The Missing Link? Trust, Cooperative Norms, and Industrial Growth in Italy

Abstract

Despite recent research about the link between social capital and economic growth, the degree to which social norms influenced the first phase of Italy’s regional economic divergence remains largely unexplored. A methodology based on a multifaceted definition of social capital, employing data about charity, mutual aid, and crime permits estimates of the differences in the strength of trust and cooperative norms across Italy’s provinces at ten-year intervals between 1871 and 1911. Further analysis of trust and cooperative norms via regression models of conditional convergence in industrial value added per capita shows that, although regional disparities in social capital were large during the late nineteenth century, they are not strongly correlated with industrial growth. Instead, the evidence indicates that human capital, innovation, and formal institutions were far more instrumental in determining the economic fortunes of Italy’s provinces before the World War I.

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

“…The dependent variable is based on the figures by Ciccarelli and Missiaia (2013). Provincial agricultural employment was easily retrieved from the population censuses, while the provincial literacy rates are the ones used by Cappelli (2017). For water power, the same source used for the regional level was also available at the province level.…”

“…In the 1990s, the work by Putnam et al (1993) started a new line of research that focused on southern culture and institutions, which were regarded as less conducive to economic growth compared to the northern ones. Human capital has also gained increasing attention as an explanatory variable, along with social capital (Felice 2012;Cappelli 2016Cappelli , 2017. Felice and Vasta (2015) proposed, as origin of the divergence, the failure of elites in the South to guide society through the stages of active industrialization, with progress taking place only through state intervention.…”

“…Market versus endowment: explaining early industrial location… consistent with a broad long-term approach, but of course there is an implicit trade off between temporal comparability and detailed analysis on a more specific period. Measures of industrial performance have also been related to some of the classical hypothesis, for instance by Cappelli (2017) in relation to human and social capital and Nuvolari and Vasta (2017) in relation to secondary schooling and innovation. Finally, the most recent contribution in this direction is the one by Basile and Ciccarelli (2018) who propose a formal model to explain the value added in each sector at provincial level using literacy, energy and market forces as main explanatory variables.…”

“…Moreover, the industrial classification used by Nuvolari and Vasta (2015) in their regional reconstruction of Italian patents is not consistent with the one used in the employment reconstructions available, making it hard to include patents also from the regional side of the interaction. 6 The other variable that in a broad way represents an endowment is social capital, which has been the object of various studies, most recently Felice (2012) and Cappelli (2017). The nature of the model we are using makes it hard to include a measure of social capital: we should have a clear hypothesis of which industrial channel social capital would use to attract industrial employment, but it is hard to think of a single measurable industry characteristic to consider.…”

An Economic History of Regional Industrialization

“…Other scholars have studied the early location of industry in Italy using a variety of alternative approaches. Cappelli (2017) explains the growth of industrial value added for provinces using human and social capital. Social capital in this case is measured through engagement in charities, mutual aid, and crime incidence.…”