panel data.
5
Using the PPP-adjusted expenditure-side GDP figures from Penn World Tables 9.0 (Feenstra et. al., 2015)
2
II. Historical Context and Methodology
It might seem somewhat strange for an economist to dig into events of a distant past. As context of
economic actions changes over time, the stronger arguments we need to justify the use of the historical
knowledge for today. My study is not exclusive in these terms. To prove why the study of the 19th
century Russian Empire is relevant for contemporary discussion, let me briefly introduce the broad
methodological issues surrounding economic history as a subject.
Every empirical economic inquiry happens in some context. When Angist and Evans (1998) discuss
the effects of childbearing on the female labour supply in the 1980s in the United States, they assume
that we know what childbearing is and why the effect of childbearing on women is different from that
on their husbands. Given that we believe in their identification strategy, we do not seriously doubt if
their results are valid (at least for the U.S. economy) for the near future because we typically assume
that the basic object of the study – the human behavior – remains the same.
What could change the behavior? Abstracting from the very long run evolutionary factors, it is the
environment in a broad sense, which shapes views and incentives of human beings. As many
elements, which surrounded life in the past, were different from today, economic historians have no
choice but to explicitly introduce a broad context6. Hence, I first briefly introduce the historical
context of the Russian Empire, which enables to discuss whether the economic environment of that
time imposes any limits on the methodology, with which I proceed later on.
II.A Industrial Development in the Nineteenth Century Russia
By the end of the 18th century, the Russian Empire had an agrarian economy located on the East of the
European periphery. Despite the modernizing activities of Catherine the Great 7 and military
successes against the Ottoman Empire and Poland, the Russian Empire is considered to be a backward
country compared to Western Europe (Gaidar, 2005; Gerschenkron, 1962; Sylla & Toniolo, 1991).
The executive power of the Emperor (Empress) had little legal constraints8, the bodies of political
representation did not exist, and landlord aristocracy was the most influential political force
(Mironov, 2003, 2012). The nobility, clergy, and the city dwellers gained their personal freedoms only
in the late 18th century. Ninety percent of the population were serfs owned by either nobility or state
(Kabuzan, 1971). Unlike in Europe, many cities had only little commercial or trade activity (Gaidar,
2005; Mironov, 1990) and very limited contacts with the European markets (Mironov, 2012).
Much, however, has changed a century thereafter. The quantitative evidence on the agricultural sector
and the estimation of the population height suggest that the productivity gradually began to increase
after the institutional reforms of Aleksander II 9 , which inter alia granted freedom to the serfs
6
The contextual emphasis partly pushed the economic history on the periphery of the economic research by 1970s. See
the overview by Abramitzky (2015), who suggests an optimistic interpretation for the contemporary period. For a more
critical view, see Temin (2013), who describes how the economic history disappeared from the PhD curricula of the MIT.
7
Catherine the Great (1729 – 1796) – the Empress of the Russian Empire from 1762 to 1796. Became a solely ruler of the
Empire after the assassination of her husband, Peter III (1728 – 1762).
8
Although the informal constraints existed. The assassination of the emperors Peter III and Paul I, and Pugachev’s
Rebellion (1773 – 1775) are notable examples. Mironov argues that the informal rules were essential in the relationships
between the serfs and their owners. (Mironov 2003, pp. 375 – 376)
9
Aleksander II (1818 – 1881) – the Emperor of the Russian Empire from 1855 to 1881.
3
(Markevich & Zhuravskaya, 2015; Mironov, 2012). Between 1861 and 1897, income per capita
increased by 40 per cent and reached 1100 dollars p.a.10 (Bolt & van Zanden, 2014; Gregory 2003, pp.
22). The increasing production was accompanied by social changes: rural population experienced
increasing income differentiation, migration to the cities intensified, and the share of the peasants in
the total population decreased. All of the factors led to social tensions and gave a rise to popularity of
radical political movements (Gaidar, 2005; Mironov, 2012). Despite the non-impressive performance
in comparison to the leading European states (Gregory, 2003), the Russian Empire made a huge leap
from a serfdom economy to the early stage of modern economic growth (Gregory, 2003). The
emerging industrial production was one of the hallmarks of the ongoing modernization, which
inhibited, however, specific features of the eighteenth century.
The peculiarity of the Russian industrial development was its lasting focus on military purposes. The
military competition of the backwarded Russian economy with the modern European states required
additional finance of the professional army and domestic production of the modern army supplies –
from uniform to cannons. As Peter the Great11 entered the war against Sweden, he required tools that
could deliver rapid results, namely to create enterprises able to produce required goods.
There is, therefore, no wonder, that Peter used non-market solutions to solve the problem
(Tugan-Baranovsky, 1907/1997). He strengthened serfdom to increase taxation and relocate labour
force to the sparsely populated locations near Urals, where the state established new industries;
provided finance to establish plants and hire the workforce (sometimes the foreign one); developed
specific institutional arrangements to fix the labour force on the plants; granted the monopolies to the
pioneering enterprises and provided legal preferences to the plant-owners in case of legal issues12.
Although Catherine the Great abandoned the monopoly rights and legal preferences of the pioneering
enterprises, much of Peter’s legacy was visible until the middle of the nineteenth century in particular.
The legacy of Peter’s policy was most prominent in the government regulation of the ‘strategic’ and
‘consumer’ industries. Mining, arms plants, and woolen industries belonged to the first ones and
‘enjoyed’ state support in various forms. First, the owners had exclusive right to buy the serfs to their
factories. Second, the government typically enforced to sell all of the produced goods to the state to
ensure the supply of military goods. At last, the state often granted direct subsidies to the industries.
On the contrary, most of the light industries were oriented on the consumer market, operated in a
competitive environment, and had to employ ‘voluntary’ labour force13. The term ‘voluntary’ is in
10
Geary-Khamis 1990 Dollars.
11
Peter the Great (1672 – 1725) – the first Emperor of the Russian Empire most famous for his military and westernization
activities.
12
It important to mention, that even aristocracy was not personally free as well, as they Peter obliged every noble man to
serve the state either in the army (fleet) or on administrative positions (Mironov, 2003).
13
A peculiar institute of the ‘possessional peasants (serfs)’ was a notable exception. Possessional peasants were the
property of a fabric or plant, on which they worked. The ‘possessional’ peasants typically lived with their families near the
plants, could not switch their job, and received lower salaries than the ‘voluntary’ workers – often in a barter receive. This
circumstance often led to protests of the possessional peasants. After failing to regulate the relationship between the
possessional peasants and the entrepreneurs, the government issued an act in 1840, which enabled entrepreneurs to free the
peasants with an obligatory cash payment, determined by the state. As Tugan-Baranovsky (1907/1997) argues, most of the
entrepreneurs granted freedom to their possessional peasants. The institution completely disappeared with the
emancipation act of Aleksander II in 1861.
4
quotes because most of the peasants remained serfs before the emancipation act of 1861. They were,
however, free in terms choosing their employer and had a bargaining power during the negotiations
with the entrepreneur. In the records provided by Tugan-Baranovsky (1907/1997), the ‘voluntary’
serfs usually got twice as higher salary than the immobile plant-owned possessional peasants did on
the same plant.
The preferential positions of the heavy industries did not stimulate their development.
Tugan-Baranovky (1907/1997) provides a persuasive picture of the supply shortage and poor quality
of the produced goods. Apparently, the market did a better job in stimulating productive efficiency in
the ‘consumer’-oriented industries that the state did. A peculiar feature of the textile development was
the increasing defragmentation in terms of the firms’ size. As the price of weaving mill was cheap and
production technique easily to master, peasants often started their own production at home. This
process was a response of the market to the capital constraints. Small-scale handicraft production
expanded until entrepreneurs started to import steam machines, which rapidly increased productivity
and started to drive out the small-scale production from the markets. Textiles in the central Russia and
sugar industries on the south were the most dynamic sectors of the economies (Crisp, 1976). Textiles
– because of the low entry costs and a wide consumer market; sugar production – due to accumulated
capital of the polish aristocracy.
The pattern seemed to change in the middle of the century. The traditional explanation was the
emancipation of the serfs, which should weak the institutional constraints put on peasants by serfdom,
rise productivity in the agriculture, and increase the mobility of the labor force 14 (Gerschenkron,
1962; Markevich & Zhuravskaya, 2015). Crisp (1976) alternatively emphasized the role of the
railway construction, which promoted the Russian-wide market for industrial goods by decreasing the
transportation costs.
The statistics, however, cannot give us the exact answer so far because we do not have any
comparable systematic records of the industrial production before 1860 to detect a discontinuity point.
The country-level index of industrial production constructed by Sukhara (2007) shows that the deep
initial decline of the industry production after the abolition of serfdom was followed by a stage of the
uneven growth from 1865 to 1890 with frequent yet not very deep declines compared to the initial
downturn in 1860 – 186215. It was only after 1890 when the industry production consequently grew
every year almost without downturns until the Russian-Japan war began in 1904 (see Figure I). The
initial decline in the industry production after the emancipation act seems somewhat strange at first.
Tugan-Baranovsky (1907/1997) mentions two possible sources of the initial decline. First, the
previously entrepreneur-owned serfs moved from the plants to agriculture affecting the production
capacities of the iron and steel industries, which depended on the manual labour. The second possible
14
The conditions of the emancipation process led to emergence of the so-called peasant communes, which enforced
specific formal and informal rules of the peasants’ behavior. The historiography of the 20 th century saw the communes
mostly as the rigid institution, which hindered the economic development of the Russian Empire. In the recent years, the
statement was put under question. See Gregory (2003) for discussion.
15
One has to remember that the Sukhara index covers only 31 industry products. Ferrous metallurgy, chemicals, and
textiles are least presented whereas the products of the fuel industry and nonferrous industries are observed almost
completely. See Sukhara (2007, p. 45) on methodology and coverage.
5
link was the increase of the wool and cotton prices on the world market due to the Civil War in the
United States.
2
y = 0,0396x - 0,2858
1,5
NATURAL LOGARITHM
0,5
0
1876
1912
1860
1862
1864
1866
1868
1870
1872
1874
1878
1880
1882
1884
1886
1888
1890
1892
1894
1896
1898
1900
1902
1904
1906
1908
1910
-0,5
Figure I. Dynamics of the Sukhara Industry Index Adjusted for the Population
Growth
Sources: Industry index – Sukhara (2007), Population – Borodkin (2011); own calculations
Another feature of the growth process after 1860, emphasized by Kafengauz (1994), was the
emergence of the new heavy industries. As Table I shows, fuel and chemical industries demonstrated
an impressive growth close to 10 p.p. per annum. The construction industry is likely to develop with
high rates given the increasing railway construction supported by state but the figures on them stretch
back to 1890 only.
A prominent feature of the growth was the ‘wake-up’ of the iron and steel industries, which is at odds
with the dynamics during the first half of the century. Kafengauz (1994) argued that the role of the
railway construction and the institutional factors were essential in that case. The rising railroad
construction created domestic demand for the capital goods: from rails to wagons. Moreover, after the
railroads reached eastern Ukraine, it enabled to connect the Donetsk steel and coal basins with the
Russian market. The nonferrous producers, on the contrary, remained mainly unaffected by the
diffusion of the railway network as its sources concentrated mainly in the Urals. Moreover, some of
the old regulations constrained the sales of the industries16.
16
Kafengauz (1994) describes that after one produced some gold, he must declare the amount of produced metal in a
special office, which was typically located far away from the production place. After that, the office would divide the gold
6
Table I. Implied Industry Growth Rate, by Sectors
Iron & Nonferrous Construction

Year Fuel Chemicals Textiles Food
Steel Metals Supplies
1860 - - - - - - -
1870 9.0% 2.1% 3.5% 6.1% - -0.1% 2.0%
1880 17.4% 7.4% 1.6% 12.6% - 7.5% 2.6%
1890 9.0% 3.4% -0.5% 15.0% - 3.8% 3.3%
1897 8.8% 10.8% 0.0% 7.0% 20.2% 10.3% 7.5%
Source: Sukhara (2007); own calculations
In short, most of the industries emerged from the involuntary-based and almost negligible (in terms of
the total share in the overall national product) share of the economy to the steady growing sector based
on the voluntary work with capital-intensive fuel, chemical, and heavy industries on the frontier of the
growth process.
II.B On Preferences and Markets

