Research Project of Relevant National Interest - PRIN 2017

REGIONAL POLICY, INSTITUTIONS AND COHESION
IN THE SOUTH OF ITALY

 

INTRODUCTION

 

Premise

After almost 70 years of regional policy, the economic gap between the North and the South of Italy, according to major macroeconomic and social indicators, has not decreased. Although significant improvements were recorded between 1950 and 1975 (the golden age of ‘national’ regional policy), since the advent of EU Cohesion policy in the early 1990s Southern per capita GDP, consumption and investment, relative to the North, have actually regressed to post-WW2 levels. The 2008 financial crisis and the ensuing austerity measures have further worsened the picture. Within the South, Apulia, Basilicata, Calabria, Campania and Sicily have recorded the lowest GDP growth rates among EU NUTS2 regions, despite five rounds of EU Cohesion policy.

Why is that? What sets these regions apart from other lagging regions in Europe, which have been able to grow and/or exploit Cohesion policy funds? There are differences also among them; why has Apulia performed better – in aggregate terms – than Calabria or Sicily? And within each of these regions, why did some places fare better than others? Most importantly, why has Cohesion policy not achieved the expected results and how can regional development policy – at the EU, national and regional scales – be improved to include places that seem ‘locked-in’ cumulative processes of decline and are ‘left-out’ of current regional policy opportunities?

 

Aims of the research project

The project has two main aims: 1) To answer the above questions and identify the determinants of the failure and success of different regional policy strategies and tools, in different phases, and in different territorial contexts, with a focus on EU Cohesion policy and the South of Italy. 2) To contribute recommendations for a more effective regional policy architecture, at the EU, national and local levels.

To achieve the first aim, the project first examines regional policies and development trends across a number of selected EU member states, historically characterised by regional disparities or lower development levels. At the same time, it compares the strategies, tools and impacts of regional policies deployed for Southern Italy in selected regions and places, across two different policy ‘regimes’ – the ‘national’ policies of the Keynesian period (1950-80) and the EU Cohesion policy of the last 30 years. The aim of these (space- and time-wise) comparative analyses is to identify the main factors – macroeconomic context, policy design, and endogenous features – that have conditioned the economic, social and territorial transformations of places and may contribute to explain their relative success or failure. The macroeconomic contexts of the two periods are, in fact, quite different, as are the regional policy strategies and tools. But very different are especially place-specific factors such as regional/local structures (production and class structures, labour markets, morphology and infrastructure) and regional/local institutions (political elites, administrative bureaucracies, business coalitions, civil society organisations, culture and values), and the way these are articulated with the broader national and international contexts. All these factors contribute to explain differences in performance and may shed some light on ‘what is to be done’.

Among institutional factors, the project pays particular attention to government institutions, which are increasingly acknowledged as a key determinant of development trajectories. The quality and capabilities of governments – at different scales, but especially the local – to steer and exploit development policies are main explanatory variables of the success and failure of places. This is especially true in the current Cohesion policy regime, which privileges the ‘local’ governance of development strategies and is based on a competitive bidding funding mechanism.

The second aim of the project is to learn lessons from the above comparative reviews and to put forward an articulated set of recommendations for revising the current regional policy framework and devising more effective measures for regions and places that are proving unable to change, are ‘locked-in’ processes of decline, and/or are ‘left-out’ of current funding opportunities.

 

THE DEBATE: STATE OF THE ART

 

The persistence of regional disparities in Europe and Italy

The last three Cohesion Reports (EC 2010; 2014; 2017a) all attest to the persistence – and in some cases even increase – of regional disparities in Europe over the last twenty five years, although they also highlight changes in the geography of growth. While disparities ‘between’ countries have decreased – namely between the ‘old’ EU-15 member states and the ‘new’ EU-12 entrants – a worsening has been observed of the ‘within countries’ coefficient of variation (Monfort 2009). The resumption of regional disparities, after the convergence of the 1960s and 1970s, is especially noticeable in the UK and Italy (Crafts 2005; MacCann 2016; Iuzzolino et al. 2013; Martinelli 2017), whereas the 2008 financial crisis has interrupted the convergence processes observed in countries such as Spain or Ireland in the 1990s and has further worsened the position of Italy. Moreover, a polarisation of growth in few (metropolitan) regions has occurred, at the expenses of more peripheral ones. Recent studies also stress the mounting difficulties encountered by ‘intermediate regions’, i.e. areas trapped in between the few competitive growth engines of the ‘old’ Europe and the less developed but fast growing Central and Eastern European countries (Iammarino et al. 2017; EC 2017b).

