Regional Disparities In Italy Over The Long Run: The Role Of Human Capital And Trade Policy

The well known Italian dualism in terms of development disparities between the North and the South has been one of the most debated issues in economics over the last few decades. In the aftermath of the Unification of Italy, the gap between North and South in terms of human capital stock was more relevant than the dualism in terms of GDP per capita. In 1871 the percentage of population able to read and write was 57.7% in the North-West and only 15.9% in the South, while there is no evidence of income disparities. Interestingly, in 1951 income per capita in Southern regions was only about 50% of that of the North. Bearing this evidence in mind, and using a novel panel dataset, we in-vestigate the pattern of regional development focusing on the role of initial hu-man capital conditions as a major driver of growth over the period 1891–1951. We provide further empirical evidence on the impact of protectionist trade poli-cies in the late 19th century on long run development. We find that a numerical-ly large human capital stock in the North provided fertile soil for early industri-alization, while the protection of agriculture resulted in an incentive for the South to specialize further in the primary sector, which turned out to be harmful in the long run.