As one could see from a brief introduction to the Russian history, the industrial development faced
manifold obstacles. Some recent empirical works emphasized the role of the cultural traits in the
long-run growth process (Gorodnichenko & Róland, in press; Tabellini, 2008). Could it be the case
that the institutional rigidities had shaped a systematic bias in behavior incompatible with the
neoclassical convergence framework, where self-interest drives the model? If this is true, there is little
sense in testing the neoclassical propositions for the nineteenth century Russia.
The bad news is that earning profits per se did not have a positive image in the Russian Empire even
by the end of the nineteenth century. Mironov (2003) came to the conclusion that nobility, which
controlled a large share of assets until 1861, did not consider entrepreneurship a noble activity. It was
rather important to be (or at least to look like) a generous person with good manners and a tendency
towards an adventurous behavior (Lotman, 1993/2015). Nobility was not familiar with the concept of
costs and often did not have bookkeeping on the plants. A negative attitude toward the
entrepreneurship was also popular among the intellectuals, who saw the image of a profit-seeking
moneymaker as asocial and egoistic. A welfare-enhancing altruist, who shared his knowledge and
wealth with the poor to increase the total welfare was an ideal of the educated men.
Tugan-Baranovsky (1907/1997) clearly depicted it in his analysis of the scientific discourse of the 19th
century17.
This vision, however, was frequently at odds with the ordinary course of life in general and specific
circumstances in particular. In the discussion about the aristocratic values, one should not forget that
nobility was not a homogenous group neither at the beginning nor at the end of the century. Scholars
highlighted instances when nobility engaged in the entrepreneurial activity one way or another. Crisp
into the part belonging to the state and the one, which remained to the producer as a reward. Naturally, most of the gold
producers sold the produced metal to the Chinese smugglers.
17
As it is clear from the introduction of his book, one of his main aims was to dismantle the (at that time) common view
that capitalism is ‘unnatural’ for the Russian Empire.
7
(1976) payed a particular attention to the sugar industry in Ukraine, which developed under serfdom
and gentry’s ownership. Tugan-Baranovsky (1907/1997) mentioned that some nobles promoted
manufacturing on their estates contrary to the wishes of their peasants. Melton (1987) provides a
bunch of anecdotic evidence of the rich estate holders, who used their capital to found enterprises on
their lands18.
Although aristocracy was rarely interested with the entrepreneurial activity per se, it certainly had an
incentive to obtain a certain rate of return from their estates to support a high level of expenditures
(especially for those nobles, who lived in St.-Petersburg and Moscow). The European fashion was
persuasive among the aristocracy and an ability to follow a ‘European’ way of life – which included
not only an expensive European suit unavailable in Russia but also knowledge of foreign languages
and connections with the foreigners – was necessary for a social inclusion among the nobles (Lotman,
1993/2015)19. Strategies to solve this problem varied but someone should finance the costs in the very
end20. As Mironov (2012) argues, the landowners increased their revenues from their estates in the
eighteenth century to finance their prodigal way of life. Some valuable evidence comes from Nafziger
(2013), who shows that serfdom ‘payments’ varied considerably by the middle of the eighteenth
century in the European part of Russia. Serfs in the northern regions (roughly above the 54th latitude
line) usually paid a quit rent, whereas serfs in the other regions typically provided labour services to
their masters. It was, however, the right of the nobles to establish the type of the payments for the
serfs. Nafziger’s figures suggest an explanation based on the suitability of the land for agriculture. If
the black-soil regions provided greater returns from agriculture, then the nobles set the payment
system according to the productivity constraints imposed by the quality of the soil. At last, nobility
clearly followed its interest when it was a matter of their own freedom and heritage issues. Aristocracy
was the first class, who obtained personal freedom from the state service and guarantees of the
property rights. As historians emphasized, it was not a coincidence but a strong and persistent
influence, which gradually increased after the death of Peter the Great (Mironov, 2003; Gaidar, 2005).
Tugan-Baranovsky (1907/1997) also documented that the nobility took over the merchant lobby to
buy serfs as a property for the plants. It is, therefore, unlikely that nobility was completely irrational
and did not respond to the market incentives. It was rather aversive to the economic risks, had little
value for the future income and often preferred to use political and personal influence to maintain the
socially aspired level of demonstrative consumption. These features then probably explain their
inability to compete with others when markets started to expand and political tools became less
efficient.
Contrary to the aristocracy, merchants produce less concern by definition. Contrary to the nobles,
merchants did not have rights to buy serfs for the fabrics in the nineteenth century21. Indeed, the
18
Apparently, they did not participate in the governance of the enterprises by themselves but rather delegated the
responsibility to one of the peasants (although). The peasants did not have their own right to buy the property for
themselves and acted – in a very oversimplified form – as a noble’s trustee.
19 Leo Tolstoy represented this type of behavior in his famous novel “War and Peace”. He, therefore, wrote a significant
part of dialogues in French to represent how strong the European fashion affected the life of the Russian aristocracy.
20
Many took credits from friends or family or strived for a beneficial marriage.
21
With the exception of a short period during the reign of the Paul I (1796 – 1801). Aleksander I abandoned his father’s
practice.
8
history of the ‘possessional’ workers described by Tugan-Baranovsky (1907/1997) in detail, gives us
a good example. Unlike nobles, merchants, therefore, had to employ either ‘possessional’ workers
(they were the property of the plants as entities, not the property of the merchants) or the ‘free’ labour
– peasants who went to the cities to earn money for the quit rent. Whereas the wages of the quit rent
peasants had mainly a monetary basis, the costs of the possessional ones often contained a significant
non-monetary element. Possessional workers often had small pieces of land near the plant and
depended on the support of the fabric owner, who frequently delivered construction supplies and fuel.
Possessional workers, however, were often unsatisfied with their salaries as ‘free’ workers typically
earned twice as more as the possessional ones. This controversy became a foundation for so many
frequent protests that the owners of the possessional fabrics asked the state to enable them to free the
labour force upon an arrangement by the second quarter of the eighteenth century. In 1840, the
government issued an act, which grated the requested possibility specifying the exit conditions. If the
estimations of Tugan-Baranovsky are true, the majority of the ‘possessional’ workers got freedom
despite the compensation payments, which fabric-owners had to pay according to the act. The whole
course of the controversy shows that entrepreneurs strived to minimize costs of employing the
‘possessional’ workers and pushed them to switch to the solely monetary relationships.
Could the serfdom shape a peasantry culture, which embodied a non-market behavior? Again, the
evidence is mixed. On the one hand, Mironov (2003) argues that peasants had a minimalistic culture.
They did not strive for wealth and did not increase productivity unless their master or the state
increased the obligations. Their work ethic did not emphasize thrift and hard work. He emphasizes
that the tiny share of the free peasants, who got freedom from their masters before emancipation did
not show higher productivity. On the other hand, we have strong evidence of how peasantry slowly
learned the basics of the market economy.
The peculiar feature of the industrial development before emancipation was its increasing
fragmentation. As Tugan-Baranovsky (1907/1997) argued that peasants frequently started their own
small-scale production in the industries where the fixed costs were small. By the middle of the
century, the craftsmen were able to drive out the big fabrics from the markets where the equipment
was cheap and production process easy to learn (e.g. in the cotton industry, flax processing,
smithcraft). Rudolph (1985) argued that peasants often created networks of production and suggested
that handicraft production accounted for the half of the industry production by the middle of the
century. Despite the mobility restrictions (peasants had to get a written permission to visit a city),
nearly one quarter of the peasants’ male population paid a quit rent to their master thus engaging in a
monetary relationship by definition (Nafziger, 2013). The Napoleons’ invasion in 1812 provides an
additional example of an exogenous shock, which caused a predictable outcome. After Napoleon
entered Moscow and burned it down together with its fabrics, the small-scale manufacturing of the
neighboring regions (especially in the Vladimir region) began to flourish because of the supply
shortage. Tugan-Baranovsky (1907/1997) describes how the whole villages began to build clusters by
specializing in the textile production. Some of the serfs, who were lucky enough to profit from
Napoleon’s invasion (and clever enough to save their earnings), were able to buy themselves out for
tens of thousands of roubles – a tremendous amount of money at that time. At last, one should not
forget that the work ethic differentiated depending on confession. Protestants were a big share of the
9
population in the Baltic regions and accounted for 3% of the total population by 1897. Old-believers –
a closed orthodox religious group, which put much emphasis on thrift and collective help due to their
prosecution in the 17th and 18th centuries – around 8.5% (Troinitskii, 1905; Raskov, 2012). Both
together they consisted a minor but visible share of the population. Overall, it seems that peasants did
not violate neoclassical prescriptions although institutional constrains likely put many distortive
effects and limited the market development.
What about the government? Did its policies suffer from the ideological bias? It is true that until 1762,
the government applied mostly administrative methods and strengthened serfdom. The policy
approach, however, experienced a paradigm shift under the reign of Catherine the Great, who
liberalized trade, eliminated legal preferences to the fabric owners, and permitted serfs to produce
handicraft goods at home (Lunden, 2009) 22 . During the reign of Paul and Aleksander I, the
government made the first steps to dismantle serfdom by allowing serfs to buy them out upon an
arrangement with the master and allowing peasants to trade in the cities. Consequently, the
government extended the trade and property rights of peasants in the urban and rural areas (Mironov,
1990).
The government experienced some anti-industrial influence flair under Nikolas I 23 .
Tugan-Baranovsky (1907/1997) gives a number of instances when Nikolas and the minister of finance
Kankrin expressed support for some legislative proposals, which would impose restrictions on the
labour force movement or limit the size and quantity of enterprises in the cities. None of these plans
became real. As Tugan-Baranovsky concludes, the state had a vital interest to develop industries for
the military purposes. The painful consequences of the Crimean war (Russia agreed to withdraw the
navy forces from the Black Sea) highlighted the backwardness of the Russian economy again and
during the rule of Aleksander II and his successor Aleksander III, there is little doubt in the
government’s consequent efforts to promote growth.
Despite different ideological positions of Nikolas I (who had an image of a reactionary monarch),
Aleksander II (a liberal) and Aleksander III24 (conservative), the ministry of finance showed a lasting
continuity in its major policies: stabilization of the monetary system and transition to the gold
standard, which took decades (Gregory & Sailors, 1976), and the finance of the railroads25. As Crisp
(1976) concludes, ‘the finance ministry had become something in the nature of a ministry of national
development’ in the second half of the century.
Overall, the evidence is mixed. One could find examples, which favor both points of views even in the
works of the same scholars. Nobles are likely to be the most reluctant group in these terms.
Nevertheless, whatever influence the nobility had in the beginning of the nineteenth century, most of
22
The impact of the ‘enlightenment’ ideas on Catherine’s mindset was clear in the Instruction to the Legislative
Commission – a set of recommendations, which manifested Catherine’s view on the law system of the Empire. It
contained 655 articles in its final version, and nearly the half of them were adopted from the works of Montesquieu and
Beccaria. (Pavlenko, 2006, pp. 114 - 116).
23
Nikolas I (1796 – 1855) – the Emperor of the Russian Empire from 1825 to 1855.
24
Aleksander III (1845 – 1894) – the Emperor of the Russian Empire from 1881 to 1894.
25
A notable exception was the tariff policy, which was more liberal under Aleksander II and became protective under
Aleksander III. (Crisp, 1976) One should not, however, forget, that the protectionists tariff policies became popular in the
last quarter of the 19th century. See Aghion & Williamson (1998).
10
the Russian entrepreneurs had a merchant or, somewhat paradoxically, a peasant background a
century thereafter (Mironov, 2003). More important, however, is that the broad population learned
how to operate in the market environment by the eve of the October Revolution. A failure of the “war
communism” and a tremendous revival during the “new economic policy” under Bolsheviks shows
how deep a market-based behavior was already entrenched in the Russian economy (Gaidar, 2009;
Markevich & Harrison, 2011). Hence, even if we assume a systematic behavioral bias by the
beginning of the nineteenth century, it should gradually decline by the end of the century and pave the
way for the neoclassical forces. The skeptic, thus, could interpret the subsequent econometric exercise
solely as an estimation. An optimist could join me and accept my results as a hypothesis test.
II.C The Solow Model and Its Linear Parametrization

I take the basic neoclassical growth model, which assumes a Cobb-Douglas production function with
the Harrod-neutral technology and an exogenous technological progress, savings rate, and population
growth. Let Y denote annual income (or a measure of output), K –capital stock, and L – labour force:
𝑌𝑡 = 𝐾𝑡𝛼 (𝐴𝑡 𝐿𝑡 )1−𝛼 (1)
In my study, I estimate the log-linear equation, which connects the textbook Solow model with the
econometric specification suitable for the OLS estimation (see the formal derivation in Appendix I).
Assuming that output measures is a good proxy for a capital stock and approximating around the
steady state, equation (1) yields the following equation.
ln 𝑦𝑖,𝑡 − ln 𝑦𝑖,𝑡−𝜏 = 𝛽0 + 𝛽1 ∗ ln 𝑦𝑖,𝑡−𝜏 + 𝜀𝑖 (2)
Where y is gross industry production per capita, t is the specific year, τ is the difference between the
initial and end points of time in years, β0 and β1 are the regression coefficients, and 𝜀𝑖 is an error term.
One can derive the value the convergence parameter from the estimation of β1:
1
𝜆̂ = − ln(1 + 𝛽
̂1 ) (3)
𝜏
𝜆̂ estimates by how many percent the catching-up region reaches the steady state in theory or closes
the gap to the leading region every year de facto. In my study, I estimate only the industry output per
capita, as figures on agriculture and service are not available yet.
Note, that the Solow model implies unconditional convergence only in case if the technological levels
across regions are similar. This assumption was the major point of critique, which emphasized the
failure of the model to explain the cross-country variation in the income sizes and let the concept of
the conditional convergence emerge (Mankiw et.al. 1992). In the case of the cross-regional studies,
the assumption of the equal technological levels is more reasonable as regions within the country
often share similar institutions. In that case, the neoclassical model predicts a negative value of 𝛽1.
Note, however, 𝛽1 represents a complex term (see equation A.6 in Appendix) and does not have
economic interpretation in terms of the model. Furthermore, its statistically significant value does not
necessarily mean a vindication of the convergence, as it still may have a small size and little sense in
economic terms (McCloskey & Ziliak, 1996). Hence, it is 𝜆̂ (together with the implied half-life rate)
that provides the true check for the convergence hypothesis.
11
III. Data and Descriptive Statistics
III.A Description of the Sources
The major source of the historical statistics I use is RISTAT. RISTAT is a panel dataset on
demographic and economic variables of the Russian regions. As data for 1858 are not yet publicly
available, I use data on population, gross industry production, shares of urban population, and a
number of teachers and pupils for years 1795 and 1897 only. The dataset covers all regions of the
Russian Empire except Bessarabia, the Kingdom of Poland, Finland, and Alaska.
To test the growth-initial equation one usually uses GDP per capita as a key variable. To reconstruct
the gross domestic product, however, one requires the detailed prices for a set of the agricultural
products, which are in kind in the RISTAT database. Therefore, I restricted my analysis to the gross
industry output per capita only26.
The original source of the RISTAT on gross industrial output in 1795 is the statistics gathered by the
so-called "collegia" ["коллегия"]. The "collegia" were administrative units responsible for the
development of the specific industry sectors. For 1897, the primary source is the statistics of the
Ministry of Finance complemented by the data gathered by the Ministry of Agriculture and State
Property and local censuses of handicraft production. See Markevich and Kessler (2014) for more
details.
Since some entries of the gross industrial production in 1897 were in kind in the database, I calculated
their monetary value multiplying the output values with the respected prices from the Code of
Commodities’ Prices (1901) and Kafengauz (1994). I used additional figures on ethnicity, population,
and urbanization rates in 1795 from the Global Collaboratory on the History of Labour Relations
([GCHLR], 2012). To adjust for inflation, I used the consumer price index based on the prices of the
basket of consumer goods of the carpenters constructed by Mironov (2012) for the period from 1703
to 1913. It contains prices for 47 goods reported sold in St.-Petersburg from various sources27. Note,
however, that his index contains data for one city only. I, therefore, assume the equal price levels
across the regions, which is unlikely to be true. It is, however, to some extent favorable to my
hypothesis test as the price levels in less developed regions should be lower and output, thus, lower.
Hence, my estimations are likely to underestimate the regional convergence. I extracted the
geolocation of the regional capitals using Google Maps to account for the spatial dependencies later
on.
III.B Data Adjustment