In this general context, the case of Italy – with the persistence of its ‘Southern question’ – stands out. While other countries characterised by important regional disparities such as Germany and Spain experienced some convergence until the crisis of 2008 (Prota & Viesti 2015), since the end of national regional policy in 1992 the regional divide in Italy has remained impervious to change (Giannola 2010; Martinelli 2013; Leonardi 2014; Trigilia & Viesti 2016).

To explain this anomaly, three orders of factors are here called in cause: a) changes in the macroeconomic context; b) changes in the policy architecture; c) endogenous factors.

 

The macroeconomic context

Since the end of the 1980s relevant changes have undermined the post-WW2 Fordist order and modified the international division of labour: the globalization of markets and the emergence of new competitors among newly industrializing countries; the de-industrialisation of Western economies, the reorganisation of production systems, the expansion of foreign direct investment and the establishment of global value chains (Iammarino & Mccann 2013; Giovannetti et al. 2015); the development of NICT and the intensification of technological innovation; the fall of the Soviet Union and the acceleration of European integration. These changes have significantly weakened the competitive position of many European nations and regions on the global scene and have altered the European geography of growth. The generalized slowdown of growth rates has also reduced governments' spending capabilities.

 

The policy framework

Two policy ‘regimes’ are generally contrasted in the literature, each characterized by distinct sets of (i) ideologies and principles about the role of the state and the market, (ii) policy objectives and tools, (iii) actors and forms of governance: the Fordist-Keynesian regime (1945-1980s) and the Post-Fordist or Neo-liberal regime (early 1990s to date) (Brenner 2003).

During the first period, the state significantly intervened in the economy and society, via direct infrastructural investment and ownership of strategic sectors, close regulation and financial support of private corporations, as well as social policies, all geared to ensure efficient and balanced growth. State intervention had both redistributive and developmental aims in the context of a nation-strengthening strategy. It is in this period that targeted regional development agencies were born: the Cassa per il Mezzogiorno in Italy, the DATAR in France, the RDAs in the UK. Regional policies of the time shared several features: regional disparities were a national concern and policies were cast in national development strategies (‘Spatial Keynesianism’, see Martin and Sunley 1997); relevant national public resources were engaged; policies were centrally designed and implemented; significant reductions in social and economic disparities were achieved.

The second period was characterized by an acceleration of European integration and the re-surfacing of supply-side economics (with their corollaries of competition and liberalization). A systematic dismantling of established national systems of economic regulation and public responsibility was carried out throughout Europe. National governments lost sovereignty in policy domains that had been key to redressing regional disparities – industrial policy, regional policy, public services of general interest – and were now considered unfair competition (Colomb and Santhina 2014). By the turn of the 21^st century, radical changes had occurred in the role of the state: a generalized retrenchment of national governments’ regulatory, redistributive and direct involvement in the economy; a vertical ‘re-scaling’ of authority, both upward (in favour of the EU) and downward (to regional and local governments); a ‘horizontal’ broadening of governance, involving private partners. Regional policies were up-scaled into the EU-wide ‘Cohesion policy’ framework, meant to aid the weakest territories within the Union, and re-articulated in a multi-level system (Stephenson 2013) in which the EU provides regulation, funding and strategic priorities, the national level ensures co-funding and strategic contextualisation, and the regional and local levels are to formulate and implement policy actions.

 

Endogenous factors

Endogenous factors, and the competitive advantages they can provide, have always been a central element in regional development theories. With the ‘institutional turn’ (see Martin 2001 for a review), traditional structural advantages were enriched with socio-institutional assets (political elites and government institutions; business, labour and civil society organisations; culture and values; knowledge and routines; relationships and trust). It is now recognised that the interplay among local structures and institutions – especially government institutions – and the way these are articulated with the broader national and international contexts profoundly affect local agency and the capacity of places to change (Martinelli and Novy 2013; De Vivo 2017). On the other hand, ‘institutional capital’ is highly differentiated across places (Rodríguez-Pose 2013; EC 2017b; Iammarino et al. 2017) and local capabilities remain also strongly conditioned by broader structural trends (Lovering 1999; MacLeod 2001).

