Weapons of Mass Production. World War I and the Modernization of the French Economy

Abstract

During World War I, annual government spending in France reached unprecedented levels, accounting for 50 percent of prewar GDP. A significant portion of this spending was allocated to support war industries at a time when the country’s industrial cradle in the northeast was unavailable for production. Using original archival data on more than 200 thousand war procurement contracts, we examine whether these substantial but temporary wartime industrial investments fostered the modernization of the French economy in the interwar period. We find that départements that benefited from relatively greater wartime industrial investment experienced a sustained postwar expansion of their manufacturing sector. This expansion was driven by a reallocation of labor and firms toward manufacturing, as well as increased industrial concentration and capital deepening.

Victor Gay

Professor of Economics

Professor at the Toulouse School of Economics (TSE) and at the Institute for Advanced Study in Toulouse (IAST), University of Toulouse 1 Capitole.