Unfortunately, the change of the regional borders during the century makes the direct comparison of
regional figures impossible. During the time span I cover in the study, many changes occurred in the
newly acquired regions in the west and southwest of the Empire (current Belarus and Ukraine) and on
26
The industrial output in the database does not contain the construction sector. See the web site of RISTAT for more
details (Markevich & Kessler, 2014).
27
The basket of goods contains 20 food items, 19 household goods, and 9 units of cloth. See Mironov (2012, pp. 407 -
410) for a description of his sources (pp. 407 – 410).
12
the East (Middle Asia, Siberia, and the Far East). Some of them involved split of the regional districts
["уезды"].
Some scholars already tried to account for the changes of the borders. Kabuzan (1971) used visual
comparisons of the maps but he reported the changes at the district level describing changes as the
binary outcomes, which are not precise. Den (1902) analyzed the changes in the European Russia and
“Malorossia” (territory of current Ukraine) according to the official records but he did not estimate
how big the share (neither in terms of the area nor in terms of the population) of the reassigned district
was.
To assure the comparability of the figures, I adjusted the values of industry production and population
of 1897 to the regional borders of 1796. As RISTAT do not provide the district-level data, I assumed
that industry output had an equal distribution over the district area and used districts’ population as
weights for the industry output. To estimate the shares of the areas, which “moved” from a region "A"
to a region "B", I compared the maps of the districts in a geospatial software “QGIS”.
I used the Atlas of the Russian Empire in 1796, which depicted borders just before the administrative
reforms took place. The maps of the later periods, which I used for comparison varied by date
depending on their image quality and visibility of the district divisions but were produced later than
1820. The variety of the reference years should not affect results because the European Regions did
not experience significant changes after 1808 according to Den. For the non-European regions, I used
maps after 1850 whenever possible.
Unfortunately, the coordinate systems varied among maps and sometimes did not contain the
reference points for longitude and latitude. Therefore, I overlaid maps using cities and rivers as the
pinpoints between two maps. Figure II shows the result in the case of the Kursk region.
Kursk Region, 1796 Kursk Region, 1876
Figure II. Overlay of the Maps for the Kursk Region

One may notice how the map of the later period squeezed trying to approximate the reference points
based on the cities’ location. The changes are particularly strong around the corners. The following
13
effect appears often because regional maps depicted in detail mainly those elements (cities, town,
roads, rivers), which are located within the regional borders only.
After performing the overlay, I drew the borders for the regions in 1796 and a later period and
approximated the division line between the old and the new borders. Figure III provides an example of
such a procedure using the case of the Sudzhansky district, which acquired Miropolje – a city, which
belonged to the Kharkov region in 1796 – with the surrounding territory.
Kursk Region, 1796 Kursk Region, 1876 Overlay with Borders
Figure III. Drawing the District Perimeter and the Separation Line
After drawing the borderlines, I calculated the squares of the districts expressed in artificial units.
Dividing the square of the removed sub-district on the square of the whole district gave me the share
of the relocated district, which I used as a proxy for the population and industrial output to adjust the
data28. Note that the following approximation is valid only if population and industry output were
equally distributed across the district areas.
I applied the described procedure to every region, which was a subject to change in borders according
to Den (1902). Since Den did not account the changes in “Belorossia” (contemporary Belarus), the
Baltic Regions and Siberia, I compared the maps for all of them. Afterward, I adjusted the gross
industrial production and population figures in 1897 as if the borders of the regions in 1795 remained
constant until 1897.
III.C Descriptive statistics

The adjusted data shows a tremendous growth of population and industry production over the
observed period: the average population in a region increased 2.7 times, the real gross industrial
production increased 27.7 times, and the real gross industry output per capita grew on average from
1.62 to 14.32 roubles (see Table II). The real gross industry output was on average more than three
times greater the population growth. The average annual growth rate of industry production per capita
28
Consider a district “X”, which contained 5% of the population in the region “A”. Suppose we find that 40% of the
district “X” was initially located in the other region “B” in 1795. Multiplying the share of the reassigned area (40%) by the
district’s share in the population total (5%), I estimate the share of the population of the reassigned sub-district in the
region “A” equal to 2% (0.4 * 0.05 = 0.02). I apply the same procedure for the industry output.
14
was equal to 2.56% despite the population growth. Notable that all regions experienced rising per
capita output with Kolyvan being the only exception29.
Table II. Population and Output of the Regions of the Russian Empire. In
Borders of 1795
Variable Observations Mean Std. Dev. Min Max
Population in 1795 48 728,033 274,117 62,906 1,127,496
Population in 1897 48 1,952,697 988,547 311,144 4,995,617

Gross Industry Output in
48 1,034,873 1,608,484 10,579 8,435,317
1795, RUB
Real Gross Industry Output
48 28,700,000 49,500,000 1,757,816 226,000,000
in 1897, RUB
Gross Industry Output per
48 1.62 2.40 0.01 11.33
capita in 1795, RUB
48 14.32 20.39 1.54 83.65
per capita in 1897, RUB
Population Growth, % 48 0.96 0.58 0.31 3.35
48 3.56 1.68 0.67 8.80
Growth, %
48 2.58 1.62 - 0.18 7.14
Growth per capita, %
Source: Population (except Kurlandia, Vilno in 1795) in 1795 and 1897, Gross Industry Production in 1795 and 1897 –
RISTAT (Markevich & Kessler, 2014); Population (Kurlandia, Vilno) – GCHLR (2012); own calculations
One way to analyze the intra-regional catching-up is to look at the correlation figures between the
industry output in 1795 and 1897. The Pearson correlation between the initial industry output per
capita is equal to 0.63 showing that regions with a higher initial output per capita had a greater output
by 1897. The Spearman rank correlation, however, is equal to 0.29 suggesting that the ranking of the
‘most industrialized’ regions experienced a considerable change.
Figure IV reveals which regions were the major “game-changers”.Although the rich regions
(Moscow, St.-Petersburg, and Vladimir) occupied the top positions in both years, Yekaterinoslavl and
Riga were rapidly approaching their output values per capita. Kurlandia, Tver, Voznesensk, and Kiev
demonstrated a considerable catch-up as well. Another group, which was able to maintain the
‘advantage’ consisted of Revel, Kostroma, Yaroslavl, Perm, Nizhny Novgorod, Arkhangelsk, and to a
lesser extent Orel and Kharkov. The main ‘losers’ were Astrakhan, Olonets, and Kolyvan, which
occupied high positions in 1795 but became and industrial periphery by 1897.
Note that whereas almost the half of the sample had negative logs of industry output per capita in
1795, there is no single region with negative values by 1897. The distribution of logs, therefore,
became less disperse in the logarithmic terms.
29
I suggest two explanations for this finding: (a) extraction of the old ore sources, which enterprises did not exploit further
because they used methods typical for XVIII century (Kafengauz, 1994); (b) high population growth in the region (29
times), which probably overestimates the increase of the overall labor force in the industry sector.
15
Figure IV. Regional Gross Industry Output Per Capita in Natural Logarithms.
Real Prices, in Borders of 1795
A set of the formal inequality measures indicates that the disparities decreased over time but suggests
the various size of the equalization across regions (see Table III).
Table III. Inequality Measures of the Regional Gross Industry Output Per Capita
Coefficient of Standard Gini coefficient Theil entropy
Variation deviation of logs measure
1795 1.48 1.61 0.64 0.75
1897 1.42 1.00 0.58 0.64
The coefficient of variation decreased only slightly from 1.48 to 1.42 but the indicator gives much
weight to the extreme values and may overstate the persistence of inequality30. The Gini coefficient
declined only slightly as well, whereas alternative measures suggest a stronger equalization within the
Empire. The standard deviation of logs suggests the sharpest decline of the inequality as it decreased
more than by one third indicating that the distance across the output per capita values declined. As we
know, beta-convergence is a necessary but not sufficient condition for sigma-convergence (Islam,
1
√ Σi (𝑥𝑖 −𝑥̅ )2
30 N
Recall that the formula of the Coefficient of Variation looks as follows: 𝐶𝑣 = . As the numerator grows at
𝑥̅
exponential rate and the denumerator grows at a constant rate, outliers have a disproportionally high influence.
16
2003). Thus, we have a weak indication of the convergence given the dynamics of the inequality
measures.
Before I proceed with the estimation, one issue calls for a word of explanation. Namely, to which
extent an effect of a low base could drive the results of my estimations. At the starting point of the
study, many regions could have very small production capacities compared to the rich regions and an
increase by one unit of production would lead to a substantially higher growth rate for a poor region
compared to a rich one. Although the decreasing returns to capital is a feature of the Solow model, the
effect can be too strong in my case.
I validate my results by comparing the coefficient of variation of the gross industry output per capita
in 1795 with the coefficient of variation for the datasets typically used for the growth regressions: the
Maddison database, Penn World Table, and World Development Indicators (Abreu et.al., 2005) and
yet did not find the unconditional convergence (e.g. Barro & Sala-i-Martin, 2004). With the exception
of the World Bank, other series contain the PPP-adjusted GDP per capita back to 1960.
Table IV. Coefficient of Vatiation of the GDP Per Capita in 1960, by Database
Maddison Penn World Penn World Penn World World
Tables 9.0 Table 7.0 Table 6.1 Bank
PPP Yes Yes Yes Yes No
Base year 1990 2011 2005 1996 2010
Coefficient 1.37 1.02 1.08 0.95 1.33
of Variation
Sources: World Bank (2016); Bolt & Zanden (2014); Feenstra et.al. (2015); Heston et. al (2002, 2011); I used the
expenditure-side GDP PPP chained series from the Penn World Table series; own calculations
As we may see, the values of coefficient of variation range from 0.95 to 1.37, which is close to the
value in my dataset – 1.48. Albeit the relative variation in my sample is higher, it cannot drive the
estimations. Therefore, the concern has as much validity for my results, as for alternative growth
regressions, which use the Maddison or the World Bank figures and we may finally proceed with the
empirical assessment.
17
IV. Regression Results
IV.A Basic Regressions
Figure V provides an illustration of the convergence process in the Russian Empire. Without the
covariates, the estimated equation fits the growth pattern quite well (R2 = 0.652).
Figure V. Regional Convergence of the Gross Industry Output in the Russian