 

The three pillars of EU Cohesion policy

 

Since its beginning, the EU cohesion policy was significantly influenced by two coeval shifts in the scientific debate: (a) the discussion and pressures concerning administrative decentralisation; (b) the consolidation of the ‘local development paradigm’. Both have become pillars of Cohesion policy, which places an almost blind faith in the advantages of the ‘local’ governance of development (Martinelli 2017).

The first pillar is the ambiguous principle of ‘subsidiarity’, introduced in 1985, together with the EC discourse of ‘a Europe of the regions’. It sponsors the idea that decentralised government systems are inherently more efficient and more democratic than centralised ones. Recently, however, scholars have questioned these assumptions (Ezcurra & Rodríguez-Pose, 2013), arguing that administrative decentralisation is not a homogeneous process, nor does it feature a uniform system. Efficiency and democracy depend on which functions and policy fields are decentralised and on the ‘quality’ of subnational governments (Charron et al, 2014).

The second pillar is the faith in the ‘local’ governance of development strategies. The ‘new regionalism’ and ‘flexible production systems’ debates of the 1980s and 1990s (of which the Italian ‘industrial districts’ were forerunners) had stressed the role of ‘endogenous’ factors – especially institutional and other territorially embedded immaterial assets – in ensuring the success of certain local production systems (see Garofoli 2003 and Moulaert & Sekia 2003 for reviews), contributing to the so-called ‘institutional’ and ‘territorial’ turns in regional studies (Martin 2002). But the ‘local development paradigm’ soon assumed a normative dimension, evolving into a ‘policy paradigm’ that was explicitly adopted by the EU in the 2000-2006 Cohesion policy round (Viesti & Prota 2007): the local was deemed the best level for revealing needs, formulating strategies and ‘unlocking’ the endogenous potential of places. This approach was re-confirmed in the 2014-2020 programming round, with the ‘place-based’ development strategy (Barca 2009).

A third pillar of Cohesion policy is the ‘competitive’ funding architecture, which entrusts policy formulation and implementation mainly to the local level through a public bidding mechanism, whereby public and private actors must formulate and submit proposals, in order to obtain resources.

 

The case of Southern Italy

 

Italy is both an emblematic and a ‘special’ case, that illustrates very well how macroeconomic conditions, policy design, and endogenous factors influence policy implementation and regional disparities.

From 1950 to 1980 regional policy in Italy was formulated, financed and implemented by a national agency (the Cassa per il Mezzogiorno), with massive public investment in infrastructures and in support of industrialisation, in a context of growth (the Italian ‘economic miracle’) and within an overall national development strategy. The amount of public resources channelled into the South was humongous and the socio-economic impact extraordinary, even though not without contradictions. The gap between the South and the rest of the country decreased significantly according to most macroeconomic and social indicators (Giannola 2010; Martinelli 2013).

In 1984 the Cassa was abolished and a more decentralised system was introduced, with significantly reduced resources. It was the ‘death rattle’ of national regional policy, which was altogether terminated in 1992, ostensibly to comply with EU directives, but mostly because of the growing financial difficulties of the central government and hostility of North-Eastern regions (Martinelli 2009). When national concern for regional policy somewhat resumed in 1998, it endorsed the EU ‘local policy development paradigm’, which functionally merged with the Italian ‘new programming’ approach (Prota & Viesti 2012).

But, as has been systematically documented by the Svimez, since the advent of Cohesion policy the gap between the South and the rest of the country has grown back to post-WW2 levels. There is also widespread agreement that Cohesion policy has failed in Southern Italy compared to other lagging EU regions (Manzella & Mendez 2009). The reasons for such poor performance must be found – as previously postulated – in the changed macroeconomic conditions, the new policy approach, and country- and region-specific factors.

