Market versus endowment: explaining early industrial location in Italy (1871–1911)

Abstract

This article aims to explain the location of the manufacturing industries in Italy in the period 1871-1911. The analytical framework takes into account of two competing theories on the determinants of the location of economic activity: the Heckscher-Ohlin (H-O) theory on factor endowments and the new economic geography (NEG) theory on access to markets. The methodology used here is based on Midelfart-Knarvik et al. (The location of European industry, European Economy Economic Papers 142. European Commission, 2000) and has seen several historical applications. The location of industries is explained through interactions between characteristics of the regions and characteristics of the sectors, of both H-O type and NEG type. The main finding is that endowments, and in particular energy and human capital, were the determinants of the geography of the first Italian industrialization. Market access, at this point of industrialization, mattered only in its domestic formulation and only through economies of scale.

Extractive states: The case of the Italian unification

“…of 1861 lire, i.e., HW-Power (Missiaia, 2012). Water represented the single and most important energy endowment in the post-unitary period and became increasingly relevant for the newborn industry (Missiaia, 2012).…”

“…of 1861 lire, i.e., HW-Power (Missiaia, 2012). Water represented the single and most important energy endowment in the post-unitary period and became increasingly relevant for the newborn industry (Missiaia, 2012). Second, we tackle the possibility that demographic differences, captured by the population per square kilometer-i.e., Population-D, determine outcomes by shaping the incidence of land property taxes.…”

Crowding out the change: business networks and persisting economic elites in the South of Italy over Unification (1840–1880)

“…More recently, a new strand of research in economic history, focused on a quantitative approach, has opened up a new terrain of debate on the long-term causes of the Italian divide. Moving away from the tradition of previous qualitative analyses, these studies have provided empirical evidence on the determinants of Italy's longterm regional development by producing estimates at the regional or provincial level of economic growth (GDP) (Daniele and Malanima 2011;Felice 2013;Ciccarelli and Fenoaltea 2013), various measures of industrial productivity and innovation (Toninelli and Pavese 2012;Basile and Ciccarelli 2018;Ciccarelli and Fachin 2017;Nuvolari and Vasta 2017), living standards and inequality (Felice and Vasta 2015;Vecchi 2017;Felice 2018) and other indices like market potential (Missiaia 2019).…”

Continuity or Change? The Evolution in the Location of Industry in the Netherlands and Belgium (1820 – 2010)

“…However, it took until the development of the partial equilibrium model by Midelfart-Knarvik et al (2000;2002a;2002b) that an integrated model was developed to estimate the effects of both factor endowments and market potential on the location of industry, thereby making it possible for historians to compare the importance of the Heckscher-Ohlin theorem and the New Economic Geography theorem over time (e.g. Crafts and Mulatu 2005;Betran 2011;Martinez-Galarraga 2012;Ronsse and Rayp 2016;Nikolic 2018;Missiaia 2019). Nonetheless, the application of these models on a relative short period of time limits our understanding how the importance of certain factors increased or decreased over different phases of industrialization.…”

“…As most countries faced similar differences in the spatial distributions of factor endowments, income levels, and institutions, the study of spatial patterns of industrialization have drawn increasingly attention in recent decades (e.g. Kim 1995;Crafts and Mulatu 2005;Missiaia 2019). But, even today, regional differences seem to occur.…”