Empire, 1795 - 1897. Real Prices, in Borders of 1795.
The coefficient is statistically and economically significant on the 1% level (β1 = - 0.812) implying
the annual convergence rate of 1.64% and the half-life of 42 years (see Table VI). The convergence
parameter remains robust to specification changes. Measures of human capital, urbanization rate,
share of Germans and Jews (proxy for the knowledge spillover and trade), ethnic fractionalization,
longitude (proximity to the Western Border), dummies for the capital cities (St.-Petersburg and
Moscow), wheat-to-rye ratio (proxy for the quality of soil), border with the seas – none of these
measures were able to drastically undermine the significance of the convergence parameter (see Table
V)31. Nevertheless, the convergence coefficient experienced some changes in the point estimates after
controlling for certain factors. Human capital and proxies for trade intensity increase the convergence
rates, whereas accounting for the sea borders and quality of soil has an adverse effect.
31
See Appendix IV for estimations with a full number of covariates available for year 1795.
18
Table V. Regional Convergence in the Russian Empire, 1795 - 1897
. Baseline Human Capital Geography Soil Proxies for Trade and All(1) All(2)
Quality Technology
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Dependent Variable: Real Gross Industry Output Per Capita Growth
Ln industry output -0.812*** -0.899*** -0.899*** -0.761*** -0.794*** -0.661*** -0.811*** -0.842*** -0.781*** -0.754***
per capita, 1795 [-9.26] [-8.59] [-8.39] [-9.87] [-9.18] [-6.21] [-8.98] [-10.35] [-8.11] [-7.86]
Teachers to 35.16**
population ratio [2.35]
Pupils to population 1.381** -2.018* -1.309
ratio [2.12] [-1.90] [-1.17]
Border with the 1.369** 1.323** 0
Black Sea [2.69] [2.59] [.]
Border with the 1.716*** 1.953*** 2.126***
Baltic Sea [4.06] [3.12] [3.14]
Longitude -0.0163* 0.00408 0.00936
[-1.72] [0.46] [0.93]
Wheat to rye ratio -1.548* -0.595
[-1.84] [-0.84]
Urban citizens per -0.421 -4.068 -3.56
capita [-0.10] [-1.16] [-0.37]
Germans to 6.750*** 2.256 -1.085
population ratio [3.04] [0.64] [-0.27]
Moscow / 2.726*** 2.374**
St.-Petersburg [3.11] [2.67]
dummy
Ethnic -0.525
fractionalization [-0.77]
Constant 2.160*** 1.942*** 1.927*** 1.958*** 2.816*** 2.342*** 2.173*** 2.019*** 1.880*** 1.819***
[14.70] [11.55] [10.90] [15.11] [6.91] [12.28] [11.23] [14.10] [4.97] [3.93]
Observations 48 40 40 48 48 38 48 48 40 36
Adjusted R-squared 0.643 0.649 0.641 0.753 0.658 0.51 0.636 0.697 0.789 0.709
t-statistics in brackets, * p<0.1, ** p<0.05, *** p<0.01; Sources: Population (except Kurlandia, Vilno in 1795) in 1795 and 1897, Gross Industry Production in 1795 and
1897, Pupils and teachers per capita, figures on agriculture – RISTAT; Population (Kurlandia, Vilno), Urbanization Rate, Germans to population ratio, Ethnicity figures –
GCHLR, - RISTAT; Sea Borders – Atlas of the Russian Empire (1796); Inflation Rate – Mironov (2012); Geolocation – Google Maps. All ‘stock’ explanatory variables are
for 1795. Calculations performed by the author.
From all other covariates, only the access to the Black and Baltic seas
appears to provide a robust explanatory variable of the growth rates
adding additional 1.7 and 1.4 pp p.a. respectively. Proxies of the human capital are significant but not
robust if one adds additional covariates: an increase of the pupils per capita by 1 pp would increase the
growth rate by 1.38 pp. Proxies for the trade intensity and knowledge transfer, measured by the share
of Germans in the total population and longitude (proxy for distance to the West), show only spurious
signs of significance. Following the findings in the literature devoted to the economics of conflicts
(Alesina et.al., 2003; Blattman & Miguel 2010; Ginzburg & Veber, 2012), I also estimate a possible
influence of ethnic fractionalization on the industry output growth. As in the case with the proxies for
the technological spillovers, I could reveal only spurious signs of statistical significance.
Table VI. Estimated Convergence Rates and Half-Life Periods
Number of Beta Convergence Half-Life, Observations Adjusted

Model Coefficient Rate years R2
Baseline (1) -0.812*** 1.64% 42 48 0.643
Human (2) -0.899*** 2.25% 31 40 0.649
Capital (3) -0.899*** 2.25% 31 40 0.641
(4) -0.761*** 1.40% 49 48 0.753
Geography
(5) -0.794*** 1.55% 45 48 0.658
Soil Quality (6) -0.661*** 1.06% 65 38 0.510
Trade and (7) -0.811*** 1.63% 42 48 0.636
Technology (8) -0.842*** 1.81% 38 48 0.704
All(1) (9) -0.781*** 1.49% 47 40 0.789
All(2) (10) -0.754*** 1.37% 50 36 0.709
* p<0.1, ** p<0.05, *** p<0.01; Source: Table V. Calculations performed by author.
The differences in point the estimates of the convergence rate vary between 1.06 to 2.25%. The
half-life drops to 31 years if one adds human capital and increases up to 51 years once I account for the
access to the seas (Table VI). Controlling for the quality of provides the most pessimistic picture
extending the convergence rates up to 65 years.
IV.B Spatial Regressions
As the empirical research found out, club-convergence (or clustering) is not a rare when one examines
the pattern of economic growth (Arbia, 2006; Kholodilin et.al. 2012; Alvarez et. al. 2016). Figure V
gives an overview of the growth pattern across regions from the geographical perspective, where
regions are colored according to the growth quantiles.
Previous scholars (Crisp, 1976; Tugan-Baranovsky, 1907/1997; Kafengauz, 1994) emphasized the
existence of the central industrial cluster, which consisted of Moscow, Vladimir, Kaluga, Kostroma,
Nizhny Novgorod, Tver, and Yaroslavl regions (marked by the stars on the map). The raw RISTAT
data suggest that this assessment is only partially true. Whereas Vladimir, Kostroma, Yaroslavl, and
Tver (black stars) stand out from the neighboring regions, Nizhny Novgorod, Kaluga, and Moscow
(blue stars) showed a growth close to the 3rd quantile or even below it.
Figure VI. Annual Industry Growth Rates Per Capita: A Spatial View. Real
Prices, in Borders of 1795
RISTAT (Markevich & Kessler, 2014); Population (Kurlandia, Vilno) – GCHLR (2012); Map is reconstructed using the
Atlas of the Russian Empire consisted of 52 maps (1796); own calculations
Figure VI, however, does not account for the convergence forces and do not reveal if the regions with
the initially higher output level grew faster than the neoclassical model would predict. Figure V plots
the residuals on the same geographical map. The blue colour reflects the growth rates lower than the
fitted values and the red colour reflects the growth rates greater than the fitted values of the baseline
growth regression. I exclude Don and Volyn as RISTAT does not contain industry output for the
regions in 1795.
One may notice that the pattern within the central industrial region changed: Moscow, Vladimir, and
Kostroma showed (yellow stars) showed a substantially higher performance compared to the
predicted values. Nizhny Novgorod and Tver (green stars) had the industry growth slightly above the
predictions of the model, whereas Yaroslavl and Kaluga (red stars) underperformed. This finding
somewhat undermines the previous findings but one has to keep in mind that scholars attributed the
‘industrial’ rise of the regions due to the handicraft production, which experienced rising competition
by the end of the century.
Contrary to the mixed evidence of the central-industrial region, Figures VI and VII reveal a more
consistent spatial pattern in the southwest of the Empire. The territories of contemporary Ukraine and
the Baltic states have high growth rates both before and after accounting of the initial levels of output.
21
Figure VII. Residuals of the Baseline Regression: A Spatial Representation. In
Borders of 1795.
RISTAT (Markevich & Kessler, 2014); Population (Kurlandia, Vilno) – GCHLR (2012); Map is reconstructed using the
Atlas of the Russian Empire consisted of 52 maps (1796); own calculations
To formally test for the persistence of the spatial correlation, I calculate the Moran’s I using the
geolocation of the regional capitals for the spatial weights and assuming that regional capitals were
the centers of commercial and industrial activities of the regions.
𝑦 ′ 𝑊𝑦
𝐼𝑚 = ′ (4)
𝑦𝑦
Here, y is a vector of the demeaned growth of the industry output per capita and W is a matrix of
spatial weights. By construction, W contains zeros for the diagonal elements and the inverse of the
1
distances between the regional pairs otherwise. An entry of the matrix W, wij = if 𝑖 ≠ 𝑗 and zero
𝑑𝑖𝑗
otherwise. The entry dij represents a distance measure between the regions ‘i’ and ‘j’ normalized to the
total distance of the region to all counterparts such that they all sum up to the value of one.
One can limit the number of the non-zero values using a distance threshold. It proves useful in case of
big samples but as my sample consists of 48 regions, I do not set any restrictions. In the baseline
model, I fail to reject the spatial effects across the regions (Moran’s I p-value = 0.033). Since it is not
clear if direct or indirect spillovers could contribute to the spatial correlation, I test both spatial lag (6)
and spatial error models (7), which have the following functional form in the matrix notation:
𝑦 = 𝜌𝑊𝑦 + 𝑋𝛽 + 𝜀 (6)
𝑦 = 𝑋𝛽 + 𝑢, 𝑢 = 𝜃𝑊𝑢 + 𝜀 (7)
22
Here, ρ is a spatial lag (sometimes-called autoregressive) term and θ is a spatial error term. If ρ is non-zero in
equation (6), then the industry growth of a single region was directly associated with the growth rates of its
neighboring regions. Yet if 𝜃 in the equation (7) is non-zero, the growth rates of a single region depended on the residual values of the
neighboring regions. The equations differ in terms of the mechanism, through which they imply the spatial dependence. Model (6) suggests
that the growth could have spillovers (e.g. by establishing the value chains with the neighbors), whereas the spatial error model attributes the
clustering effect to the unobserved factors (e.g. knowledge spillovers).
The spatial error coefficient in all of the listed specifications is not statistically different from zero (Table VII). The coefficient, however,
remains stable irrespective whether I add other covariates or not. Therefore, weak spillover effects could indeed take place in forms of
technology transfer or migration flows of the educated population but the data is not precise or detailed enough to capture these effects.
Table VII. Testing for the Spatial Effects in the Convergence Regressions
Spatial Error Models Spatial Lag Models

(1) (2) (3) (4) (5) (6) (7) (8)
Ln industry output per capita, -0.794*** -0.769*** -0.826*** -0.782*** -0.798*** -0.765*** -0.827*** -0.773***
1795 [-9.15] [-10.44] [-10.60] [-10.69] [-9.56] [-10.25] [-10.77] [-10.32]
Border with the Black Sea 1.398*** 1.277** 1.380*** 1.261**
[2.86] [2.57] [2.83] [2.49]
Border with the Baltic Sea 1.810*** 1.497*** 1.789*** 1.483**
[4.00] [2.80] [3.74] [2.43]
Germans to population ratio 6.838*** 2.536 6.538*** 1.985
[3.30] [1.10] [3.13] [0.79]
Constant 2.115*** 1.884*** 1.941*** 1.840*** 0.756 2.243** 0.686 1.947*
[8.11] [8.01] [6.24] [6.74] [0.93] [2.25] [0.88] [1.86]
theta 0.439 0.426 0.566 0.516
[0.99] [0.98] [1.53] [1.33]
rho 0.532* -0.111 0.507* -0.00212
[1.76] [-0.29] [1.73] [-0.01]
Observations 48 48 48 48 48 48 48 48
1897, Pupils and teachers per capita – RISTAT; Population (Kurlandia, Vilno), Urbanization Rate, Number of Germans in a Region – GCHLR; Sea Borders – Atlas of The
Russian Empire (1796); Inflation Rate – Mironov (2012); Geolocation – Google Maps. . All ‘stock’ explanatory variables are for 1795. Calculations performed by the
author.
In contrast, the spatial lag coefficient is statistically significant at the 10%
level in the baseline model. The effect disappears, however, once I control
for the border of the regions to the Black and Baltic seas. With other covariates, the coefficient drops
close to zero and becomes negative in one of the models (see Table VII, column 6). The results
indicate that it was mainly the regions with the access to the warm seas, which accounted for the
spatial correlation.
IV.C Discussion
After estimating the regression equations, it is time to make some sense of the numbers. As one may
conclude, the speed of convergence in the Russian Empire for 1795 – 1897 was below the widely
referred 2% per year and 2.9% p.a., which Rodrik (2013) reports for the manufacturing sector in 1995
– 2005 period. One has to keep in mind, however, that Rodrik (a) uses the contemporary time span
1995 - 2005, and (b) investigates the industry growth per industry worker (Rodrik, 2013) while I use
industry growth per capita32. Yet the conclusion is only true given that the convergence started from
1795. If we assume that there was no convergence before the emancipation act of 1861, the
convergence rate of the baseline regression would exceed 3% coming close to the Rodrik estimation.
Does it mean that the neoclassical mechanics ruled the economy in the long term? The Solow model
uses savings as the main mechanism of the capital accumulation and subsequent growth. This link,
however, is not likely to be the engine of the convergence process in the Russian case: by 1904, the
volume of deposits did not exceed 25% of the government capital expenditures with ca. 3.7 million
depositors. (see Table VIII). At the beginning of the last quarter of the century, its value was almost
negligible. No doubt, these numbers do not other types of investments but it is unlikely that peasants
used other types of investment on a greater scale than the basic saving deposits.
Table VIII. Savings and State Expenditures in the Late Imperial Russia
State Capital Deposits to

