Working Paper: CEPR ID: DP16815
Authors: Cedric Chambru; Emeric Henry; Benjamin Marx
Abstract: How do radical reforms of the state shape economic development over time? In 1790, France's first Constituent Assembly overhauled the kingdom's organization to set up new administrative entities and local capitals. In a subset of departments, new capitals were chosen quasi-randomly as the Assembly abandoned its initial plan to rotate administrative functions across multiple cities. We study how exogenous changes in local administrative presence affect the state's coercive and productive capacity, as well as economic development in the ensuing decades. In the short run, proximity to the state increases taxation, conscription, and investments in law enforcement capacity. In the long run, the new local capitals and their periphery obtain more public goods and experience faster economic development. One hundred years after the reform, capitals are 40% more populated than comparable cities in 1790. Our results shed new light on the intertemporal and redistributive impacts of state-building in the context of one of the most ambitious administrative reforms ever implemented
Keywords: State Capacity; Economic Development; Statebuilding; Administrative Reform
JEL Codes: D70; H41; H71; O18; O43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Proximity to the newly established state capitals (N91) | taxation (H20) |
| Proximity to the newly established state capitals (N91) | conscription (H56) |
| Proximity to the newly established state capitals (N91) | investments in law enforcement (H76) |
| Proximity to the newly established state capitals (N91) | public goods provision (H41) |
| Proximity to the newly established state capitals (N91) | economic development (O29) |
| increase in coercive capacity (D74) | extraction of fiscal resources from citizens (H29) |
| extraction of fiscal resources from citizens (H29) | funding of public goods (H40) |
| Proximity to the newly established state capitals (N91) | substantial long-term economic benefits (F69) |
| Proximity to the newly established state capitals (N91) | more banks and more patents (N11) |