Can external agents successfully impose significant institutional reforms? The Napoleon effect

Can external agents successfully impose significant institutional reforms? Many economists are sceptical.

After 1792, French armies invaded and reformed the institutions of many European countries. Crucially, European polities did not choose the French institutions. Those institutions were imposed on them, first by the Revolution and then by Napoleon. The package of reforms the French imposed on areas they conquered included the civil code, the abolition of guilds and the remnants of feudalism, the introduction of equality before the law, and the undermining of aristocratic privilege. Acemoglu, Cantoni, Johnson and Robinson (2009) argue in a recent paper that the impact of the French Revolution on the institutions of Europe can be seen as a “natural experiment” that sheds light on the question of the efficiency of imposed institutional reforms.

The authors analyzed the economic consequences of these reforms taking advantage of the fact that the French conquered and reformed some parts of Europe but not others. Territorial expansion by French armies did not intentionally target places with a greater potential for future economic growth. Rather, the French sought to create a system of buffer states in response to the threat of Austrian or Prussian (or later British) attempts to topple the Revolutionary regime. In addition, in the early 1790s, the French sought to establish France’s “natural frontiers”. In neither case were the places which were reformed selected on the basis of economic characteristics.

Overall, the authors find no evidence that the reforms imposed by the French had negative economic consequences. On the contrary, there is fairly consistent evidence from a variety of different empirical strategies that they had positive effects and genaerated significantly faster economic growth.

Reading the paper and listening to Acemoglu at the last Isnie 2009 conference, I thought that it was an interesting paper with astonishing imlplications. First of all, it clearly goes against the consensus amongst economists that French institutions, particularly the civil code had adverse effects on many dimensions of institutions (e.g., La Porta, Lopez-de-Silanes, Shleifer, and Vishny, 1998). More importantly, it suggests that, under some conditions, imposed institutional reforms might be successful. The only limitation (with the data and the lag imposed by the authors between imposed reformed and effect on growth - see the article in details) is that I hope, war is not the only way to impose efficient institutional reforms ...