The Uniqueness of Italian Internal Divergence

A few weeks ago, I got engaged in a twitter debate with Garett Jones, Pseudoerasmus and Anna Missiaia (see her great work here) about institutions in Italy. During the course of that discussion, I was made aware that I held a false belief. Namely, the belief that since the late 19th century, there had only been a minor divergence within Italy. In reality, there has been considerable divergence within the country since the late 19th century.

In the wake of the Italian referendum, it is worth examining how big is this divergence. Below is a map of regional GDP per capita taken from Europa.ec.  The southern regions of Italy have GDP per capita below 75% of the European average while some of the northern regions have GDP per capita above 125% of the European average. The IStat database suggest similar levels of divergence across regions in Italy.

Gross_domestic_product_(GDP)_per_inhabitant_in_purchasing_power_standard_(PPS)_in_relation_to_the_EU-28_average,_by_NUTS_2_regions,_2014_(¹)_(%_of_the_EU-28_average,_EU-28_=_100)_RYB2016.png

So, how much divergence was there – say a little a more than one hundred years ago? Well, according to the great work of Felice (see here in the Economic History Review and here), there were more similarities back in the 19th century than there are today. Take the Liguria which – in 1891 – had per capita value added of 44% above national average. Take also Campania which was 3% below the national average. Today, the IStat data places Liguria 9% above national average but the region of Campania is 37% below the national average. Overall, regardless of how you present the data , divergence has increase. Just expressed at coefficient of variations, there has been an increase. In 1891, the coefficient of variation stood at 22.95% while it stood at 28.95% in 2013.

italiangdp

This makes Italy into an oddity. My own work shows that in Canada, since the 19th century, there has been considerable convergence (see article in Economics Bulletin). The same happened in the United States (see this paper by Michener and McLean), in England (here and here) and in Sweden (here). Among western countries, increased internal divergence is rare and Italy is the prime case example. And this is a strong indictment. Either Italy as a whole shares the same steady-state status and something is preventing upwards convergence from the South or Italy has two different economies with two different steady-states. In both cases, the implications are depressing.

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3 thoughts on “The Uniqueness of Italian Internal Divergence

  1. Daniel Ziblatt, a political scientist at Harvard, has a great book that helps to explain why there is such a stark contrast between north and south Italy. The book, Structuring the State, is based off of his dissertation asking why Germany became a federal republic and Italy a unitary state.

    Basically, the German states were afraid of Prussia whereas the Italian states had no obvious potential hegemon. Because of this, the German states were able to work together to form a compromise that resulted in a representative federation, while the Italians got a unitary state that was unrepresentative (the Italians feared France more than each other).

    As an aside, the American republic was formed in much the same way as the German one, because many states feared the rise of Virginia. (See David Hendrickson’s book Peace Pact for a more in-depth argument.)

  2. I think Robert Putnam s “Making Democracy Work: Civic Traditions in Modern Italy” goes some way in explaining the persistent north south difference in Italy.

    As a half Swede, half Italian with roots in the Veneto region, I would like to add an anecdote. I was living in Dublin, Ireland and invited to a pub to watch a world cup football match with Italy playing. In the beginning everyone introduced themselves and said where they were from: Messina, Palermo, Bari, Naples, Catania… Every single one except me was from southern Italy. I realised that it wasnt a coincidence, they self select regionally, and that Veneto was the “wrong” place to be from. And my amateur psychology assessment was that these people are very different from my friends in Veneto – much more macho. I dont think people from any other European country divide themselves up socially on a regional basis like this when abroad.

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