Gerschenkron Economic Backwardness

RESPONSE PAPER ON ALEXANDER GERSCHENKRON
ECONOMIC BACKWARDNESS IN HISTORICAL PERSPECTIVE

Response paper
ALEXANDER GERSCHENKRON,
ECONOMIC BACKWARDNESS IN HISTORICAL PERSPECTIVE

Introduction
Gerschenkron in the Economic Backwardness in Historical Perspective which focused on how relatively backward economies lagged the economic basics for industrialization. And set out the " Elements of backwardness" and "The States and The Banks; Social Attitudes, Entrepreneurship, and Economic Development", and summarized in "The Approach to European Industrialization”.

Central idea of Gerschenkron
The central idea of Gerschenkron is encouraging industrial growth. State intervention should compensate for the inadequate supplies of capital, labor,

In contrast Russia where the monarchy and the upper classes controlled the political system were against industrialization. Instead, they continued to rely on the existing system of production and lagged behind.
“The main reason for the abysmal economic backwardness of Russia was the preservation of serfdom until the emancipation of 1861. In a certain sense, this very fact may be attributed to the play of a curious mechanism of economic backwardness, and a few words of explanation may be in order.”
In the advanced countries capital accumulation takes place within industry of development, in the moderately backward countries the banks first undertake the leading role in industrialization, and at the next stage industry advances to a position independent of the banks. In other words, the backward countries it is the state which first undertakes the leading role in industrialization, at the second stage the banks take over this function, and at the third stage industry attains independence of the

It is more accelerated than British because it applied a strategically designed, as in British industry base industrialization. Then they switched to centralized formed of capital accumulation by the state which is the main factor for the industrialization. Rapid industrialization among its economic and military competitors may have also contributed to the Germany industrialization. Germany, the key innovation would be the formation of large universal banks to provide access to needed capital for industrialization. Universal banks were created as a primary agents of wealth and capital allocation and accumulation. They also fund and subsidize the private enterprises. It encouragement the private entrepreneurs. Japan has also a similar approach as Germany