Saving Deposits, total
Investment Expenditures
(1) (2) (3) (4) (3) / (4)
Period 1865 - 1869 1881 - 1885 1900 - 1904 1887 - 1903 -
Mln. RUB,
2.8 10.7 611.3 2,607.1 0.23
Real
Sources: Deposits – Mironov (2012), State Expenditures – Crisp (1976); Numbers are deflated using the Mironov’s
Inflation Index
As Mironov (2012) mentions, peasants often held their savings in cash limiting its ability to flow into
the economy. It seems, therefore, more plausible that other forces led to the catching-up (e.g.
redistribution through the railroad investment, peasants’ emancipation, rising market integration).
32
I tried to calculate the values of industry output per worker using the GCHLR (2012) branch and occupational indexes
for 1795 and official census figures from Troinistkii (1905) for 1897. Unfortunately, they produce obviously unreasonable
numbers (e.g. Moscow and St.-Petersburg experienced decline in productivity levels). The measurement of the true
numbers of industry workers is difficult if not impossible for 1795 as many of them worked both in agriculture and on
fabrics depending on the seasonal conditions and arrangement with the master. Figures for 1897 could suffer from similar
problems. See Tugan-Baranovsky (1907/1997) for the nature of the workers’ occupation at fabrics and Lenin (1908/1971,
pp. 457 - 469) for a discussion of the measurement problems.
Our data also points out several other links, which could contribute to the industry growth. Proximity
to the warm sea is one of them. Yet the study design does not enable to reveal the channel through
which the growth took place. We could only suggest, which factors were decisive – access to the
external markets, technological spillovers through trade, higher competitive pressure (the list could be
long).
Human capital could have some influence according to the calculations but the effect is not robust.
Part of the problem is the multicollinearity of the variables. Correlation between teachers, pupils and
German per capita is close to 80%. Insufficient data quality and endogeneity could be another
problem. Somewhat surprisingly, the comparative advantage in agriculture (measured by the
wheat-to-rye production ratio) did not have a significant effect in our regressions. Nevertheless, one
should not take this result at a face value, as the sample shrinks to 39 provinces and does not include
many southern regions.
Spatial regressions did not add much to the previous interpretations. Contrary to the long-standing
emphasis of the previous researchers (Crisp, 1976; Tugan-Baranovsky, 1907/1997), they do not
support cluster building in the central-industrial region though the sample size is an obvious limitation
here. Figure VI shows that some regions north-west from Moscow were indeed growing faster than
the model predicts. Moving to the more disaggregated district-level data is likely to improve the
estimations.
The study, however, has a number of limitations, which could potentially flaw the results. From the
technical side, using the gross industry output could potentially lead to some problems if enterprises
were deeply involved into inter-regional value chains. Yet the correlation between the gross and
value-added figures for 1897 calculated by Markevich (2014) is equal to 0.95 indicating that the
differences in variation are marginal33. One should also keep in mind that some regions, which appear
in our estimations, are artificial. Novgorod-Seversky and Brazlaw regions disappeared from the map
after the administrative reform of Paul I. This division could produce different channels of industry
growth depending on the peculiarities of the succeeding administrative unites.
From the methodological standpoint, omitted variable bias causes the highest concern. The dramatic
(in a true sense of the word) institutional change and the government investment are the first
candidates, which call for an exogenous treatment. Besides the importance per se, their absence could
lead to biased estimates of the Sea influence for two reasons. First, the serfs of the Baltic Regions got
emancipation forty years earlier than the ones in the rest of the Empire. Second, the acquired
Ukrainian regions enjoyed some preferences in the production of certain goods (e.g. alcohol) and were
subject to a large-scale infrastructure investment from the central government in the early years after
the conquest. Estimating the panel data is another option, which could eliminate the omitted variable
bias34.
Endogeneity issue, which is a scourge of nearly all OLS regressions, seems to be of a lesser concern
for the convergence parameter in our case. As Cho (1996) argued, savings rate and population growth
change together with the course economic growth and are, therefore endogenous. Yet as savings
33
I am not aware of any estimations of the labour costs or value added industry output for 1795.
34
On the other hand, the previous studies found out, that the panel data approach usually estimates of convergence
parameter close to 4% per year (Caselli et.al, 1996; Islam, 2003).
25
accounted for a miniscule share of the national investments until the last quarter of the century, the
population growth produces more concerns.
Figure VIII. Regional Industry and Population Growth in the Russian Empire.
Real Prices, in Borders of 1795
Figure VIII shows that there was no strong correlation between the industry growth per capita and
population growth during the observed period. Moreover, the pattern of the influence changes by
including and excluding regions with the exceptionally high population growth (Astrakhan and
Kolyvan).
Nevertheless, I provide additional check by estimating the number of equations, which explicitly
include the population growth. As it is unlikely that the industry labor force grew with the same speed
as the population growth in these regions, I rather believe the estimates without the outliers (similar
results hold in the unrestricted sample as well). As Table IX shows, the coefficient of the population
growth is insignificant and its sign depends on the covariates added. In the specifications with only
one additional covariate, the sign is mostly positive, whereas controlling for all other variables
changes the sign of the coefficient. Moreover, its inclusion into the regression does not affect the
convergence coefficient much. After adding it to the baseline model, its value drops only slightly from
-0.776 to -0.770. At last, the initial industry output per capita remains significant in all of the
specifications and has the predicted sign.
My interpretation follows Kuznets (1966), who emphasized the inverse U-shape of the population
growth during the course of modern economic growth. He noticed that fertility of the western nations
26
adjusted to the decline of infant child mortality (and subsequent increase in life expectancy) with a
certain lag.
27
Table IX. Regional Convergence Estimated with Population Growth, 1795 - 1897
Baseline & Human Geography Soil Proxies for Trade and All(1) All(2)
Population Growth Capital Quality Technology
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Ln industry -0.776*** -0.770** -0.860** -0.729*** -0.759** -0.646** -0.789** -0.821*** -0.801* -0.755**
output per capita, * * * * * ** *
1795 [-8.85] [-8.58] [-7.63] [-9.59] [-8.48] [-5.95] [-9.53] [-9.71] [-8.40] [-7.91]
Annual 0.148 0.0531 -0.435 0.295 0.157 0.0569 -0.249 -0.745 -0.578
Population [0.39] [0.12] [-1.24] [0.76] [0.34] [0.16] [-0.67] [-1.34] [-1.03]
Growth
Pupils to 1.567** -1.179 -1.285
population ratio [2.20] [-1.15] [-1.31]
Border with the 1.726*** 2.267** 0
Black Sea *
[3.05] [3.47] [.]
Border with the 1.693*** 2.276** 2.195***
Baltic Sea *
[4.13] [3.30] [3.25]
Longitude -0.014 0.017 0.0141
[-1.27] [1.54] [1.30]
Wheat to rye ratio -1.379 -0.492
[-1.52] [-0.68]
Urban citizens 22.95*** -6.789 -4.273
per capita [2.98] [-0.61] [-0.38]
(GCHLR)
Germans to 6.942***
population ratio [2.92]
Moscow / 2.774** 2.562**
St.-Petersburg [2.41] [2.30]
dummy
Ethnic -0.619 -0.146
fractionalization [-0.73] [-0.17]
Constant 2.238*** 2.112*** 1.950*** 2.385*** 2.531*** 2.218*** 1.657*** 2.293*** 2.047** 2.016***
*
[15.03] [6.00] [5.11] [7.63] [5.28] [5.54] [4.63] [6.94] [3.93] [3.97]
Observations 46 46 38 46 46 37 46 46 38 35
Adjusted 0.632 0.625 0.635 0.752 0.63 0.479 0.683 0.681 0.779 0.694
R-squared
1897, Pupils and teachers per capita – RISTAT; Population (Kurlandia, Vilno), Urbanization Rate, Number of Germans in a Region – GCHLR; Sea Borders – Atlas of The
Russian Empire (1796); Inflation Rate – Mironov (2012); Geolocation – Google Maps. All ‘stock’ explanatory variables are for 1795. Astrakhan and Kolyvan excluded.
29
As sanitation facilities in the Russian regions increased only slowly starting approximately from
1870-s and with less efficiency compared to Western Europe (Mironov, 2012; pp. 292 – 294), it is
likely that by 1890-s the population only started the demographic transition at best. It follows that
population growth in the Russian regions remained largely exogenous to rising industrialization
within the Empire. These are rather other covariates related to human capital or technological
diffusion such as the share of Germans, which carry the endogeneity effects.
Yet the data is too scarce to address the issue reasonably because an instrumental variable approach is
likely to suffer from the finite sample bias in the dataset of 48 observations, which drops below 40 in
some cases (Bound et.al. 1995)35. Again, moving to a more disaggregated level could help us to get
estimates that are more precise. It is, however, beyond the limits of this work and could be a subject of
a separate study.
35
My attempts to instrument the share of Germans in total population with the urbanization rates (see Mironov (1990) on
why it may satisfy the exclusion restriction) produced very unstable results. The beta coefficient had a very high amplitude
depending on the number of additional covariates. The convergence coefficient remained statistically significant in all of
my estimates and decreased to 0.9% per annum in the worst case.
30
V. Conclusion
What is the bottom line? According to my investigation, the Russian Empire experienced the regional
convergence of industry production per capita. Gross industry output per capita grew faster in those
regions, where it the output was initially small. From all other covariates, only proximity to the sea
seems to contribute significantly to the growth rate. Given all this, the study suggests that the Russian
Empire was not that bad at all in promoting industrialization and the neoclassical framework is still
alive in explaining the long-term dynamics of the industry output at least.
Does it mean we have one mystery less? An optimist would say ‘yes’. A sceptic – ‘maybe’. As I
pointed out, the calculations are valid for the gross industry production only and do not reflect
productivity changes if the population grew faster than the industry labour force. Another limit is the
absence of the savings ratio in the analysis. Although it is likely to affect regional growth only by the
last quarter the century, its introduction could reveal the effect of savings in a true spirit of the Solow
model.
Omitted variable bias is another concern, as I could not properly control for a number of factors
emphasized by both theoretical models and historians. Infrastructure investment, institutional change,
human capital, and within-country specialization of a Ricardian or Hekscher-Ohlin type – all of them
could shed more light on the regional economic development. Moving to the panel data or more
disaggregated level could substantially improve the estimates. Although historical statistics has
obvious limits, Nafziger (2013) shows that it is possible to move to the district-level data as far as
1858. Hence, there are still possibilities to go deeper in the Russian economic history. Let us hope that
it will help to understand the course of modern economic growth better.
31
References
Abramitzky, R. (2015). Economics and the Modern Economic Historian. The Journal of Economic
History, 75(04), 1240-1251.
Abreu, M., De Groot, H. L., & Florax, R. J. (2005). A Meta‐Analysis of β‐Convergence: the
Legendary 2%. Journal of Economic Surveys, 19(3), 389-420.
Aghion, P., & Howitt, P. (1992). A Model of Growth. Through Creative Destruction. Econometrica
60(2), 323-351
Aghion, P., & Williamson, J. G. (1998). Growth, inequality, and globalization: theory, history, and
policy. Cambridge: Cambridge University Press.
Alvarez, E., Holzner, M., Jestl, S., & Marti-Henneberg, J. (2016). Introducing Railway Time in the
Balkans: Economic eﬀects of railway construction in Southeast Europe and beyond since the early
19th century until present days. Working paper (No. 121). The Vienna Institute for International
Economic Studies, wiiw.
Angrist, D., & Evans, W. N. (1998). Children and their parents' labor supply: Evidence from
exogenous variation in family size, American Economic Review 88(3).
Arbia, G. (2006). Spatial Econometrics: Statistical Foundations and Applications to Regional
Convergence. Berlin: Springer-Verlag.
Atlas Rossiiskoi Imperii, sostoiashchii iz 52 kart, izdannyi vo grade S. Petra v leto 1796 goda [Atlas of
the Russian Empire consisted of 52 maps, published in a city of Saint Peter in summer 1796] (1796).
St.-Petersburg: Tipografiia Sytina.
Barro, R. J. (2015). Convergence and Modernisation. The Economic Journal, 125(585), 911-942.
Barro, R. J., & Sala-i-Martin, X. (1992). Convergence. Journal of Political Economy, 223-251.
Barro, R. J., & Sala-i-Martin, X. (2004). Economic Growth. Cambridge, MA: MIT Press
Blattman, C., & Miguel, E. (2010). Civil war. Journal of Economic literature, 48(1), 3-57.
Bolt, J., & Zanden, J. L. (2014). The Maddison Project: collaborative research on historical national
accounts. The Economic History Review, 67(3), 627-651.
Bound, J., Jaeger, D. A., & Baker, R. M. (1995). Problems with instrumental variables estimation
when the correlation between the instruments and the endogenous explanatory variable is weak.
Journal of the American Statistical Association, 90(430), 443-450.
Borodkin L.I. (2011) Dinamika ekonomicheskogo i sotcialnogo razvitiia Rossiiskoi imperii v XIX -
nachale XX vv. [Dynamics of the economic and social development of the Russian Empire in the
XIXth – early XXth centuries]. Retrieved from: http://www.hist.msu.ru/Dynamics/data/01_001.xls
32
Caselli, F., Esquivel, G., & Lefort, F. (1996). Reopening the convergence debate: a new look at
cross-country growth empirics. Journal of Economic Growth, 1(3), 363-389.
Cho, D. (1996). An alternative interpretation of conditional convergence results. Journal of Money,

Credit and Banking, 28(4), 669-681.
Crisp, O. (1976). Studies in the Russian Economy before 1914. London and Basingstoke: Palgrave
Macmillan UK.
Den, V. (1902). Naselenie Rossii po Piatoi revizii. Podushnaia podat v XVIII veke i statistika
naseleniia v kontce XVIII veka, T. 1 [Population of Russia according to the Fifth revision. The poll tax
in the XVIII century and the population statistics at the end of the XVIII century (Vol. 1)]. Moscow:
Universitetskaia tipografiia.
Feenstra, R. C., Inklaar, R., & Timmer, M. P. (2015). The next generation of the Penn World Table.
American Economic Review, 105(10), 3150-3182.
Gaidar, E. (2005). Dolgoe vremia. Rossiia v mire: ocherki ekonomicheskoi istorii [Long time. Russia
in the World: Essays on Economic History]. Moscow: Delo.
Gaidar, E. (2009). Vlast’ i sobstvennost: smuty i instituty, gosudarstvo i evoliutciia. [Power and
property: strife and institutions, state and evolution]. St.-Petersburg: Norma
Ginsburgh, V., & Weber, S. (2011). How many languages do we need?: The economics of linguistic
diversity. Princeton, NJ: Princeton University Press.
Gerschenkron, A. (1962). Economic backwardness in historical perspective: a book of essays.

