This article studies the structural transformation of Russia in 1885–1940 from an agrarian to an industrial economy through the lens of a two-sector neoclassical growth model. We construct a data set that covers Tsarist Russia during 1885–1913 and Soviet Union during 1928–1940. We develop a methodology that allows us to identify the types of frictions and economic mechanisms that had the largest quantitative impact on Russian economic development. We find that entry barriers and monopoly power in the non-agricultural sector were the most important reason for Tsarist Russia’s failure to industrialize before World War I. Soviet industrial transformation after 1928 was achieved primarily by reducing such frictions, albeit coinciding with a significantly lower performance of productivity in both agricultural and non-agricultural sectors. We find no evidence that Tsarist agricultural institutions were a significant barrier to labour reallocation to manufacturing, or that “Big Push” mechanisms were a major driver of Soviet growth.

We use weekly data from 79 Russian regions to measure the impact of economic shocks and proximity to war in Ukraine on social capital in Russian regions. We proxy social capital by the relative intensity of internet searches for the most salient dimensions of pro-social behavior such as “donate blood”, “charity”, “adopt a child” etc. This measure of social capital is correlated with a survey-based measure of generalized social trust. Our search-based measure of social capital responds negatively to the spikes of inflation and positively to the intensity of the conflict in Ukraine (controlling for region and week fixed effects).