In the last twenty years, all Italian regions have grown at a much slower pace than other European regions. And the North-East, once called "the locomotive of Italy" struggles and fails to pull the country on a faster path of development.
La slow growth it is Italy's real disease, a disease which is undermining its economic and social health, with repercussions on political stability. In fact, if in Italy in 2000 the per capita GDP was 22% higher than the European average, twenty years later it is 6% below. A retreat which, albeit with varying degrees of intensity, does not spare any Italian region. Nor those that started from higher levels of GDP per capita: the inhabitants of Lombardy had a GDP 62% higher than the average European citizen, after twenty years the advantage dropped by two thirds, to 23%; Emilia-Romagna did worse, going from +51% to +13%. Nor those that already started in 2000 from GDP levels below the European average: in Campania the per capita GDP was 18% lower than the EU average, in 2019 it was 39% lower; in Sicily it was 22% lower and after almost twenty years the difference stands at -42%.
The slow growth is the knot that will face the winners of the next election, and the programs of the candidates must be examined on the ability to untie this knot. Otherwise campaign promises will either be ignored or will aggravate the disease, accelerating the decline.
Italian regions are losing positions in the European ranking of well-being
Over the last twenty years, all Italian regions have grown at a slower pace than other European regions, especially the leading regions. A trend that has also united the regions of the North-East, which were once considered the "locomotive of Italy" for their ability to drive the national economy.
Il European average GDP per capita it went from 24.175 euros to 32.277, with an increase of 33,5%. In the same period, the Italian area with the highest growth rate is Bolzano (+18,1%), while all the other Italian regions grew by less than 10%. Per capita GDP is the main measure of material well-being.
The comparison between the per capita GDP of Italian and German regions in the period 2000-2019 it provides an interesting overview both for the regions that started from higher values and for those that in 2000 had lower values than the Italian average. The comparison with the German regions is interesting for several reasons: some areas of Germany, such as Bayern and Baden-Württemberg, have often been taken as a benchmark by the regions of Northern Italy for their manufacturing vocation; in 2000 Germany had, like Italy, a strong gap in the indicators of development between advanced regions (those in the West; in Italy those in the North) and backward (the Länder of the East; in Italy the regions in the South); moreover, in 2000 Germany was considered the sick person of Europe, due to its slow growth, like Italy now; finally, the two countries share a strong export vocation.
Some examples. L'Oberbayern, the German region that hosts Munich, among those considered a benchmark for the regions with a high manufacturing vocation in Northern Italy, grew by 27,5%. Stuttgart, in Baden-Württemberg, which started from GDP values paired with those of Lombardy and slightly higher than those of Emilia-Romagna, sees the per capita GDP grow from 38.890 to 50.530 Euros (+29,9%), while the two Italian regions recorded, respectively, variations of 4,8% and 3,7%.
The difference in speed between the Italian and German regions is even more marked if a comparison is made between the territories that started out, in both countries, from low per capita GDP values. Chemnitz, in Saxony, which had per capita GDP values that were among those of the Calabria and those of the Sicilia, between 2000 and 2019 managed to grow by 48,1%, while the two Italian regions recorded an increase of 3,7% for the first and 1% for the second.
The dynamics of the GDP just described led to a sensitive sliding down all regions Italians in the ranking by GDP per capita. Lombardy loses 20 positions, Emilia-Romagna 26, Tuscany 35, Veneto 37 and Piedmont 51. Umbria shows the worst trend: -78 positions in the ranking. In the South, Basilicata "stands out" and manages to lose "only" 30 positions. Lazio lose 34.
And the Covid? The regions most affected by the pandemic, in terms of number of cases, are those that have also suffered the most from an economic point of view. In 2019, per capita GDP in Italy was 96% of the European average, in the year of the pandemic it stood at 94%, moving away by two percentage points from the European average. More intense variations, caused by the pandemic, are found in Emilia-Romagna (from 117% to 113%), in Lombardy (from 127% to 123%) and in Veneto (from 109% to 105%). The southern regions, on the other hand, recorded less intense variations (from 62% to 61% for both Campania and Puglia, from 59% to 58% for Sicily).
The "trapped" regions are not only in Italy
Italian regions are not the only ones in Europe to have experienced a prolonged period of slow GDP growth and modest productivity gains, linked to low job creation or even loss.
Slow growth can become a real trap from which it is difficult to get out. This is supported by four economists (Andreas Diemer, Simona Iammarino, Andrés Rodríguez-Pose and Michael Storper) in a recently published work (The Regional Development Trap in Europe). The “Regional development trap” describes the situation in which a region loses economic dynamism in terms of income, productivity and employment, and underperforms not only its national but also its European peers. The analysis conducted on European regions for the period 2001-2015 shows that the risk of falling into the development trap is higher among the regions of countries such as France, Italy and Greece but also for some old industrialized regions of the Nordic countries and the United Kingdom (included in the analysis even if outside the EU). Conversely, the risk of being caught in the development trap is low for Central and Eastern European regions, including Germany.
The regions that find themselves trapped live in an uncomfortable situation: on the one hand, their production costs are too high to be able to be competitive in the production of goods and services low added value; on the other hand, the quality of their human capital, combined with radical innovation capacity, proves insufficient to rival that of leading regions in Europe, which would then remain unapproachable in the production of technologically advanced and knowledge-intensive goods and services.
How do you get out of the trap?
Starting from the factors that have traditionally generated growth (economic structure, physical capital and infrastructure, human capital and characteristics of the workforce, economic geography and institutional quality) it is possible to go in search of the characteristics that unite the European regions in a trap. It is a purely descriptive analysis, but illuminating for some associations that emerge from it.
With regard to the economic structure, it appears that, among the regions trapped or at risk of being trapped, in the period 2001-2015 the variation in the added value generated by industrial sector was lower than that recorded in the other regions.
Another characteristic concerns the growth, in the economy of the trapped regions, of the weight of the added value generated bynon-market services (mostly public and private services in the welfare, health, education and defense sectors), and this seems to be true, in particular, for medium and high income regions such as most of northern Italy. So, the role of the manufacturer in a region and its variation over time appear to be factors to pay attention to when analyzing growth processes.
Also the demography plays a role against the trapped regions, especially those characterized by a different level of income such as those of Northern and Central Italy. The dependency ratio, i.e. the percentage ratio between the non-working age population (0-14 years and over 64 years) and the working population (15-64 years), worsens, signaling a growing weight of the non-working age population in trapped regions. This suggests adopting policies in favor of young workers rather than the elderly (early retirement); and aimed at education and training, rather than raising social security annuities, finding a new balance in welfare spending, today much shifted in favor of the elderly.
Many of the problems of the "economically trapped" regions, especially those characterized by medium-high incomes, have not received much attention in recent years. The risk is of underestimate human and social impoverishment, as well as economic and knowledge-based, which perpetuates the condition of a trapped region. The citizens of the regions who remain trapped in the long run lose the ability to elaborate visions and projects aimed at future development, self-feeding the conviction of being cut off from the growth processes and this, therefore, generates in them the social and political resentment that leads to compensatory rather than rewarding growth initiatives. A real trap. The vote on September 25th puts Italian citizens in front of a really complex choice.
°°°°The author is a senior researcher at the Nord Est Foundation
I was replying to your report, but everything gets deleted all the time, so I can't express my opinion.