You Only Weave Twice: Industrial Espionage and Growth in XIX Century France

Can state-sponsored industrial espionage promote innovation and lead to self-sustained growth? We study the effect of 18th century French industrial espionage activity on French innovation and industrial actrivity in 1840-60. Between 1720 and 1810 the French Bureau of Commerce promoted an ambitious plan aimed at stealing from Britain the new technologies of the Industrial Revolution, bribing British entrepreneurs and inventors to leave England and bring their expertise to France. We assemble a novel database with a comprehensive list of French espionage activity between 1720-1810 and combine it with newly-digitized18th century industrial surveys and trade statistics, 1800s industrial censuses, and the full list of early French patents. Using a rich model with granular department × sector fixed effects, we find large, positive, and persistent effects of industrial espionage on trade, patents, and industrial activity. Placebo results with failed espionage attempts suggest that selection is unlikely to drive the results.