The quality of the institutional context: how it varies across regions and over time

This paper proposes a composite index of the quality of the institutional context that varies across regions and over time. The index considers the main domains of public action that influence the environment in which firms and workers operate: (i) the functioning of the justice system; (ii) the integrity of the public administration; (iii) bureaucratic efficiency; (iv) the quality of local public services. To cover this broad spectrum of public action, around 50 indicators were collected, combining objective metrics with perceptions of businesses and citizens. The analysis shows that the quality of the institutional context is lower in southern Italy. While this outcome cuts across all domains, it is particularly pronounced in the quality of local public services. This may be due to lower administrative capacity and more limited financial resources available to local authorities. The gap is consistent for both objective and subjective indicators. Since the early 2010s, the quality of the institutional environment has gradually improved, especially with regard to the functioning of civil justice and administrative efficiency. This improvement has affected both the South and the Centre-North of Italy, although no substantial convergence has occurred.