In what concerns macroeconomic conditions, the crisis of Fordism in the 1980s particularly affected the newly industrialised South. In the new Post-Fordist scenario, the industrial districts of the North-East became the new engines of Italian growth and exports, but only few places in the South were able to participate in this new industrial model (Viesti 2000). The economic stagnation of the Italian economy and the enduring fiscal crisis of the national government after 1992 (further aggravated by the austerity measures introduced after 2008), certainly contribute to explain the overall reduction in public resources attributed to the South. But there is also a political dimension, i.e. the low priority given by the central government to the Southern question (Polverari 2013). This is witnessed not only by the systematically lower amount of ‘ordinary’ public investment per capita in the South compared to the rest of the country (Svimez 2010; 2014), but also by the systematic diversion of the ‘special’ national resources targeted to the South to other uses (Petraglia & Scalera 2012). EU resources have thus ‘substituted’ for ‘ordinary’ national public investment, instead of being ‘additional’ (Woster & Slander 2009; DPS 2009; EC 2010). This ‘withdrawal’ of national resources has been particularly detrimental for Southern regional and local governments after the 2008 crisis and related austerity measures, compromising, among other things, their capacity to co-finance Cohesion policy actions (Prota & Viesti 2015; Giannola et al. 2015; Leonardi 2014).

In what concerns policy design, in the absence of adequate ‘subsidiary’ national support, the planning and implementation responsibilities placed on regional and local actors, together with the competitive bidding mechanism to obtain funding and the cumbersome policy implementation procedures, have penalised many places in the South, especially where the quality of both local governments and local actors is weak, (Provenzano 2015; Trigilia and Viesti 2016). As stressed by Avdikos & Chardas (2016), the recently introduced conditionalities and sanction/reward mechanisms, are proving a further obstacle to access Cohesion policy funds, precisely in those places that are most in need of additional resources.

On the other hand, despite this aggregate policy ‘implementation gap’, many instances of virtuous development governance can also be found in the South. The quality of regional and local institutions and structures – political elites, business interest groups, administrative staff, but also productive structures and the built and infrastructural environment, as inherited from the previous policy regime (De Vivo 2009; Milio 2011; Nigrelli 2014; Nigrelli & Bonini 2017) – are then key variable to explain differences.

 

PROJECT METHODOLOGY AND STRUCTURE

The analytical approach deployed in the research project is multidisciplinary, comparative and transdisciplinary. Understanding development in space and time requires integrating the economic, the social, and the geographical dimensions, with a historical outlook. The scholars participating in the project have different disciplinary backgrounds, ensuring such a multidisciplinary approach: spatial planning, regional development and policy, geography, political economy, industrial economics and sociology, agricultural economics, economic sociology, history [LINK A PAGINA UDR]. The comparative perspective is applied both in space and time. Space-wise, on the one hand the Italian regional policy approaches and implementation performance are compared with other European nations; on the other hand, the individual trajectory of the five selected regions (Apulia, Basilicata, Calabria, Campania and Sicily) and a number of local case studies are compared among themselves, to better understand how context specificities have shaped differences. Space is also considered in terms of inter-scalar relations, as local trajectories are conditioned by the broader scales. Time-wise, policy approaches, implementation and impacts are compared across two periods: a) the ‘national’ regional policy phase and b) the EU Cohesion policy period, especially addressing the issue of path-dependencies. Last but not least, a transdisciplinary approach is deployed in what concerns the analysis local case studies, whereby local stakeholders are involved in both contributing knowledge and sharing research results.

The research methodology is both qualitative and quantitative. The comparative review of regional development trajectories and policies in Europe and in the South of Italy mobilises existing literature, research reports and policy documents (EU; OECD; archives of the Cassa per il Mezzogiorno; Svimez; Ministry of Economy and Finance; Department of Development and Cohesion; Agenzia per la Coesione Territoriale; regional governments etc.) and is integrated with extensive original fieldwork (reviews of local records, surveys, interviews with experts and privileged witnesses). Development trends and transformations are also supported by descriptive statistics, econometric analyses and GIS mapping, based on both public and private data bases (Eurostat, Istat, Svimez, European Regional Dataset and FDIMarket).

To achieve its aims, the research project is structured in seven Work Packages (WPs), some of which are running in parallel. Each WP is coordinated by one of the four Research Units (RUs) involved and each is characterised by specific objectives, activities and deliverables (Ds) (see GANTT chart LINK). Each RU contributes specific theoretical, methodological and empirical inputs to the different WPs, in function of its disciplinary specialisation.

