Temporary Protection and Technology Adoption: Evidence from the Napoleonic Blockade

This paper uses a natural experiment to assess whether temporary protection from trade with industrial leaders can foster development of infant industries in follower countries. Using a new dataset compiled from primary sources, I find that in the short-run regions (départe-ments) 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 a new tech-nology, mechanised cotton spinning, to a larger extent than regions which remained more exposed to trade. Temporary protection had long term effects. In particular, by exploiting the fact that the post-war location of the cotton industry was determined to a large extent by the historical accident of the wars, I first show that the location of cotton spinning within France was persistent, and firms located in regions with higher post-war spinning capacity were more productive 30 years later. Second, I find that after the restoration of peace, exports of cotton goods from France increased substantially, consistent with evolving comparative ad-vantage in cottons. Third, I show that as late as 1850, France and Belgium- both part of the French Empire prior to 1815- had larger cotton spinning industries than other Conti-nental European countries which were not protected from British trade during the wars; this suggests that adoption of the new technology was far from inevitable. ∗r.juhasz1@lse.ac.uk. I thank Silvana Tenreyro and Steve Pischke for their continued guidance and support