Growth and sectoral dynamics in the Italian regions

Regional differentials in per capita income and labour productivity in Italy is one of the most notable cases of regional inequality and have attracted attention from economists from all over the world since the 1950s. In this paper we first aim at yielding a comprehensive description of the pattern of regional inequality in Italy on the basis of a new dataset on the main regional variables for the period 1951-94. We use descriptive statistics and panel regression analysis, in order to allow direct comparisons with the impressive evidence available on a large number of national cases. Second, we offer our contribution to the debate about the sources of the persistence of a high degree of regional inequality in Italy. We concentrate on sectoral dynamics in order to assess how much of the initially high potential for convergence due to the dualistic structure of the poorer regions has been exploited, by which regions, under what regional policy regimes. Our analysis remarks that a limited convergence process has occurred over the years 1951-75; afterward the degree of inequality between Northern and Southern regions has increased again. Moreover, the regional distribution of per capita income presents a bimodal polarisation with a rich convergence club which includes most of northern regions, and a poor club made of a small group of non-adriatic southern regions. In the sectoral analysis we find that dual mechanisms play a role in aggregate convergence as long as the outflows of labour from the low productivity agriculture of the poorer regions are a source of expansion of these regions' industrial sector. Once this migration from agriculture to industry ends in some of these regions, the impact of dualistic mechanisms on convergence weakens significantly. Industrialisation, or its failure, still appears to be the key to understand why some of the lagging regions converge and others do not.