WP0. COORDINATION AND MANAGEMENT (Coordinator: University of Reggio Calabria)

WP1. REGIONAL POLICIES IN EUROPE (Coordinator: University of Bari)

WP2. REGIONAL POLICY IN THE MEZZOGIORNO (Coordinator: University of Reggio Calabria)

WP3. REGIONAL TRAJECTORIES (Coordinator: University of Napoli)

WP4. LOCAL CASE STUDIES (Coordinator: University of Catania)

WP5. LESSONS AND POLICY RECOMMENDATIONS (Coordinator: University of Reggio Calabria)

WP6. DISSEMINATION AND VALORISATION (Coordinator: University of Reggio Calabria)

  

Bibliographical references

 

Avdikos V & Chardas A (2016) European Union Cohesion policy post 2014: more (place-based and conditional) growth – less redistribution and cohesion, Territory, Politics, Governance 4 (1)
https://www.tandfonline.com/doi/abs/10.1080/21622671.2014.992460

Barca F (2009) An Agenda for a Reformed Cohesion Policy. A Place-based approach, DG Regio
https://ec.europa.eu/regional_policy/archive/policy/future/pdf/report_barca_v0306.pdf

Brenner N (2003) ‘Glocalisation’ as a state spatial strategy in J Peck & HWC Yeung (eds) Remaking the Global economy, Sage Publications

Sage Charron N, Dijkstra L & Lapuente V (2014) Regional governance matters: quality of government within European Union member states, Regional Studies 48 (1)

Colomb C & Santhina G (2014) European Union competition policy and the European territorial cohesion agenda: an impossible reconciliation?, European Planning Studies 22 (3)
https://www.tandfonline.com/doi/abs/10.1080/09654313.2012.744384

Crafts N (2005) Regional GDP in Britain, Scottish Journal of Political Economy 52
https://onlinelibrary.wiley.com/doi/full/10.1111/j.0036-9292.2005.00334.x

De Vivo P (2017) L'impresa come istituzione sociale, Il Mulino

De Vivo P (2009) Lo sviluppo locale nel Mezzogiorno tra crescita economica e limiti sociali, in C Carboni (ed) La governance dello sviluppo locale, Il Mulino

DPS (2009) Le politiche di sviluppo 2000-2006, DPS

EC (2010) Ex Post Evaluation of Cohesion Policy Programmes 2000-2006, EU

EC (2010) 5th Report on Economic, Social and Territorial Cohesion, EU

EC (2014) 6th Report on Economic, Social and Territorial Cohesion, EU

EC (2017a) 7th Report on Economic, Social and Territorial Cohesion, EU

EC (2017b) The Lagging Regions Report, Commission Staff WP, EU

Ezcurra R & Rodríguez-Pose A (2013) Political decentralization, economic growth and regional disparities, Regional Studies 47(3)
https://www.researchgate.net/publication/263751976_Political_Decentralization_Economic_Growth_and_Regional_Disparities_in_the_OECD

Garofoli G (ed.) (2003) Impresa e territorio, Il Mulino

Giannola A (2010) Il Mezzogiorno nell’economia italiana. Nord e Sud a 150 anni dall’Unità, Rivista Economica del Mezzogiorno (3)

Giannola A. Padovani R & Petraglia C (2015) Spending review e divari regionali in Italia, Economia Pubblica (1)
https://ideas.repec.org/a/fan/epepep/vhtml10.3280-ep2015-001006.html

Giovannetti G, Marvasi E & Sanfilippo M (2015) Supply chains and the internationalization of small firms, Small Business Economics, 44
https://link.springer.com/article/10.1007/s11187-014-9625-x

Iammarino S & McCann P (2013) Multinationals and Economic Geography, Elgar

Iammarino S, Rodriguez-Pose A & Storper M (2017) Why regional development matters for Europe’s economic future, Working Papers (7), DG Regio

Iuzzolino G, Pellegrini G & Viesti G (2013) Regional Convergence, in G Toniolo (ed.) The Oxford Handbook of the Italian Economy, Oxford University Press

Leonardi R (2014) Fondi strutturali e declino economico, perché? L’anomalia del caso italiano, Rivista Giuridica del Mezzogiorno (4)

Lovering J (1999) Theory led by policy: the inadequacies of ‘New Regionalism’, International Journal of Urban and Regional Research 23
https://onlinelibrary.wiley.com/doi/10.1111/1468-2427.00202

