Where do we go from here? Market access and regional development in Italy (1871–1911)

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Lund UniversityAbstract Italy has been characterized, throughout its history as a unified country, by large regional differentials in the levels of income, industrialization and socio-economic development. This paper aims at testing the New Economic Geography hypothesis on the role of market access in explaining these regional differentials. We first quantify market access of the Italian regions for benchmark years from 1871 to 1911 following Harris (1954). We then use these estimates to study the causal link between GDP per capita and market potential following Head and Mayer (2011). The main result of this paper is that only domestic market potential, which represents the home market, shows a "traditional" North-South divide. When international markets are introduced, the South does not appear to lag behind. Regression analysis confirms that market potential is a strong determinant of GDP per capita only in its domestic formulation.This suggests that the home market in this period mattered far more for growth than the international markets, casting new light on one of the classical explanations to the North-South divide.JEL Classification Numbers: N33, N73, N93, O18, R11.

Geography, market potential and industrialization in Italy 1871–2001

“…While the role of political and institutional factors has been widely examined to explain the gap between the North and South of Italy, the effect of geography and, in particular, the distance from markets, has long been overlooked. Only recently was it explicitly addressed by some scholars, at the regional level or for relatively short time‐spans (A'Hearn and Venables ; Missiaia ). Our contribution points out how a potential market has been a crucial factor in shaping the regional distribution of manufacturing and, therefore, economic development.…”

“…In the case of Italy, while the role of social and institutional factors in regional inequalities has been stressed by several scholars (Putnam et al ; Perrotta and Sunna ; Felice ), the effect of geography, although discussed in the past (Nitti ; Fortunato ), has been far less investigated. The influence of geographic factors, that is, resource endowment and access to markets, has only recently stimulated the interest of researchers (A'Hearn and Venables ; Martinelli ; Ciccarelli and Fachin ; Missiaia ). In particular, A'Hearn and Venables () showed how both domestic and foreign market access favoured the industrialization of Northern regions, while Missiaia () found how, in the period of early Italian industrialization (1871–1911), the Northern regions benefited from a larger domestic market than those in the South.…”

One market fits all? Market access and the origins of the Italian north–south divide

“…The GDP of region A is also included, weighted by a measure that takes into account the area of the region. Later refinements have replaced plan distance with transport costs, as in Missiaia (2016).…”

“…In the case of a lack of trade statistics, the standard formulation by Harris (1954) based on regional GDP and distances across regions can be applied. This latter is used by Missiaia (2016), where the NEG hypothesis is tested for post-unification Italy. The author shows that domestic rather than total (domestic plus foreign) market potential explains regional GDP across all Italian regions, challenging the long standing view that the north industrialized first because of better access to international markets (Daniele & Malanima, 2011).…”

The roots of a dual equilibrium: GDP, productivity, and structural change in the Italian regions in the long run (1871–2011)

“…The most updated estimates for the market size suggest that this did not play a major role in the liberal age (Missiaia, 2016). For the second half of the twentieth century, although the debate is open (A'Hearn and Venables, 2013), the basic conclusion should not be different: geography is likely not to be the major ingredient behind the falling back of the Mezzogiorno.…”