The economic disparity between northern and southern Italy is a significant issue, with a 30% gap in GDP per capita between the two regions. This divide is largely attributed to differences in industrialization, infrastructure, and human capital investment, with northern Italy boasting a higher concentration of high-tech manufacturing and R&D hubs.
Overview
The regional differences in Italy's economic development are stark, with the north being roughly twice as developed as the south. According to Putnam et al., northern and central Italian regions had denser traditions of local self-government, guilds, cooperatives, and participatory municipal politics, which generated lower corruption, trust, and effective collective action. Southern regions, by contrast, were shaped more by hierarchical authority and landlord domination, which produced lower interpersonal trust and weaker monitoring of public officials.
Proximate and Ultimate Causes
The good modern quantitative evidence corroborates parts of Putnam's story, but there are a few crucial things that are missing or remain unsatisfactory about it. Social/civic capital is the proximate but not the ultimate cause of the differences. Geography and environmental disease stress, particularly malaria, seem to be a key determinant of the regional disparity. Malaria presence shaped agrarian, pre-industrial institutions, which then strongly conditioned how/when/if industrial development took off through various mechanisms such as education, political power, productivity, and so on.
The legacy and persistence of medieval self-government, as an ultimate cause, can itself be traced to what happened in both regions in the times of the Norman kingdom. The rise of the Sicilian Mafia in the late nineteenth century is another determinant of the divergence. The spread of socialist Peasant Fasci organizations created a threat to landholders and local elites in areas of weak state presence, leading some elites to rely on Mafia groups for private enforcement and repression.
Tradeoffs and Consequences
The literature on Italian South-North divergence provides a fairly good grasp on both the proximal and ultimate reasons for the regional developmental gap. The absence of the free-city-state experience accounts for at least half of the North–South gap in social capital. Organized crime can have direct economic effects, and local institutional capture by organized crime can depress economic activity. Weakening such capture can improve outcomes.
In conclusion, the economic disparity between northern and southern Italy is a complex issue with multiple causes and consequences. Understanding the proximate and ultimate reasons for the regional developmental gap is crucial for addressing the issue and promoting economic development in the south.