Following the results of the recent elections, he has come to the fore again the theme of the South. It has been a long time since there was more talk in the public debate and in the political agenda of what remains the largest unresolved question of Italian development since Unification, and which heavily conditions the future of the country. And it wasn't discussed in the long electoral campaign.
THE CITIZENSHIP INCOME FOR THE SOUTH
After the vote, on which the choices of the voters of the South weighed decisively, a debate was opened on the 'CBI' as a winning proposal that would explain the results of the southern regions in favor of the Five Star Movement. Basically, yet another request for assistance.
It is a very reductive reading - and one might add even disrespectful - of the choices of the southern electorate. When the percentages of votes reach levels such as those reached in many areas by the Five Star Movement, it is evident that a large part of local society wanted to express a signal that goes far beyond the request for basic income: it is a signal that rather expresses a profound dissatisfaction with the functioning of public institutions in the southern regions.
THE DEVELOPMENT OF THE SOUTH AND THE PUBLIC INSTITUTIONS
In reality, it is precisely on this theme – public institutions – that an in-depth reflection should begin, grasping its fundamental connection with the crux of development. In other words, we should get out of the illusion – which has lasted for decades – that the question of the development of the South is only a problem of more or less appropriate economic policies, and of more or less adequate resources to be redistributed from the centre. Before the policies, the problem involves the institutions and the politics that conditions its functioning at the periphery but also at the centre. Moreover, the most recent directions of development studies, which focus on the issue of institutions, urge us to reflect in this direction.
Economic neo-institutionalism does not neglect the previous acquisitions, relating to the role of capital and investment, of technology, and finally of human capital in development processes, but tends to consider these factors as the 'proximate causes' or mechanisms through which development takes place. The crucial question becomes the followingWhat are the 'fundamental causes' that push some companies to improve their technological endowment, to invest in physical capital and to accumulate human capital by using it effectively? According to institutionalists, these causes have to do with institutions and culture. And it is on this ground that economics and sociology of development meet again. But what can this renewed attention to institutional factors mean for the development of the South?
Institutionalists believe that the development and consolidation of the market economy depend on 'good' economic institutions, in particular those which ensure non-arbitrary behavior by the public administration; ensure adequate protection of property rights, an effective fight against crime and judicial protection of contracts; they also promote education and scientific research, and ensure collective goods such as infrastructure and services, which are crucial for the performance of businesses and for the well-being of citizens and families (welfare). But what does the availability of these institutional requirements depend on for the development of a market economy capable of social cohesion?
THE GOOD INSTITUTIONS
Good economic institutions depend on the ones that Daron Acemoglu and James Robinson in Why Nations fail they call 'inclusive political institutions', i.e. open and pluralist political regimes, capable of limiting the power of restricted elites and encouraging active participation of members of society in choices, thus promoting citizenship rights. And they depend – I would also add – on cultural values congruent with these processes (as underlined by authors such as Douglas North and David Landes in the wake of the great German sociologist Max Weber).
When this congruence between values and norms, culture and institutions is achieved, truly inclusive political institutions can grow and the economic institutions that support the development of the market economy are affirmed and strengthened. On the other hand, the tendency of the elites to bend the economic rules to their interests by creating institutions of an 'extractive' type (what Weber called 'political' or 'adventure capitalism') is contrasted. The latter favor the appropriation of the product of economic activities by a privileged minority, with a low differentiation between political and economic elites, the creation and reproduction of areas of rent politically protected by the state.
THE INSTITUTIONAL READING OF THE SOUTHERN DAY
What can one suggest institutionalist reading for our unresolved issue of the South? It could urge us to focus more on the 'institution trap', the role of institutions as an obstacle to development and therefore also to review the design of policies in order to take this into account. And in a certain sense that is exactly what the results of the March 4th vote are urging us to do. Let's see then, in a necessarily schematic way, how to propose a reading of this type.
One might say that the local elites in the South have historically tried to bend the institutions to their particular interests formally in favor of the nation-state market economy. They have thus introduced strong elements of arbitrariness in the functioning of public policies, in the protection of property rights, in market competition, and have fueled a poor ability to offer collective goods for businesses and families and to fight corruption and crime. They were able to do it - and they can do it - because formally inclusive political institutions lacked for historical reasons those cultural (civic culture) and organizational (strong social and political pluralism at the level of civil society) requisites that could have steered their functioning in a direction favorable to development . But also because - it should be emphasized - the national elites, politically weak and challenged for a long time by forces that are not fully integrated into the national state, have given up and often give up opposing the extractive and predatory behavior of the local elites in exchange for the consent that they bring as a dowry for the center.
