The unvenen development of Italy's regions, 1861-1936: a new analysis based on human capital, institutional and social indicators

This thesis sheds new light on the process of economic divergence that characterized Italy’s regions in the second half of the nineteenth century and the Interwar period. It shows that social capital had a limited impact on the regions’ economic fortune prior to the Great War. Further, only specific dimensions of social capital affected regional economic growth. Instead, the country’s regional inequalities grew large as a result of different endowments of human capital. In turn, human capital differences inherited from pre-unification states remained large as a result of public policy, which established a decentralized education system in 1859. This choice delayed convergence in primary schooling across regions, because of the tight connection between municipal fiscal capacity and the supply of schools and teachers. Centralized education, introduced with the Daneo-Credaro Reform in 1911, loosened this link and favoured regional convergence in human capital. Contrary to expectations, local institutional mechanisms did not play a large role in the growth of mass education: a detailed analysis of the determinants of primary schooling across Italy’s provinces in the years 1871 – 1911 confirms that local economic conditions influenced the development of human capital far more than political participation and access to local decision-making. These results cast doubt on recent interpretations of the socioeconomic divergence experienced by Italy’s regions. While further research is needed on the link between local institutions and the development of basic education, this work calls for a renewed focus on the way that central policy affected regional divergence and Italy’s overall economic development before the Second World War.