5.6G: The Governments Role in Industrialization

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Learning Objective 5G

Explain the causes and effects of economic strategies of different states and empires.

Historical Development 1

As the influence of the Industrial Revolution grew, a small number of states and governments promoted their own state-sponsored visions of industrialization.

Historical Development 2

The expansion of U.S. and European influence in Asia led to internal reform in Japan that supported industrialization and led to the growing regional power of Japan in the Meiji Era.


Key ideas

Certain states forced their societies through industrialization to strengthen their societies against industrialized societies in Western Europe and the United States.

Russia successfully industrialized by focusing on the building of heavy industry and infrastructure.

Japan successfully industrialized by focusing on building heavy industry and consumer goods.

The Egyptian government attempted to industrialize Egypt but ultimately failed.

Successful industrialization in Russia and Japan led to Russia and Japan becoming global powers.

What Was State-Sponsored Industrialization?

After falling behind the industrialized west, some states wanted to industrialize rapidly. These states governments forced industrialization on their societies. State-sponsored industrialization was successful in some locations and failed in others.

Industrialization in Western Europe and America
State-sponsored industrialization
Industrialization was a naturally occurring social change.
Industrialization was planned and managed by the government.
Governments passed laws that helped facilitate further industrialization.
Industrial businesses are often owned by the state but can also be owned by private businesses.
Industrial planning and business were left to industrialists and business leaders.
The state had high levels of control over financial and economic systems.

State-led industrialization is not communism. 

  • Private property allowed 
  • Private business and production allowed 
  • Private profit allowed

Why did governments support industrialization?

As Western Europe and America industrialized, their power grew. Non-industrialized states worried that they would be dominated militarily and economically by industrial powers unless they too industrialized.

The goal of industrialization: Increase economic and military power to compete with industrial powers 

Russian Industrialization

By the 1850s, Northwestern Europe and the United States had industrialized. The Russian Empire was primarily still agrarian and feudal. Lack of industrialization left Russia weak compared to Britain, France, and Germany. In the 1860s, Russian Czar Alexander II began a series of state-led industrial reforms that forced Russia into the industrial age.

The cause of Russian industrialization

The primary cause of the start of Russian industrialization was Russia’s defeat in the Crimean War in the 1850s. The Crimean War was a military conflict fought from October 1853 to February 1856 in which Russia lost to an alliance of France, the Ottoman Empire, the United Kingdom.

  • Loss in the Crimean war exposed Russia’s lack of development. 
    • Russian factories could not produce enough weapons to compete with industrial powers. 
    • Russia lacked industrial innovations and was dependent upon industrial imports from western powers. 
    • Russia lacked the railways necessary to effectively move troops, soldiers, and weapons.

The focus of Russian industrialization

Russian industrialization focused on building up heavy industries like steel production, railways, mining operations, and chemical manufacturing.

Russia’s path to industrial reform differed from western industrial powers. 

  1. The government decided industrialization was necessary and led the efforts to industrialize. 
  2. The government ended serfdom to weaken aristocratic classes, increase agricultural productivity, and free peasants to work in urban factories. 
  3. The government made it easier for foreigners to invest in new industrial projects to help fund Russian industrialization. 
  4. The government supports large infrastructure projects such as railways like the Trans-Siberian railway.

Comparing Russian and Western industrial production

Western Industrial Powers
The government planned and forced industrialization on society
Industrialization was a natural result of merchant and business activity.
Industrialization was rapid and took place in just a few decades
Industrialization happened in heavy industry and consumer goods like textiles.
Industrialization focused on heavy industry like steel and military technology
Industrialization happened in heavy industry and consumer goods like textiles
Foreign money was an important funding source for industrial products. By 1900, half of Russia’s heavy industry was foreign-owned.
Local investors had a larger role in funding for industrial projects

Historical comparison: Russian industrialization differed from earlier industrialization in Western Europe and the United States. Russia focused mainly on building up heavy industries to make the state stronger. There was little emphasis on industrialization in the manufacturer of commercial products.

The effects of Russian industrialization

Russian industrialization transformed Russia. The speed at which the transformation happened changed the course of Russian history.