Cambridge, MA: Belknap Press of Harvard University Press.
Good, D. F., & Ma, T. (1999). The economic growth of Central and Eastern Europe in comparative
perspective, 1870–1989. European Review of Economic History, 3(2), 103-137.
Gorodnichenko, Y., & Róland, G. (in press). Culture, institutions and the wealth of nations. Review of
Economics and Statistics.
Gregory, P., & Sailors, J. W. (1976). Russian monetary policy and industrialization, 1861-1913. The
Journal of Economic History, 36(04), 836-851.
Gregory, P. (2003). Ekonomicheskii rost Rossiiskoi imperii (konetc XIX–nachalo XX v.): Novye
podschety i otcenki [Economic growth of The Russian Empire (end of XIX – beginning of XX
century): New estimates and calculations]. Moscow: ROSSPEN.
Guriev, S., & Vakulenko, E. (2015). Breaking out of poverty traps: Internal migration and
interregional convergence in Russia. Journal of Comparative Economics, 43(3), 633-649.
Islam, N. (2003). What have we learnt from the convergence debate? Journal of Economic
Surveys, 17(3), 309-362.
33
Kabuzan V. (1971) Izmeneniia v razmeshchenii naseleniia Rossii v XVIII-pervoi polovine XIX v: (po
materialam revizii) [Changes in the distribution of the population of Russia in XVIII – first half of
XIX c.: on the base of the tax censuses]. Moscow: Nauka.
Kafengauz, L. B. (1994). Evoliutciia promyshlennogo proizvodstva v Rossii: (posledniaia tret XIX

v.-30-e gody XX v.) [Evolution of industrial production in Russia: (the last third of XIX c. – 30-s of
XX c.)]. Moscow: Epifaniia.
Kessler, G. & Markevich, A. (2014). Electronic repository of Russian historical statistics, 18th - 21st
centuries. Retrieved from: http://ristat.org/
Kholodilin, K. A., Oshchepkov, A., & Siliverstovs, B. (2012). The Russian regional convergence
process: Where is it leading? Eastern European Economics, 50(3), 5-26.
Kuznets, S. (1966) Modern economic growth: rate, structure and spread. New Heaven, CT: Yale
University Press.
Lenin, V. I. (1971). Razvitie kapitalizma v Rossii, izd. vtoroe [Development of capitalism in Russia
(2nd ed.)]. In Gladkov I.A. (Ed.), Polnoe sobranie sochinenii, izd. pyatoe, T.3 [The complete works.
(5th ed.,Vol. 3)]. Izdatelstvo politicheskoi literatury. Moscow. (Original work published in 1908)
Lotman, Y. (2015) Besedy o russkoi kulture: Byt i traditcii russkogo dvorianstva (XVIII – nachalo
XIX veka) [Conversations about the Russian culture: life and tradition of the Russian nobility: XVIII –
early XIX centuries]. St-Petersburg: Azbuka. (Original work published in 1993).
Lunden, I. (2009). Rol’ gosudarstva v ekonomicheskom razvitii Rossii v XVIII veke [State
participation in the Russian economic development in XVIII century]. Ekonomicheskaia politika. 1,
141–157
Mankiw, M.N., Romer, D., & Weil, D. (1992). A Contribution to the Empirics of Economic Growth.
Quarterly Journal of Economics, (107), 407–438.
Markevich, A. (2014). Economic Development of the Late Russian Empire in a Regional Perspective.
Working paper.
Markevich, A., & Harrison, M. (2011). Great war, civil war, and recovery: Russia's national income,
1913 to 1928. The Journal of Economic History, 71(03), 672-703.
Markevich, A., & Zhuravskaya, E. (2015). Economic Effects of the Abolition of Serfdom: Evidence
from the Russian Empire. Working Paper.
McCloskey, D. N., & Ziliak, S. T. (1996). The standard error of regressions. Journal of Economic
Literature, 34(1), 97-114.
Melton, E. (1987). Proto-industrialization, serf agriculture and agrarian social structure: two estates in
nineteenth-century Russia. Past & Present, (115), 69-106.
34
Ministery of Finance of the Russian Empire. (1901). Svod tovarnykh tcen na glavnykh russkikh i
inostrannykh rynkakh [Code of the commodities’ prices on the major Russian and foreign markets].
St-Petersburg: Tipografiia V. F. Kirshbauma.
Mironov, B. (1990). Russkii gorod v 1740-1860-e gody: demograficheskoe, sotcialnoe i

ekonomicheskoe razvitie [Russian city in 1740 – 1860 years: demographic, social and economic
development]. Leningrad: Nauka.
Mironov, B. (2003) Sotcialnaia istoriia Rossii perioda imperii (XVIII—nachalo XX v.), izd. tret’e, T.
1 [Social history of Russia during the imperial time (XVIII – beginning XX c.). (3rd ed. Vol. 1)].
St.-Petersburg: Dmitrii Bulavin.
Mironov, B. (2012) Blagosostoianie naseleniia i revoliutcii v imperskoi Rossii: XVIII-nachalo XX

veka, izd. vtoroe [Welfare of population and revolutions in imperial Russia: XVIII – beginning XX c.
(2nd ed.)]. Moscow: Ves’ Mir.
Nafziger, S. (2013). Russian Serfdom, Emancipation, and Land Inequality: New Evidence. Working
Paper.
O'Rourke, K. H., & Williamson, J. G. (1997). Around the European periphery 1870–1913:
globalization, schooling and growth. European Review of Economic History, 1(02), 153-190.
Pavlenko, N.I. (2006). Ekaterina Velikaia, izd. shestoe [Catherine the Great. (6th ed.)]. Moscow:
Molodaia gvardiia.
Rapacki, R. (2009). The EU enlargement and economic growth in the CEE new member countries.
European Economy Economic Papers (No. 367). Directorate General Economic and Financial Affairs
(DG ECFIN), European Commission.
Raskov, D.E. (2012). Sotcialnye normy i institutcionalnye izmeneniia, ili kak poniat dinamiku
ekonomicheskoi aktivnosti staroobriadtcev. [Social norms and institutional change; or how to
understand dynamics of the economic activity of the old-believers] Journal of Institutional Studies
(Zhurnal institutcionalnykh issledovanii), 4(3). 34-42
Rodrik, D. (2013). Unconditional Convergence in Manufacturing. Quarterly Journal of
Economics, 128(1), 165-204.
Rodrik, D. (2014). The past, present, and future of economic growth. Challenge, 57(3), 5-39.
Rudolph, R. L. (1985). Agricultural structure and proto-industrialization in Russia: economic

development with unfree labor. The Journal of Economic History, 45(01), 47-69.
Sala-i-Martin, X. X. (1996). Regional cohesion: evidence and theories of regional growth and
convergence. European Economic Review, 40(6), 1325-1352.
Schulze, M. S. (2007). Regional income dispersion and market potential in the late nineteenth century
Hapsburg Empire. Working paper.
35
Solow, R. M. (1956). A contribution to the theory of economic growth. Quarterly Journal Of
Economics, 65-94.
Solow, R. (1988). Growth Theory: An Exposition. New York, NY: Oxford University Press.
Stöllinger, R. (2016). Wirtschaftswachstum in der Habsburger Monarchie 1870 – 1910: Konvergenz,

Catching-Up, Konfusion. Unpublished manuscript, University of Vienna, Vienna.
Swan, T. W. (1956). Economic growth and capital accumulation. Economic record, 32(2), 334-361.
Sukhara, M (2007). Otcenka indeksa promyshlennogo proizvodstva Rossii: 1860 - 1913 gg.
[Estimation of the index of the industrial production in Russia: 1860 - 1913]. Voprosy Statistiki (2),
41-49.
Sylla, R., & Toniolo, G. (Eds.). (1991). Patterns of European Industrialisation: the nineteenth century.
New York, NY: Routledge.
Tabellini, G. (2008). Presidential address institutions and culture. Journal of the European Economic
Association, 6(2‐3), 255-294.
The Global Collaboratory on the History of Labour Relations 1500 – 2000 [GCHLR]. (2012).
Khitrov, D - 1800 (July 2012). ‘Russia 1800 – Methodological paper’. Retrieved from:
https://collab.iisg.nl/group/labourrelations/
Troinitskii, N.A. (1905). Pervaia vseobshchaia perepis naseleniia Rossiiskoi Imperii 1897 g. T. 8
[The First Russian Imperial Census of 1897. (Vol. 8)]. St. Petersburg: “Tcentralnaia” Tipo-Litografiia
M. I. Minkova
Tugan-Baranovskii, M.I. (1997). Russkaia fabrika v proshlom i nastoiashchem. izd. tretee [The
Russian fabric in past and present]. In Abalkin, L.I. Izbrannoe. Russkaia fabrika v proshlom i
nastoiashchem [Selected works. The Russian fabric in past and present]. Moscow: Nauka. (Original
work published in 1907).
36
Appendix I. Log-linearization of the Solow Model around the
Steady State.
Let us begin the investigation by defining the terms of the Solow model with exogenous technological
change, population growth and depreciation of assets. Let us define income per effective unit of
𝑌 𝐾
labour as 𝑦 ≡ 𝐴𝐿 and capital per effective unit of labour as 𝑘 ≡ 𝐴𝐾. Assuming a Cobb-Douglass
production function yields following equation:
𝑦 = 𝑘𝛼 (A.1)
𝑘̇ 𝑦̇
Define the growth rate of capital and income as follows: 𝑘̂ ≡ 𝑘 ; 𝑦̂ ≡ 𝑦 . As y is a function equal to
capital raised to the power of 𝛼, one can define the growth rate of income per efficient worker in the
following way:
𝑦̂ = 𝛼𝑘̂
The law of motion in a Solow model with population growth and technological progress is defined as
follows:
𝑘̇ = 𝑠𝑦 − (𝑛 + 𝛿 + 𝑥)𝑘
Substituting back into equation (A.1) yields:
𝑦 (A.2)
𝑦̂ = 𝛼 [𝑠 − (𝑛 + 𝛿 + 𝑥)]
𝑘
1
As follows from (A.1), 𝑦 = 𝑘 𝛼 → 𝑘 = 𝑦 𝛼 . Substituting capital with income into (A.2) describes the
growth rate in terms of income per efficient worker only:
𝑦
𝑦̂ = 𝛼 [𝑠 1 − (𝑛 + 𝛿 + 𝑥)]
𝑦𝛼
1−𝛼 (A.3)
𝑦̂ = 𝛼 [𝑠𝑦 − 𝛼 − (𝑛 + 𝛿 + 𝑥)]
Represent 𝑦̂ as a function of ln y: 𝑦 = 𝑒 ln 𝑦 and substitute into (A.3):

1−𝛼
𝑦̂ = 𝛼 [𝑠𝑒 − 𝛼
ln 𝑦
− (𝑛 + 𝛿 + 𝑥)] ≡ 𝛾(ln 𝑦)
Now, obtain a linear Taylor series approximation around the steady state:
𝑦̂ln 𝑦=ln 𝑦 ∗ ≈ 𝛾(ln 𝑦 ∗ ) + 𝛾′(ln 𝑦 ∗ )(ln 𝑦 − ln 𝑦 ∗ )
As no more capital accumulates in the steady state, the first term is equal to zero 𝛾(ln 𝑦 ∗ ) = 0. Then
rearranging of the second term results into the following expressions:
37
1−𝛼 1−𝛼 ∗
𝛾 ′ (ln 𝑦 ∗ ) = (− ) 𝛼𝑠𝑒 − 𝛼 ln 𝑦
𝛼
1−𝛼
𝛾 ′ (ln 𝑦 ∗ ) = −(1 − 𝛼)𝑠(𝑦 ∗ )− 𝛼
1−𝛼
In the steady state, 𝑠(𝑦 ∗ )−𝛼 = (𝑛 + 𝛿 + 𝑥). Substituting the expression yields:
𝛾 ′ (ln 𝑦 ∗ ) = −(1 − 𝛼)(𝑛 + 𝛿 + 𝑥)
𝑦̂ln 𝑦=ln 𝑦 ∗ ≈ −(1 − 𝛼)(𝑛 + 𝛿 + 𝑥)(ln 𝑦 − ln 𝑦 ∗ ) (A.4)
This is a first order differential equation with a constant coefficient. Define variables as follows:
ln 𝑦 (𝑡) ≡ 𝑥(𝑡)
𝑦̂ = 𝑥̇
𝜆 ≡ (1 − 𝛼)(𝑛 + 𝛿 + 𝑥)
ln 𝑦 ∗ ≡ 𝑥 ∗
Then, one can rewrite equation (A.4) in terms of x:
𝑥̇ (𝑡) = −𝜆𝑥(𝑡) + 𝜆𝑥 ∗
𝑥̇ (𝑡) + 𝜆𝑥(𝑡) = 𝜆𝑥 ∗
Multiplying both sides of the equation by 𝑒 𝜆𝑡 yields:
𝑥̇ (𝑡)𝑒 𝜆𝑡 + 𝜆𝑥(𝑡)𝑒 𝜆𝑡 = 𝜆𝑒 𝜆𝑡 𝑥 ∗
Now we can represent the left hand side of the equation as a derivative with respect to t:
𝑑𝑥(𝑡)𝑒 𝜆𝑡
𝑥̇ (𝑡)𝑒 𝜆𝑡 + 𝜆𝑥(𝑡)𝑒 𝜆𝑡 =
𝑑𝑡
𝑑𝑥(𝑡)𝑒 𝜆𝑡
= 𝑏𝑒 𝜆𝑡
𝑑𝑡
Integrating the equation and dividing both sides by 𝑒 𝜆𝑡 results into the following relationship:
𝑥(𝑡) = 𝑥 ∗ + 𝑐𝑒 −𝜆𝑡 (A.5)

