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

Abstract

During the First World War in France, annual government spending reached unprecedented levels, accounting for 50 percent of GDP. A significant portion of these expenditures was allocated to support industrial warfare, at a time when the country’s industrial cradle in the North-East was unavailable for production. Using original archival data on war procurement contracts, we investigate whether these large but temporary wartime industrial investments fostered the modernization of the French economy during the interwar period. We find that locations that received relatively more wartime industrial investments experienced a persistent post-war expansion of their manufacturing sector. This expansion was driven by an increased concentration of industrial firms together with sectoral shifts in the composition of the labor force within locations, rather than a reallocation of labor across locations. In contrast, we find little evidence that the war induced capital deepening and technological change.

Victor Gay

Assistant Professor of Economics

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