The Consequences of Radical Reform: The French Revolution

Transcription

1 The Consequences of Radical Reform: The French Revolution Daron Acemoglu Davide Cantoni Simon Johnson James Robinson October 15, / 28

2 Motivations Literature Which institutions are important for growth? property rights (North and Thomas (1973), Acemoglu, Johnson and Robinson (2001), Acemoglu and Johnson (2005)) legal institutions (La Porta et al. (1998)) other barriers, oligarchies (Olson(1982), Acemoglu (2008)) 2 / 28

3 Motivations Literature Which institutions are important for growth? property rights (North and Thomas (1973), Acemoglu, Johnson and Robinson (2001), Acemoglu and Johnson (2005)) legal institutions (La Porta et al. (1998)) other barriers, oligarchies (Olson(1982), Acemoglu (2008)) Can institutions be designed/reformed externally? (Berkowitz, Pistor and Richard (2003), Rodrik (2007)) amplified if reforms are implemented "Big Bang" style examples: reforms in Latin America, Africa, former Soviet Union, Afghanistan, Irak counterexamples: postwar Germany and Japan 2 / 28

4 Motivations This paper Consequences of a radical, externally imposed reform, French Revolution, on subsequent growth in Germany Reforms include : civil code, abolition of guilds, abolition of serfdom, agrarian reforms,... 3 / 28

5 Motivations This paper Consequences of a radical, externally imposed reform, French Revolution, on subsequent growth in Germany Reforms include : civil code, abolition of guilds, abolition of serfdom, agrarian reforms,... Link with the two questions from previous slide : Revolutionary reforms weakened oligarchies, entry barriers,... Should have a positive effect! But it was externally imposed... Should have a negative effect! 3 / 28

6 Outline 1 Historical Overview 2 Data 3 Reduced-Form Evidence 4 Institutional Reforms and Economic Growth 5 Conclusion 4 / 28

7 Historical Overview Europe Before the Revolution No more "real" feudalism by the end of 18th Century, rather, two kinds of oligarchies 5 / 28

8 Historical Overview Europe Before the Revolution No more "real" feudalism by the end of 18th Century, rather, two kinds of oligarchies Landed nobility in agriculture Several forms of unfree labor (serfdom, or other forms of taxes/tributes to landowners) Various rights of nobility and clergy 5 / 28

9 Historical Overview Europe Before the Revolution No more "real" feudalism by the end of 18th Century, rather, two kinds of oligarchies Landed nobility in agriculture Several forms of unfree labor (serfdom, or other forms of taxes/tributes to landowners) Various rights of nobility and clergy Urban oligarchy Major occupations controlled by guilds Cities controlled by a few families 5 / 28

10 Historical Overview Europe Before the Revolution No more "real" feudalism by the end of 18th Century, rather, two kinds of oligarchies Landed nobility in agriculture Several forms of unfree labor (serfdom, or other forms of taxes/tributes to landowners) Various rights of nobility and clergy Urban oligarchy Major occupations controlled by guilds Cities controlled by a few families => not the ideal context for industrialization 5 / 28

11 Historical Overview The Revolution and its Effect on Europe War between France and Prussia/Austria starts in France borders were expanded during the following years. By 1795, Rhineland is controlled by France Plenty of little states and cities were merged to form a string of buffer states on French northeastern frontier. They become Confederation of the Rhine in Reorganization of territories in Northwest of Germany into satelite states under Napoleon s control. 6 / 28

12 Historical Overview Map / 28

13 Historical Overview Map / 28

14 Historical Overview Map / 28

15 Historical Overview Institutional Changes Main reforms in Rhineland (1795 to 1798) Abolition of the seigneurial regime Abolition of guilds Creation of commercial courts 10 / 28

