Externally Imposed Institutions And Regional Growth Differences: Evidence From France And Germany

Abstract

This paper provides a critical examination of effect of French Revolution institutions on regional economic development variations in 19th century by focusing on the experience of France. The argument in Daron Acemoglu et al. (2011) that differences in long-run economic performance of German states stem from differences in externally imposed French and domestic German institutions needs to be investigated further. A difference-in-difference estimation is used to identify a treatment effect causing growth differences between border and interior departments. The proposed treatment effect is the faster industrialization due to intensified minerals mining and railway construction in northern and northeastern France after 1850. It is shown that border departments experienced higher economic growth primarily after 1850 even though Revolution institutions and reforms were imposed in all of French departments. Therefore, externally imposed French Revolution institutions and reforms shouldn’t be counted as primary factors of causing variation in economic development across German polities. © 2017, Savez Ekonomista Vojvodine. All rights reserved.