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 new artificial departments, local capitals were chosen quasi-randomly from a set of rival candidate cities. Comparing the final capitals with other candidates that were not ultimately chosen, 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, administrative proximity increases taxation and investments in law enforcement. In the long run, the new 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 statebuilding in the context of one of the most ambitious administrative reforms ever implemented.