INSTITUTIONS: THE ORIGIN OF ERRORS
It should be noted that this distorted use of institutions had a strong acceleration, after the Second World War, with the construction also in our country of the welfare state and with the simultaneous growth of the powers and competences of local and regional governments. The latter found themselves in the South managing increasing resources redistributed from the center to guarantee citizenship rights such as those to education, health and assistance. recognized to Italian citizens regardless of their place of residence. But this has led to an inefficient and ineffective use of resources, often bent on the patronage and welfare needs of the local political intermediation circuits. In short, the redistribution of very substantial resources has produced perverse effects, fueling clientelism, welfarism, entrepreneurship dependent on politics, corruption and crime.
We know that in recent decades this has resulted growing criticism in the northern regions, which have partly financed the redistribution. In the face of such criticisms, one cannot limit oneself to reiterating that redistribution is the normal consequence of the attempt to realize citizenship rights throughout the country. Of course it is, but we must also ask ourselves whether resources are used efficiently and what consequences they have on the development process, whether they encourage or hinder it. This inevitably leads to the role of local institutions and elites.
THE ROLE OF CITIZENS – VOTERS
However, the low quality of institutions that hinders development is not only a problem of the 'supply' of the political elites, but also of 'demand' of the citizens-voters which in turn fuels an offer of assistance and patronage. In fact, as a reaction to the distorted use of institutions by the elites, and to conditions of economic and employment hardship, citizen-voters have developed and strengthened guidelines aimed at promoting adaptive behaviors (particularism, opportunism, lack of trust, clientelism and of favors from politics).
It should be noted that this is certainly not an anthropological flaw - as is sometimes polemically rebutted by those who see the reference to the lack of civic culture and more universalistic values as an accusation against southerners - but rather an adaptation that has its own rationale historically explainable. And which has also been accompanied for a long time by forms of mobilization and temporary outbursts of protest which have not, however, settled, as in other areas of the country, in more solid forms of organization of civil society and the growth of civic culture capable of soliciting a functioning of institutions more oriented towards solving collective problems.
THE “VICIOUS CIRCLE” OF INSTITUTIONS
It is clear that all this has fueled the 'vicious circle of institutions' (the trap mentioned above) conditioning in turn the behavior of local political elites and thus further hindering the impersonal functioning of the institutions, the non-arbitrariness of public decisions administration, the ability to fight crime, corruption and abuses and to produce collective goods, precisely due to the strong pressure of particularistic questions and interests. Hence a perverse spiral that wears out the effective potential of formally inclusive institutions in favor of a solid growth of the market economy and efficient and effective social policies (education, health care, assistance). However, we must not forget - as we said - the heavy responsibility of the center for this state of affairs, to the extent that it has tolerated and still tolerates this functioning of the institutions, and the use of public resources that derives from it, to profit from the consensus offered by the local elites.
NORTHERN READING AND SOUTHERN READING
It should also be noted that this analytical framework makes it possible to overcome the sterile contrast between two readings of the problem of the South that have often confronted each other in recent years. The 'northern' one which tends to attribute the main responsibilities to the ruling classes of the South and to the culture of the southerners and the 'southern' one which instead assigns them to the inability of the center to implement adequate aid and effective economic policies to support development, when he does not even accuse the interests of the North and their influence on national governments for a real and proper historical exploitation of the South, as in certain tendencies that have recently emerged in the key of a demanding or 'neo-Bourbonic' southernism.
Naturally, the interpretative framework that we have sketched is an analytical framework. Not all of the South is affected in the same way by these unfavorable conditions for development, and not all the elites move in an extractive and predatory key. The internal differentiation of the South is today even more marked than in the past, although the reference to the broader and more aggregated category of the South does not lose its validity. Obviously, however, it is very difficult promote solid development capable of standing on its own two feet without intervening on institutional conditions upstream of economic and social policies to support development; and also without carefully evaluating development policies in relation to the institutional context in which they fall – which in the case of the South it has not yet been possible to do effectively.
THE SOUTH AND POLITICS
It is clear that seen from this perspective, the problem of the development and consolidation of the market economy in a framework of social cohesion is a political problem even before it is a political one (as the best classical southern tradition recalls), which calls first of all, it is the responsibility of the center for the proper functioning of public institutions at the local and regional level. That is, bring to first plan the need to break the perverse pact that pushes governments to redistribute resources - ordinary and extraordinary - without bothering to supervise and to intervene on their effective allocation at the local-regional level in exchange for the consent offered by local elites characterized by 'extractive' behaviour. On the other hand, better policies, better designed, can in turn help politics. Of course, designing good policies is not easy. But the institutionalist perspective at least invites us to be more aware of the task and offers some suggestions in this direction.