Assuming a starting point at t = 0 yields
𝑥(0) = 𝑥 ∗ + 𝑐𝑒 −𝜆0
𝑐 = 𝑥(0) − 𝑥 ∗
Substituting c back into the solution to the differential equation (A.5) and rearranging, we obtain
𝑥(𝑡) = (1 − 𝑥 ∗ )𝑒 −𝜆𝑡 + 𝑥(0)𝑒 −𝜆𝑡

By returning to the convenient notation and subtracting the initial value of the income per capita ln
y(0) from both sides, yields
38
ln 𝑦 (𝑡) − ln 𝑦(0) = (1 − ln 𝑦 ∗ )𝑒 −𝜆𝑡 − (1 − 𝑒 −𝜆𝑡 ) ln 𝑦(0) (A.6)
The final equation allows us to estimate the value of parameters using a simple econometric
specification:
ln 𝑦 (𝑡)𝑖 − ln 𝑦(0)𝑖 = 𝛽0 + 𝛽1 ln 𝑦(0)𝑖 + 𝜀𝑖
Where 𝛽1 = −(1 − 𝑒 −𝜆𝑡 ) is the coefficient of our interest, as it enables to calculate the convergence
parameter 𝜆.
39
Appendix II. List of the Adjustments of the Regional Districts.
Table X. Estimated Changes in the Administriative Borders of the Regions on

the District-Level, 1795 - 1897.
Acquisition from Transmission to
Region District [Uezd] Share Region District [Uezd] Share
Arkhangelsk OLO Kemsky 100%
Tobolsk AKM Omskij 12%
AKM Petropavlovskij 15%
ENI Achinskij 44%
ENI Enisejskij 100%
ENI Kanskij 66%
ENI Krasnojarskij 13%
ENI Turukhansk 100%
IRK Kirenskij 14%
TOM Kaiinskij 100%
TOM Mariinskij 100%
TOM Tomskij 100%
Brazlaw KIE Linowetsky 100%
KIE Machnowsky 100%
KIE Skwirsky 76%
KIE Taratchinsky 57%
POD Brazlawsky 100%
POD Gajsinky 54%
POD Litinsky 100%
POD Mogilewsky 58%
POD Olgopolsky 65%
POD Vinnitsky 100%
Chernigov MIN Rechitsky 76% KIE Kozeletsky 77%
POL Gadjachesky 100% KIE Ostersky 67%
POL Lokwitsky 100% NSK Borznensky 22%
POL Mirgorodsky 20% NSK Glukhowsky 100%
POL Priluksky 81% NSK Gorodnjansky 11%
POL Romensky 56% NSK Konotopsky 100%
POL Zenkowsky 100% NSK Korolewetsky 100%
POL Priluksky 81% NSK Novgorod_Seversky 100%
NSK Novo_Mestovsky 100%
NSK Sosnitsky 100%
NSK Starodubsky 100%
NSK Surazhsky 100%
Don EKA Rostowsky 100%
Table X continued
Ekaterinoslavsky CHE Gadjachesky 100% POL Khorolsky 100%
40
CHE Lokwitsky 100% POL Kobylaksky 100%
CHE Mirgorodsky 20% POL Konstantinogradsky 100%
POL Kremenchugsky 100%
POL Mirgorodsky 80%
POL Poltawsky 100%
VOZ Elisawetgradsky 44%
Irkutsk TOB Kirenskij 14% YAK ALL 100%
KAM ALL 100%
ZAB ALL 100%
Kiev VOL Radomyslsky 41% BRA Linowetsky 100%
VOZ Tcherkassky 100% BRA Machnowsky 100%
VOZ Tchigirinsky 100% BRA Skwirsky 76%
VOZ Umansky 100% BRA Taratchinsky 57%
VOZ Zwenigirodsky 72% CHE Kozeletsky 77%
CHE Ostersky 67%
POL Lubensky 100%
POL Perejaslawsky 100%
POL Pirjatensky 100%
KIE Priluksky 19%
POL Zolotonoshsky 100%
Kharkov KHE Kupensky 100% KUR Grajvoronsky 100%
KHE Starobelsky 100% KUR Sudzhansky 30%
KHA Belgorodsky 41%
KHA Korochsky 17%
KHA Novooskolsky 9%
Kolyvan AKM Omskij 6%
ENI Achinskij 56%
ENI Kanskij 34%
ENI Krasnojarksij 87%
ENI Minusinsk 100%
ENI Usinsky 100%
SEM Pavlodarskij 34%
SEM Semipalatinskij 30%
SEM UstKamen 1%
TOM Barnaulsky 100%
TOM Bijsky 100%
TOM Kuznetsky 100%
TOM Zmeinogorsky 100%
Kursk KHA Grajvoronsky 100%
KHA Sudjansky 30%
Table X continued
KHA Belgorodsky 41%
KHA Korochsky 17%
KHA Novooskolsky 9%
41
Minsk CHE Rechitsky 76% VIL Disnensky 100%
GRO Novogrudksy 100% VIL Vilejsky 100%
Novgorod PSK Demjansky 20%
Novgorod-Seversky CHE Borznensky 22%
CHE Glukhowsky 100%
CHE Gorodnjansky 11%
CHE Konotopsky 100%
CHE Korolewetsky 100%
CHE Novgorod_Seversky 100%
CHE Novo_Mestovsky 100%
CHE Sosnitsky 100%
CHE Starodubsky 100%
CHE Surazhsky 100%
POL Romensky 44%
Olonets AKRH Kemsky 100%
Podolsk BRA Brazlawsky 100% VOL Dubnensky 73%
BRA Gajsinky 54% VOL Ostrogsky 18%
BRA Litinsky 100% VOL Zaslawsky 19%
BRA Mogilewsky 58% VOL Kremenetsky 100%
BRA Olgopolsky 65% VOL Starokonstantinowsky 100%
BRA Vinnitsky 100%
VOZ Baltsky 100%
VOZ Gajsinky 46%
VOZ Olgopolsky 35%
Poltava CHE Gadjachesky 100%
CHE Lokwitsky 100%
CHE Mirgorodsky 20%
CHE Priluksky 81%
CHE Romensky 56%
CHE Zenkowsky 100%
KIE Lubensky 100%
KIE Perejaslawsky 100%
KIE Priluksky 19%
KIE Zolotonoshsky 100%
NSK Romensky 44%
EKA Khorolsky 100%
Table X continued
EKA Kobylaksky 100%
EKA Konstantinogradsky 100%
EKA Kremenchugsky 100%
EKA Mirgorodsky 80%
EKA Poltawsky 100%
EKA Konstantinogradsky 100%
EKA Kremenchugsky 100%
42
EKA Mirgorodsky 80%
EKA Poltawsky 100%
Pskov NOV Demjansky 20%
Saratov VOR Novokhopersky 100%
Slonim POL Belostoksky 100% MIN Novogrudsky 100%
VOL Kovelsky 21%
Smolensk TVE Sychewsky 17%
Tver SMO Sychewsky 17%
Vilno MIN Disnensky 100% KOV ALL 100%

MIN Vilejsky 100%
Volyn GRO Kovelsky 21% KIE Radomyslsky 41%
POD Dubnensky 73%
POD Ostrogsky 18%
POD Zaslawsky 19%
POD Starokonstantinowsky 100%
POD Kremenetsky 100%
Voronezh SAR Novokhopersky 100% KHA Kupensky 100%
KHA Starobelsky 100%
Voznesensk EKA Elisawetgradsky 44% KIE Tcherkassky 100%

KIE Tchigirinsky 100%
KIE Umansky 100%
KIE Zwenigirodsky 72%
POD Baltsky 100%
POD Gajsinky 46%
POD Olgopolsky 35%
POD Vinnitsky 100%
KHA Kupensky 100%
KHA Starobelsky 100%
Note: Only regions with territorial changes listed. The shares of districts do not (and should not) sum up to 100% as they
represent the borders of 1897.
43
Table XI. Regional Gross Industry Output and Population in 1795 and 1897.
Nominal Prices, in Borders 1795.
Index Latitude Longitude Population, Population, Gross Industry Gross Industry

1795 1897 Output, 1795 Output, 1897
ARKH 64.55 40.57 187,223 311,144 251,051 8,238,848
BRAZ 48.83 28.94 836,615 1,152,031 68,841 13,294,902
VLAD 56.14 40.41 1,015,041 1,515,691 3,151,817 189,575,000
VOZ 47.57 31.31 753,376 4,712,852 10,579 94,866,986
VLGD 59.22 39.90 593,340 1,341,785 206,765 4,169,000
VOLYN 50.25 28.66 613,464 2,365,590 222,043 18,390,911
VOR 51.67 39.21 978,207 2,338,817 577,210 12,676,027
VTK 58.60 49.65 927,647 3,030,831 599,147 15,518,000
YEK 48.47 35.02 1,127,496 3,973,712 137,392 371,887,903
IRK 52.28 104.30 363,589 1,448,463 49,002 10,280,968
ASTR 46.33 48.03 164,727 2,612,757 378,069 12,324,443
KAZ 55.79 49.11 837,631 2,170,665 507,304 20,345,900
KAL 54.53 36.27 757,407 1,132,843 1,841,375 13,340,730
KIE 50.45 30.52 977,916 3,335,208 428,536 54,613,440
KOL 54.75 83.10 62,906 1,807,755 221,788 8,724,633
KST 57.77 40.93 830,137 1,387,015 1,261,947 57,447,000
KUR 51.72 36.18 1,006,953 2,036,902 814,352 18,987,765
MIN 53.92 27.55 796,627 2,144,854 31,829 9,327,639
MOG 53.92 30.35 707,067 1,686,764 184,039 7,680,600
MSC 55.76 37.62 969,267 2,430,581 8,435,317 334,153,560
NIZH 56.31 43.93 856,089 1,584,774 2,200,223 44,374,600
NOVG 58.53 31.28 648,439 1,350,982 202,516 10,901,568
NSK 51.98 33.27 639,600 1,241,899 1,324,323 11,285,482
OLON 60.98 32.97 208,388 399,548 1,005,535 3,260,940
ORL 52.97 36.08 1,018,978 2,033,798 1,146,466 37,526,200
PENZ 53.20 45.00 692,008 1,470,474 798,558 9,101,500
PERM 58.01 56.25 783,003 2,994,302 6,349,007 89,943,963
POD 55.43 37.54 823,399 1,969,630 25,940 19,554,442
POL 55.48 28.80 746,876 1,489,246 33,691 4,609,000
PSK 57.82 28.33 633,147 1,138,357 323,961 2,888,932
REVEL 59.43 24.75 216,396 412,716 1,254,512 22,163,200
RIGA 56.95 24.11 552,255 1,299,365 17,743 86,157,590
RZN 54.62 39.72 917,879 1,802,196 746,831 20,494,000
SPB 59.95 30.32 380,871 2,112,033 4,314,913 289,615,000
SAR 51.53 46.00 953,248 3,708,399 1,327,751 43,957,991
SIMB 54.31 48.40 837,935 2,168,242 101,708 19,995,514
SLO 53.67 23.82 654,838 1,688,879 72,675 16,843,542
SMO 54.78 32.05 950,346 1,501,683 771,899 11,826,866
TAVR 44.95 34.10 239,672 1,447,790 75,576 12,262,352
TAMB 52.72 41.43 1,044,280 2,684,030 1,236,671 20,226,000
44
Table XI continued.
TVER 56.86 35.92 966,434 1,792,731 194,625 31,976,084
TOB 58.20 68.26 642,620 2,282,465 43,229 10,872,890
TULA 54.20 37.62 991,313 1,419,456 876,467 16,626,700
UFA 54.73 55.97 1,107,726 4,995,617 2,090,233 44,982,425
KHAR 50.00 36.23 888,590 2,232,959 894,799 36,392,489
CHE 51.50 31.30 853,326 1,826,230 1,697,698 13,179,575
YAR 57.62 39.85 774,724 1,071,355 1,089,909 40,319,500
KURL 56.65 23.72 416,554 674,034 78,041 19,460,800
Sources: Geolocation – Google Maps; Population (except Kurlandia and Vilno) in 1795 – RISTAT; Population in 1795
(Kurlandia and Vilno) – GCHLR; Population in 1897 – RISTAT and Troinitskii (1905); Gross Industry Production –
RISTAT. Adjustments performed by the author
45
Appendix III. Additional Statistics
Table XII. Descriptive Statistics of Regions in 1795.
Variable Observations Mean Std. Dev. Min Max

