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Where Do We Go From Here? Market Access and Regional Development in Italy (1871-1911)

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  • Anna Missiaia

Abstract

Italy has been characterized, throughout its history as a unified country, by large regional differentials in the levels of income, industrialization and socio-economic development. This paper aims at testing the New Economic Geography hypothesis on the role of market access in explaining these regional differentials. We first quantify market access of the Italian regions for benchmark years from 1871 to 1911 following Harris (1954). We then use these estimates to study the causal link between GDP per capita and market potential following Head and Mayer (2011). The main result of this paper is that only domestic market potential, which represents the home market, shows a "traditional" North-South divide. When international markets are introduced, the South does not appear to lag behind. Regression analysis confirms that market potential is a strong determinant of GDP per capita only in its domestic formulation. This suggests that the home market in this period mattered far more for growth than the international markets, casting new light on one of the classical explanations to the North-South divide.

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  • Anna Missiaia, 2015. "Where Do We Go From Here? Market Access and Regional Development in Italy (1871-1911)," LEM Papers Series 2015/18, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    • Handle: RePEc:ssa:lemwps:2015/18
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    1. Zamagni, Vera, 1997. "The Economic History of Italy 1860-1990," OUP Catalogue, Oxford University Press, number 9780198292890.
    2. Fenoaltea,Stefano, 2014. "The Reinterpretation of Italian Economic History," Cambridge Books, Cambridge University Press, number 9781107658080, April.
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    12. K.H. Midelfart & H.G. Overman & S.J. Redding & A.J. Venables, 2000. "The location of European industry," European Economy - Economic Papers 2008 - 2015 142, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    Cited by:

    1. Domini, Giacomo, 2016. "Patents, exhibitions and markets for innovation in the early twentieth century: Evidence from Turin 1911 International Exhibition," MERIT Working Papers 061, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Emanuele Felice, 2017. "The Roots of a Dual Equilibrium: GDP, Productivity and Structural Change in the Italian Regions in the Long-run (1871-2011)," Quaderni di storia economica (Economic History Working Papers) 40, Bank of Italy, Economic Research and International Relations Area.
    3. Gabriele Cappelli & Emanuele Felice & Julio Martínez-Galarraga & Daniel Tirado, 2018. "Still a long way to go: decomposing income inequality across Italy’s regions, 1871 – 2011," Working Papers 0123, European Historical Economics Society (EHES).

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    Keywords

    Economic Geography; Economic History of Italy; Market Potential;

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