Significant impacts of Russian industrialization


  • By 1900 Russia was an industrial power. In that year, Russia was the world’s 2nd largest petroleum producer and the fourth-largest steel producer.


  • Russian authorities persecuted labor unions and labor union activists.
  • There were two Russian Revolutions. 
    • The first in 1905 led the Russian Czar to promise various social, political, and economic changes. The Czar kept his power but failed to follow many promised reforms.
    • The Russian revolution of 1917 resulted in a communist takeover of Russia. Communist authorities murdered the Czar and his family in a bloody execution.


  • The Czar freed Russia’s remaining serfs in 1861.
  • Russian factories had some of the industrialized world’s worst working conditions. Hours were long, and factories were dangerous.


  • Russia’s urban populations expanded rapidly. Cities did not grow as fast as populations expanded. As a result, living conditions in urban areas were harsh and unsanitary.
Russia before and after industrialization
Russia Before Industrialization
Russia After Industrialization
Largely agricultural and feudal
Old feudal systems destroyed 
An authoritarian government led by the Czar 
Communist authoritarian government after 1917 revolution
Military power on the decline 
Military power increased
Importer of industrial goods from western industrial powers
Major producer of steel and other heavy industrial goods

Japanese Industrialization

For more than 250 years, Japan enforced a policy of self-isolation to prevent outside influence from spreading in Japan. An encounter with the United States in 1853 convinced the Japanese that isolation would no longer work. The new Japanese emperor supported state-led industrial reforms to strengthen the Japanese state.

The causes of Japanese industrialization

Japanese industrialization had multiple internal and external causes. 

  1. (Internal) Growing Japanese agricultural production: Japanese agriculture had advanced during the previous centuries. These advances increased the production of food crops like rice and crops used to produce goods like tea, fruit, mulberry plant growing (that sustained the raising of silk cocoons), and cotton.
  2. (Internal) Proto (early) industrialization under the Tokugawa Shoguns: During the Tokugawa Shogunate, Japan had developed urban centers with commercial houses that produced manufactured goods. The Tokugawa Shoguns also supported the building of roads and transportation networks.
  3. (Internal) Weakening of the Tokugawa Shogunate: The Tokugawa Shogunate began to weaken in the 19th century. The Shogun primarily relied on the taxation of agriculture to fund the government. Over time, this did not provide the government with enough revenue. The Shogun increasingly raised taxes on the peasants, who became increasingly angry.
  4. (External) The arrival of Matthew Perry and the United States in Japan: On July 8, 1853, American Commodore Matthew Perry led his four modern and heavily armed warships into the harbor at Tokyo Bay, seeking to re-establish for the first time in over 200 years regular trade between Japan and the western world. Fearing invasion and conquest if they did not allow foreign merchants into Japan, Japan reopened to the world and began a series of industrial reforms.

The focus of Japanese industrialization

Japanese industrialization focused on both heavy industry and consumer goods. 

  • Japan built industries such as shipyards, iron smelters, and spinning mills. 
  • The government also built the infrastructure needed for industrialization, including coal mines, railroads, a postal system, and telegraph lines. 
  • The Japanese government created a modern banking system to support industrial expansion.
  • Between 1872 and 1914, Japanese production of raw silk increased from 1026 tons to raw silk to 12460 tons of raw silk. Coal production also increased from 0.6 million tons in 1875 to 21.3 million tons in 1913. 

In the late 19th century, early Japanese industrialization was initially heavily financed and managed by the state. The Japanese government later sold off many government-run industrial factories to private ownership in the first few decades of the 20th century.

Model factories: The government used a “model factory’ system.  

  • The government opens a factory. 
  • Model factories used modern production processes and machines. 
  • The Tomioka Silk Mill in Gunma Prefecture opened in 1872 and included modern industrial textile equipment for improving the quality of Japanese silks. The factory remained government-owned before being sold to private industry in 1902. 
  • This process of the government building model factories, running them, and later selling them to private businesses was repeated across different types of production.
  • The Japanese government created a modern banking system to support industrial expansion.
  • The government also built the infrastructure needed for industrialization, including coal mines, railroads, a postal system, and telegraph lines.

The process of Japanese industrialization

Like Russia, military weakness resulted in the start of Japanese industrialization.