16 Historical Overview Institutional Changes Main reforms in Rhineland (1795 to 1798) Abolition of the seigneurial regime Abolition of guilds Creation of commercial courts Napoleon continued those reforms Introduction of the civil code Economic importance of the code Rhineland from oligarchy to "business friendly" region After 1815 Rhineland to Prussia => preserved French institutions Some other places went back to the ancien regime 10 / 28

17 Historical Overview Napoleon s motivations Napoleon s motivations to continue those policies Ideology Creation of buffer states around France Undermining existing elites to consolidate his control over conquered regions 11 / 28

18 Historical Overview Napoleon s motivations Napoleon s motivations to continue those policies Ideology Creation of buffer states around France Undermining existing elites to consolidate his control over conquered regions Claim : he didn t target regions with brighter economic future! Hence, we can consider France occupation as an exogeneous shock to study long term growth. 11 / 28

19 Data Overview Data from 19 counties Treated panel (8 counties) Control panel, west of Elbe (5 counties) Control panel, east of Elbe (6 counties) 12 / 28

20 Data Overview Data from 19 counties Treated panel (8 counties) Control panel, west of Elbe (5 counties) Control panel, east of Elbe (6 counties) Outcome variables economic prosperity measured by urbanization rate share of employment in industry (not before 1849) 12 / 28

21 Data Overview Data from 19 counties Treated panel (8 counties) Control panel, west of Elbe (5 counties) Control panel, east of Elbe (6 counties) Outcome variables economic prosperity measured by urbanization rate share of employment in industry (not before 1849) Treatment and reform index Treatment = number of years under French occupation Index of reforms at 1850 and / 28

22 Data Descriptive statistics 13 / 28

23 Data Descriptive statistics 14 / 28

24 Data Descriptive statistics 15 / 28

25 Data Descriptive statistics 16 / 28

26 Data Kopsidis and Bromley (2016) Acemoglu et al. admit serfdom was already abolished in practice, so why do they give such a weight in the index to that reform? According to them, half of the entries in Table 1 have incorrect dates. Recomputing the index with those elements, there are no more clear difference between the three groups of polities 17 / 28

27 Data Kopsidis and Bromley (2016) 18 / 28

28 Reduced-Form Evidence Main Results u jt = d t + δ j + α τ d τ I j + α τ d τ I j + X jtγ+ jt τ T pre τ T post where I j is treatment d t and δ j are time and polities effects u jt are urbanization rates T pre = {1700, 1750, 1800} T post = {1850, 1875, 1900} 19 / 28

29 Reduced-Form Evidence Main Results 20 / 28

30 Reduced-Form Evidence Robustness 21 / 28

31 Reduced-Form Evidence Sectoral composition of employment Data for 64 districts for 1849, 1882, 1895 and 1907 Advantage : sectoral shares closely captures the move out of agricultural activities => good check on previous results based on u jt Disadvantage : cannot check for pretrends before 1800 Cross-sectional regressions: y jt = d t + α t I j + ɛ jt 22 / 28

32 Reduced-Form Evidence Sectoral composition of employment 23 / 28

33 Institutional Reforms and Economic Growth 2SLS - First stage First stage : R jt = d t + δ j + tt t>1800 I j + η jt with R j t: the reform index d t, δ j : time and polity effects t is divided by 1000 tt t>1800 : 0 before 1800, linear after 24 / 28

34 Institutional Reforms and Economic Growth 2SLS - First stage 25 / 28

35 Institutional Reforms and Economic Growth 2SLS - Second stage Second stage : u jt = d t + δ j + R jt + ν jt 26 / 28

36 Institutional Reforms and Economic Growth 2SLS - Second stage 27 / 28

37 Conclusion The authors show that the effects of the reforms was not negative But we don t have enough evidence to claim the effects were significantly positive Some doubts about the quality of the index Some doubts about data 28 / 28

38 Conclusion The authors show that the effects of the reforms was not negative But we don t have enough evidence to claim the effects were significantly positive Some doubts about the quality of the index Some doubts about data Lack of explanatory power Role of institutions? Externally imposed reforms? 28 / 28