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Decentralization, Social Capital and Regional Convergence

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  • Mauro, Luciano
  • Pigliaru, Francesco

Abstract

By studying the interaction between social capital and decentralization, we show that political decentralization can be a source of divergence across heterogeneous regions. In particular, we claim that since the local endowments of social capital display their effect on the economy mainly through the functioning of local institutions, decentralization enhances (hampers) growth wherever social capital is high (low). We define our hypothesis within a growth model with public capital, and use the North-South divide in Italy to assess the quantitative plausibility of our model. A calibration exercise shows that it accounts for the major swings in the Italian regional divide since 1861.

Suggested Citation

  • Mauro, Luciano & Pigliaru, Francesco, 2013. "Decentralization, Social Capital and Regional Convergence," Economy and Society 151534, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemso:151534
    DOI: 10.22004/ag.econ.151534
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    References listed on IDEAS

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    2. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
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    Cited by:

    1. Bonanno, Graziella & D’Orio, Giovanni & Lombardo, Rosetta, 2020. "Generating well-being and efficiency: Evidence from Italy," Economic Analysis and Policy, Elsevier, vol. 65(C), pages 262-275.
    2. Giannola, Adriano & Petraglia, Carmelo & Scalera, Domenico, 2016. "Net fiscal flows and interregional redistribution in Italy: A long-run perspective (1951–2010)," Structural Change and Economic Dynamics, Elsevier, vol. 39(C), pages 1-16.
    3. Piras, Romano, 2022. "Structural change, growth, and convergence in Italy: 1951–1970," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 362-379.
    4. F. Pastore, 2015. "The Mezzogiorno and Crisis after Market and State Failures. A Review of Economic Literature," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 3-4, pages 525-582.
    5. Francesco Pastore, 2017. "Getting It Right: Youth Employment Policy within the EU," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 18(02), pages 26-33, July.
    6. Jonathan Muringani, 2022. "Trust as a catalyst for regional growth in a decentralized Europe: The interplay between informal and formal institutions in driving economic growth," Journal of Regional Science, Wiley Blackwell, vol. 62(5), pages 1229-1249, November.

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    More about this item

    Keywords

    Public Economics;

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • N9 - Economic History - - Regional and Urban History
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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