Regional growth and ICT in Italy: an analysis of SMEs versus large firms

Among the (most important) reasons underlying the lack of convergence of some regions towards the national and the European Union average there has been the strong gap in technological endowment and innovation capacity. In this perspective, the requirements of the “knowledge-based economy” and the observed contribution of the Information and Communication Technology (ICT) to economic growth are very likely to have a significant impact upon regional growth: however, it is far from clear whether this effect will lead to greater convergence or, on the contrary, to stronger territorial polarization. From preliminary evidence, the new ICT paradigm is showing contradictory consequences, insofar as it seems to indicate more peculiar features and different transmission modalities than the ‘old’ technologies – for instance among SMEs. At the same time, the recent debate has focused on whether and to what extent such a technological shift can be viewed as “horizontal” – that is, able to propagate growth in the overall economic system, thus representing a “radical technological change” – or, rather, if it is a more limited and sector-specific type of progress. Yet, empirical evidence seems to reveal that ICT does not only show outstanding dynamics as a single industry, but also a great capacity to promote growth in other sectors, both traditional and technology-intensive; furthermore, the diffusion of the new technologies turns out to be highly spatially variable and externalities promoting the adoption of the new technology seem to be stronger at the sub-national level. Yet, the ICT spread does not affect uniformly different firms’ dimensional classes and geographical systems - which vary deeply in terms of access capacity, connection variety and absorptive attitude - possibly giving further impulse to (or helping to reduce) the gap between cores and peripheries. As in the case of the ‘old’ technologies, not all regions are expected to be on the cutting edge of the information and communication paradigm, but all need to understand and adapt to the network age, build the capacity to participate in it and take advantage of its increasing social and economic rewards. As recently argued, there is some evidence of a growing diversification of regional economic disparities, which is generating a sort of ‘patchwork’ of manifest differentials in the patterns of socio-economic development within the EU. Starting from these ongoing transformations, the aim of this paper is to look at the recent trends in labour productivity in both small and medium enterprises (SMEs) and large firms which are active in the ICT production. Ultimately, the objective is to shed some light on the role of ICT-producing industries on regional growth – and on regional gaps - in the Italian economy, traditionally characterised by geographical polarization and imbalances which are among the sharpest in the “Europe of regions”.