Abstract:
This paper uses a natural experiment to estimate the causal effect of temporary trade protection on long-term economic development. I find that regions in the French Empire which became better protected from trade with the British for exogenous reasons during the Napoleonic Wars (1803-15) increased capacity in mechanized cotton spinning to a larger extent than regions which remained more exposed to trade. In the long-run, regions with exogenously higher spinning capacity had: i.) higher activity in mechanized cotton spinning; ii.) higher labor-productivity for mechanized cotton-spinning firms, and; iii.) higher value-added per capita in industry.