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Subsidies, Negotiated Planning and Public Enterprise in the Italian Mezzogiorno

Author

Listed:
  • Domenico Scalera
  • Alberto Zazzaro

Abstract

Currently, the main form of public intervention in the Mezzogiorno are the financial subsidies and the so-called negotiated planning instruments. In this paper, we argue that both these kind of policies show a number of relevant drawbacks. Financial subsidies fail to stimulate additional investments, lead to investment oversizing, encourage clientelism, raises transaction costs and rent-seeking activities. Negotiated planning complicates the institutional context, reinforces local bureaucracies, reduces policy’s accountability, creates opportunities for political trade-offs, and makes rent-seeking profitable. By contrast, we believe that in order for the abundant resources still untapped in the Mezzogiorno to be directed towards activities favourable for development, it is necessary to debureaucratize its economy, removing opportunities for rich pickings from political groups, bureaucracies and local potentates. To this end, we argue that a different and ‘more extreme’ combination of measures, involving automatic incentives and a new active role of the public sector in the production of goods and services, could yield better results.

Suggested Citation

  • Domenico Scalera & Alberto Zazzaro, 2002. "Subsidies, Negotiated Planning and Public Enterprise in the Italian Mezzogiorno," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 3, November.
    • Handle: RePEc:rar:journl:0165
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    References listed on IDEAS

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    More about this item

    Keywords

    Mezzogiorno; Financial Subsidies; Negotiated Planning; Public Enterprises;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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