MacLeod G (2001) New regionalism reconsidered: globalization and the remaking of political economic space, International Journal of Urban and Regional Research 25 (4)
https://onlinelibrary.wiley.com/doi/abs/10.1111/1468-2427.00345

Manzella GC & Mendez C (2009) The turning points of EU Cohesion policy, Report ‘An Agenda for a reformed Cohesion Policy’, DG Regio

Martin R (2002) Institutional approaches in economic geography, in E Sheppard & TJ Barnes (eds) A Companion to Economic Geography, Blackwell

Martin R & Sunley P (1997) The post-Keynesian atte and the space economy in R Lee & J Wills (eds) Geographies of Economies, Arnold

Martinelli F (2009) Cassa per il Mezzogiorno in R Kitchin & N Thrift (eds) International Encyclopedia of Human Geography, Elsevier

Martinelli F (2013) The ‘Southern question’ in Italy in F Martinelli, F Moulaert & A Novy (eds) Urban and Regional Development Trajectories in Contemporary Capitalism, Routledge

Martinelli F & Novy A (2013) Urban and regional trajectories between path-dependency and path-shaping in F Martinelli, F Moulaert & A Novy (eds) Urban and Regional Development Trajectories in Contemporary Capitalism, Routledge

Martinelli F (2017) Lost in translation? Regional policy from national strategy to EU competitive framework, Keynote lecture at the RSA Annual Conference, Dublin 4-7 June, now published (2020) in Rivista Economica del Mezzogiorno, 34(1/2)

McCann P (2016) The UK regional-national economic problem, Routledge

Milio S (2011) Il processo di capacity building per la governance delle politiche di sviluppo, Rivista Giuridica del Mezzogiorno (3)

Monfort P (2009) Regional Convergence, Growth and Interpersonal Inequalities across EU, DG Regio

Moulaert F & Sekia F (2003) Territorial innovation models: a critical survey, RS 37

Nigrelli F (2014) Riforma della governance dei territori in Sicilia, in R D’Amico & A Piraino (eds) Il governo locale in Sicilia, Angeli

Nigrelli F & Bonini G (eds) (2017), I paesaggi della Riforma agraria. Storia, pianificazione e gestione, Ed. Ist. A. Cervi

Petraglia C & Scalera D (2012) Le politiche per il Mezzogiorno negli anni della crisi, Rivista Economica del Mezzogiorno (4)

Polverari L (2013) Policy rhetoric versus political reality: has the Italian state given up on the Mezzogiorno? Regional & Federal Studies 23 (5)
https://www.researchgate.net/publication/263721837_Policy_Rhetoric_versus_Political_Reality_Has_the_Italian_State_Given_Up_on_the_Mezzogiorno

Prota F & Viesti G (2015) The regional effects of the economic crisis in Europe, www.nelmerito.com, 20 April

Provenzano G (2015) La ‘solitudine’ della coesione. Le politiche per il Mezzogiorno e la mancata convergenza, Rivista Giuridica del Mezzogiorno (3)

Rodríguez-Pose A (2013) Do institutions matter for regional development?, Regional Studies 47
https://www.tandfonline.com/doi/abs/10.1080/00343404.2012.748978

Stephenson P (2013) Twenty years of multi-level governance. Where does it come from? What is it? Where is it going?, Journal of European Public Policy 20 (6)
https://www.tandfonline.com/doi/abs/10.1080/13501763.2013.781818

Svimez (2010) Rapporto 2010 sull’economia del Mezzogiorno, Il Mulino

Svimez (2014) Rapporto 2014 sull’economia del Mezzogiorno, Il Mulino

Trigilia C & Viesti G (2016) La crisi del Mezzogiorno e gli effetti perversi delle politiche, Il Mulino (1)

Viesti G (ed.) (2000) Mezzogiorno dei distretti, Donzelli

Viesti G & F Prota (2007) Le nuove politiche regionali dell’Unione Europea, Il Mulino

Wostner P & Slander S (2009) The effectiveness of EU Cohesion Policy: are EU funds really additional? European Policies Research Centre (69)
https://www.eprc-strath.eu/uploads/eprc/documents/PDF_files/EPRP_69_The_Effectiveness_of_EU_Cohesion_Policy_Revisited.pdf