  1. American Commodore Matthew Perry arrived in Tokyo harbor with heavily armed gunboats to convince the Japanese to sign treaties to allow American trade in Japan. 
  1.  Having heard what happened when China resisted British pressures, Japan willingly signed treaties rather than be defeated by the Americans. 
    • Treaty of Kanagawa on March 31, 1854: The treaty stated that Japan would protect stranded seamen and open two ports for refueling and provisioning of American ships. Japan also gave the United States the right to appoint consuls (American government officials) to live in these port cities, a privilege not previously granted to foreign nations.  
    • The Harris Treaty July 29, 1858: The Harris Treaty granted the United States the right to trade freely in Japan. It also lowered import and export taxes on goods imported into and exported from Japan. American citizens were now allowed to reside in Japan, and Japan legalized Christian missionary activity.
  1. The signing of the treaties was unpopular and created political instability in Japan. Some Japanese wanted to modernize and industrialize like the west, while others wanted to resist the expansion of western culture and ideas. The pro-reform side allied itself with the Japanese emperor who overthrew the Tokugawa Shogun in 1868.
  1. With the Tokugawa Shogun out of power and the Meiji emperor restored to power, the Japanese government increasingly supported industrialization.
  1. The Japanese government brought scholars and scientists from the United States to help Japanese leaders create a plan for industrialization.
  1. Japanese students and government officials went to the United States and other western nations to learn industrial practices and mimic them back home in Japan.

The effects of Japanese industrialization

Japanese modernization successfully turned Japan into an independent and modern industrial power. 

  1. Japan became a major exporter of textiles and other industrial goods. 
  2. The countries military also became a significant producer of munitions and weapons. 
  3. Japan became a regional military power in East Asia. By the early 20th century, Japan began building its own Japanese imperial empire in East Asia when it invaded and conquered the Korean peninsula. By the 1930s, Japanese territorial ambitions would put them into direct conflict with western powers leading to Japan’s entrance into World War II on the side of Nazi Germany.

Failed Industrialization in Egypt

By the 1830s, Egyptian ruler Muhammad Ali had managed to gain independence for Egypt from the Ottoman Empire. Ali sought to strengthen the Egyptian military and economy to strengthen the Ottoman state.

Egypt's path to industrialization

Like Russia, military weakness resulted in the start of Japanese industrialization.

  1. Step #1: He increased the production of raw cotton. Egypt then sold this cotton to Britain for use in their industrial textile factories.
  1. Step #2: Use the money from cotton to invest in the growth of Egypt’s production factories so that Egypt could better benefit from its cotton. Egypt’s factories processed cotton into clothing and produced foods and various other goods like jute, silk, and wool. 

    • Egypt invested in modern infrastructure to support exports of crops and industrial products. Egypt became the first country outside of Europe or the United States to build and operate a railroad. 
    • Additional infrastructure included the build-out of a telegraph network and the build-up of ports.

Outcome of Egyptian industrialization

By the late 1840s, it looked like Egypt might eventually become an industrial power like the Europeans and the Americas. However, the Egyptian economy slowly declined in the second half of the nineteenth century. The factories stopped producing, and by the 1880s, Egypt was deep in debt to Britain. In 1882, Egypt was taken over by the British and incorporated into the British Empire.

Why did Egyptian industrialization fail

Reason #1:  Poor decision-making: Egyptian leaders focused mainly on industrialization in cotton production. When cotton prices fell, Egyptian businesses went into debt. 

Reason #2: Poor leadership: Egyptian rulers lived lives of luxury, which required significant borrowing from European banks. 

Reason #3: Debt: When cotton prices fell, Egypt had trouble paying back the loans it had taken from European banks to support the royal family and invest in industrial production. Debt allowed Europeans to control the policy of the Egyptian government. Policy changes forced upon the Egyptian government primarily benefited Europeans. 

Reason #4: Europeans worked to prevent Egyptian success: One policy forced upon Egypt was that they could not charge import tariffs on European goods imported into Egypt. These tariff restrictions kept the price of European industrial goods low. At the same time, Europeans charged import tariffs on Egyptian goods coming into their economies. These restrictions forced the Egyptians to lower the cost of their industrial goods to compete with European goods.