Population in 1795 48 728,033 274,117 62,906 1,127,496
Pupils to Population ratio, % 40 0.12 0.25 0.02 1.55
Teachers to Population ratio,, % 40 0.00 0.01 0.00 0.07
Germans to population ratio, % 48 0.02 0.06 - 0.36
Jews to population ratio, % 48 0.72 1.44 - 5.39
Fractionalization index 48 0.17 0.20 - 0.68
Wheat to rye ratio 38 0.15 0.18 - 0.78
Sea Border 48 0.23 0.42 - 1.00
Urban Citizens per capita 48 0.03 0.04 0.00 0.24
(GCHLR)
Urban Citizens per capita 34 0.10 0.16 0.02 0.67
(RISTAT-ALL)
Urban Citizens per capita 34 0.07 0.14 - 0.63
(RISTAT-5k Up)
Population (except Kurlandia and Vilno) in 1795 – RISTAT; Population in 1795 (Kurlandia and Vilno) – GCHLR;
Population in 1897 – RISTAT and Troinitskii (1905); Figures on ethnicities – GCHLR. Urbanization rate for 48 regions –
GCHLR; Alternative urbanization rates (34 regions only); Teacher and pupils figures, and data on agriculture – RISTAT.
Table XIII. Selected Cross Correlations
Variable № (1) (2) (3) (4) (5) (6) (7)

(1) 1.00
Growth per capita
Log Gross Industry Output
(2) -0.79 1.00
per capita in 1795
Urban Citizens per capita
(3) -0.20 0.26 1.00
(GCHLR)
Teachers to population ratio
(4) -0.06 0.34 0.23 1.00
Pupils to population
(5) -0.10 0.37 0.29 0.98 1.00
ratio
Germans to population
(6) 0.20 0.11 0.13 0.81 0.77 1.00
ratio
Jews to population
(7) 0.28 -0.39 -0.04 -0.07 -0.11 -0.02 1.00
ratio
GCHLR; Teacher and pupils figures – RISTAT.
46
Appendix IV. Additional Estimations and Robustness Checks
Table XIV. Robustness of the Sea and Capital Dummies
(1) (2) (3) (4) (5) (6) (7) (8)

Ln industry output per capita, 1795 -0.812*** -0.830*** -0.831*** -0.815*** -0.753*** -0.815*** -0.802*** -0.762***
[-9.26] [-10.42] [-10.31] [-8.88] [-7.62] [-10.30] [-8.59] [-8.23]
Border with the Black Sea 1.259** 1.302** 1.325*** 0 1.282** 1.215** 0
[2.58] [2.56] [2.79] [.] [2.66] [2.46] [.]
Border with the Baltic Sea 1.403*** 1.489*** 1.959*** 1.393*** 1.514*** 1.738*** 2.072***
[3.29] [3.00] [3.83] [2.80] [3.55] [3.00] [3.12]
Moscow / St.-Petersburg dummy 1.439** 1.569** 2.654*** 1.116* 1.565** 2.662*** 2.466***
[2.27] [2.12] [3.12] [1.71] [2.48] [3.12] [2.84]
Germans to population ratio -0.971 2.833 -1.314
[-0.35] [0.83] [-0.35]
Pupils to population ratio -1.638* -2.120** -1.295
[-2.01] [-2.11] [-1.28]
Wheat to rye ratio -0.992 -0.615
[-1.37] [-0.93]
Urban citizens to population ratio -4.991 -3.734
[-1.52] [-0.42]
Constant 2.160*** 1.896*** 1.898*** 1.928*** 2.081*** 2.027*** 1.950*** 2.131***
[14.70] [14.93] [14.78] [14.17] [11.99] [13.31] [13.99] [8.97]
Observations 48 48 48 40 38 48 40 36
Adjusted R-squared 0.643 0.774 0.77 0.795 0.651 0.781 0.793 0.719
Population (except Kurlandia and Vilno) in 1795 – RISTAT; Population in 1795 (Kurlandia and Vilno) – GCHLR; Population in 1897 – RISTAT and Troinitskii (1905);
Figures on ethnicities – GCHLR. Urbanization rate for 48 regions – GCHLR; Figures on agriculture – RISTAT.
47
Table XV. Convergence, Capital Cities, and Geographic Position
(1) (2) (3) (4) (5) (6) (7)

Ln industry output per capita, 1795 -0.812*** -0.798*** -0.748*** -0.794*** -0.914*** -0.869*** -0.805***
[-9.26] [-9.71] [-9.23] [-9.18] [-10.64] [-10.60] [-8.97]
Sea Border 0.859*** 0.715**
[2.76] [2.48]
Border with the Baltic Sea 1.683*** 1.300***
[3.91] [2.79]
Border with the Black Sea 1.367** 1.245**
[2.64] [2.47]
Border with the Caspian Sea -1.149 -0.985
[-1.38] [-1.21]
Border with the White Sea -0.0384 0.0581
[-0.06] [0.10]
Border with the Pacific Ocean -0.0259 0.345
[-0.03] [0.30]
Longitude -0.0163* -0.0128 -0.00656
[-1.72] [-1.53] [-0.56]
Moscow / St.-Petersburg Dummy 2.214*** 1.803*** 1.359**
[3.23] [2.75] [2.06]
Constant 2.160*** 1.971*** 1.994*** 2.816*** 2.015*** 2.398*** 2.192***
[14.70] [12.82] [14.31] [6.91] [14.27] [6.50] [4.38]
Observations 48 48 48 48 48 48 48
Adjusted R-squared 0.643 0.688 0.747 0.658 0.704 0.741 0.763
Longitude – Google Maps.
48
Table XVI. Convergence and Ethnic Factors
(1) (2) (3) (4) (5) (6) (7) (8)

Ln industry output per capita, -0.812*** -0.837*** -0.842*** -0.842*** -0.846*** -0.866*** -0.895*** -0.895***
1795 [-9.26] [-8.14] [-10.35] [-9.58] [-8.60] [-9.10] [-9.33] [-8.92]
Jews to population ratio -0.0538 -0.0536 -0.0656 -0.0653
[-0.47] [-0.51] [-0.63] [-0.59]
Germans to population ratio 6.750*** 6.750*** 6.354*** 6.355***
[3.04] [3.01] [2.85] [2.81]
Ethnic fractionalization index -1.163 -1.345 -0.97 -0.992
[-1.67] [-0.54] [-1.48] [-0.41]
Ethnic fractionalization index 0.323 0.0397
square [0.08] [0.01]
Constant 2.160*** 2.186*** 2.019*** 2.339*** 2.346*** 2.045*** 2.209*** 2.209***
[14.70] [13.80] [14.10] [13.01] [11.61] [13.34] [11.78] [11.02]
Observations 48 48 48 48 48 48 48 48
Adjusted R-squared 0.643 0.637 0.697 0.657 0.649 0.692 0.7 0.693
Figures on ethnicities – GCHLR.
49
Table XVII. Convergence with Human Capital
(1) (2) (3) (4) (5) (6)

Ln industry output per -0.812*** -0.899*** -0.899*** -0.826*** -0.884*** -0.912***
capita, 1795 [-9.26] [-8.39] [-8.59] [-7.71] [-8.23] [-8.59]
Pupils to population ratio 1.381** -2.106 -5.514
[2.12] [-0.69] [-1.53]
Teachers to population 35.16** 83.06 165.8*
ratio [2.35] [1.17] [1.95]
Teachers per pupil -3.514 -12.89
ratio [-0.52] [-1.68]
Constant 2.160*** 1.927*** 1.942*** 2.243*** 1.992*** 2.512***
[14.70] [10.90] [11.55] [7.66] [10.81] [7.02]
Observations 48 40 40 40 40 40
Adjusted R-squared 0.643 0.641 0.649 0.6 0.644 0.661
Population in 1897 – RISTAT and Troinitskii (1905); Teacher and pupils figures – RISTAT.
Table XVIII. Convergence and Urbanization Rates
(1) (2) (3) (4)

Ln industry output per capita, 1795 -0.812*** -0.811*** -0.547*** -0.592***
[-9.26] [-8.98] [-4.33] [-4.76]
Urban citizens to population ratio -0.421
(GCHLR) [-0.10]
Urban citizens to population ratio, all 0.155
cities (RISTAT) [0.15]
Urban citizens to population ratio, cities 1.143
greater 5k citizens (RISTAT) [1.00]
Constant 2.160*** 2.173*** 1.950*** 1.891***
[14.70] [11.23] [10.87] [11.60]
Observations 48 48 34 34
Adjusted R-squared 0.643 0.636 0.381 0.4
GCHLR; Alternative urbanization rates (34 regions only).
50
Table XIX. Convergence and Agriculture
(1) (2) (3) (4)

Ln industry output per capita, 1795 -0.812*** -0.661*** -0.807*** -0.830***
[-9.26] [-6.21] [-9.24] [-9.08]
Wheat to rye ratio -1.548*
[-1.84]
Annual population growth, 1795 - 1897 -0.304
[-1.26]
Latitude 0.0276
[0.73]
Constant 2.160*** 2.342*** 2.456*** 0.648
[14.70] [12.28] [8.89] [0.31]
Observations 48 38 48 48
Adjusted R-squared 0.643 0.51 0.648 0.64
Population in 1897 – RISTAT and Troinitskii (1905); Teacher and pupils figures, and data on agriculture – RISTAT.
Latitude – Google Maps
51

Industrialization of The Russian Empire in The Nineteenth Century in A Quest For The Regional Convergence

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Industrialization of The Russian Empire in The Nineteenth Century in A Quest For The Regional Convergence

Uploaded by

Copyright:

Available Formats

Submitted by:

Industrialization of the Russian

Management and Applied Economics

Linz, 15 August 2016

Keywords: industrialization, regional convergence, economic growth, economic backwardness.

II. Historical Context and Methodology ............................................................................................ 3

II.A Industrial Development in the Nineteenth Century Russia ................................................... 3

II.B On Preferences and Markets .................................................................................................. 7

II.C The Solow Model and Its Linear Parametrization ............................................................... 11

III. Data and Descriptive Statistics .................................................................................................... 12

III.A Description of the Sources .................................................................................................. 12

III.B Data Adjustment ................................................................................................................. 12

III.C Descriptive statistics ........................................................................................................... 14

IV. Regression Results ...................................................................................................................... 18

IV.A Basic Regressions ............................................................................................................... 18

IV.B Spatial Regressions ............................................................................................................. 20

Appendix I. Log-linearization of the Solow Model around the Steady State..................................... 37

Appendix II. List of the Adjustments of the Regional Districts. ........................................................ 40

Appendix III. Additional Statistics ..................................................................................................... 46

Appendix IV. Additional Estimations and Robustness Checks ......................................................... 47

Table V. Regional Convergence in the Russian Empire, 1795 - 1897 ............................................... 19

Table VI. Estimated Convergence Rates and Half-Life Periods ........................................................ 20

Table X. Estimated Changes in the Administriative Borders of the Regions on the

Table XII. Descriptive Statistics of Regions in 1795. ........................................................................ 46

Table XIII. Selected Cross Correlations ............................................................................................. 46

Table XIX. Robustness of the Sea and Capital Dummies .................................................................. 47

Table XVII. Convergence, Capital Cities, and Geographic Position ................................................. 48

Table XVIII. Convergence and Ethnic Factors .................................................................................. 49

Table XIV. Convergence with Human Capital .................................................................................. 50

Table XV. Convergence and Urbanization Rates ............................................................................... 50

Table XVI. Convergence and Agriculture .......................................................................................... 51

–Winston Churchill, BBC Broadcast, October 1st, 1939

Iron & Nonferrous Construction

II.B On Preferences and Markets

II.C The Solow Model and Its Linear Parametrization

𝑌𝑡 = 𝐾𝑡𝛼 (𝐴𝑡 𝐿𝑡 )1−𝛼 (1)

ln 𝑦𝑖,𝑡 − ln 𝑦𝑖,𝑡−𝜏 = 𝛽0 + 𝛽1 ∗ ln 𝑦𝑖,𝑡−𝜏 + 𝜀𝑖 (2)

III.B Data Adjustment

Kursk Region, 1796 Kursk Region, 1876

Figure II. Overlay of the Maps for the Kursk Region

Kursk Region, 1796 Kursk Region, 1876 Overlay with Borders

III.C Descriptive statistics

Variable Observations Mean Std. Dev. Min Max

Population in 1795 48 728,033 274,117 62,906 1,127,496

Population in 1897 48 1,952,697 988,547 311,144 4,995,617

Figure V. Regional Convergence of the Gross Industry Output in the Russian

Table VI. Estimated Convergence Rates and Half-Life Periods

Number of Beta Convergence Half-Life, Observations Adjusted

Spatial Error Models Spatial Lag Models

State Capital Deposits to

Cho, D. (1996). An alternative interpretation of conditional convergence results. Journal of Money,

Gerschenkron, A. (1962). Economic backwardness in historical perspective: a book of essays.

Kafengauz, L. B. (1994). Evoliutciia promyshlennogo proizvodstva v Rossii: (posledniaia tret XIX

Mironov, B. (1990). Russkii gorod v 1740-1860-e gody: demograficheskoe, sotcialnoe i

Mironov, B. (2012) Blagosostoianie naseleniia i revoliutcii v imperskoi Rossii: XVIII-nachalo XX

Rudolph, R. L. (1985). Agricultural structure and proto-industrialization in Russia: economic

Stöllinger, R. (2016). Wirtschaftswachstum in der Habsburger Monarchie 1870 – 1910: Konvergenz,

Represent 𝑦̂ as a function of ln y: 𝑦 = 𝑒 ln 𝑦 and substitute into (A.3):

𝑥(𝑡) = 𝑥 ∗ + 𝑐𝑒 −𝜆𝑡 (A.5)

𝑥(𝑡) = (1 − 𝑥 ∗ )𝑒 −𝜆𝑡 + 𝑥(0)𝑒 −𝜆𝑡

Table X. Estimated Changes in the Administriative Borders of the Regions on

Vilno MIN Disnensky 100% KOV ALL 100%