First of all, we should not limit ourselves – as often happens – to indicating objectives to be pursued with economic and social policies, but it is necessary try to enter the 'black box' of policies and focus on institutional mechanisms that affect unsatisfactory results and that should be changed. This seems to me to be the real challenge for dealing with the issue of development today. From this point of view, let's take into consideration the main development policies (the European Funds and the Development and Cohesion Fund), but a similar argument could be made for the main 'ordinary' social policies.
REDUCE DISECONOMIES
A first suggestion that comes from an institutionalist reading could be summarized as follows: downstream economic operators should not be compensated for external diseconomies determined by the institutional context, but try to reduce the diseconomies themselves upstream.
Placing this constraint is important because the interventions aimed at qualifying the context through the endowment of collective goods generally have long times and widespread benefits; two characteristics that are hardly compatible with the constraints of local and national politics (which prefer the opposite: short times and concentrated benefits). It is no coincidence that attention then inevitably shifts – even more in a crisis situation – to measures that 'compensate' economic operators for external diseconomies, for the disadvantages of the context, such as incentives, tax and tax, etc.
These measures - as demonstrated by the history of the South itself, where they have been tested for a long time with little success - must be handled with care; they may be helpful in some cases, but often have perverse effects. They should therefore be chosen with particular care and caution, for example favoring innovation and internationalization rather than a mere static compensation of costs, which is equivalent to protection without prospects; and should be effectively combined with contextual interventions.
In general, it should to privilege precisely the policies that have as their object collective goods capable of reducing external diseconomies putting constraints upstream, and therefore trying to counter the orientation of local institutions tending to privilege, for reasons of immediate consensus, distributive policies that are more easily divisible but less efficient, if not heralding perverse effects.
The supply policies of tangible and intangible 'collective goods for competitiveness' they concern interventions that are even more important today for enhancing the resources available to the areas of the South, and for which the process of globalization creates new opportunities. Think, for example, of the environmental and historical-artistic heritage, of agriculture and agro-industry, and again of the potential advantages of the geographical position for logistics.
THE FUNDS AND THE REGIONS
An institutionalist reading also suggests that to increase the efficiency and effectiveness of European funds and related national funds such as the Development and Cohesion Fund (FSC) – potentially a significant amount of resources – it would be necessary an overall redesign of the governance mechanisms of policies to reduce dispersion and fragmentation and increase its impact on a few strategic objectives with a high leverage effect. This, in turn, would require a greater responsibility of the center both in the definition phase of the strategic objectives and in the allocation of resources through effective evaluation and control mechanisms of the implementation interventions carried out by the regional and local governments.
In Italy we have chosen to rely heavily on the regions as privileged interlocutors (as well as on the ministries) without envisaging a greater role of coordination upstream of the choices, and of control downstream of their implementation, to be attributed to the minister for territorial cohesion (or in any case to a dedicated and authoritative structure at central level: the creation of the Agency for Territorial Cohesion went in this direction, but has not yet given the desired results).
The Minister for Territorial Cohesion, at present, has a role based mainly on moral suasion in relations with other interlocutors – regions and ministries – as well as in relations with the 'economic-social partnership' on which community regulations insist (but in the last government not even a minister with the relative powers was appointed for a long time).
Betting on decentralized institutional interlocutors (regions in particular) hasn't worked – despite the differences that have emerged and must certainly be recognized – because, given the characteristics of the political system, it has ended up favoring a fragmentation of resources, as well as a difficulty in spending, largely due to political-bureaucratic intermediation and the poor design skills. This does not mean – it should be emphasized – that all the interventions have been ineffective or have had perverse effects and that all local governments have behaved in the same way. Certainly, however, there has been a dispersion of resources and the overall impact has been unsatisfactory.
In other words, regional and local political systems highly sensitive to obtaining consensus through distributive mechanisms, often patronage, and welfare interventions, combined with the weaknesses and scarce autonomy of bureaucracies, have deeply conditioned the use of European funds and the FSC . In regional contexts, local interests have managed to 'capture' decision-makers more easily, pushing them towards the dispersion of resources and a distributive logic, while resources that are not easily divisible, such as infrastructures, are not built or are severely delayed. On the other hand, the government, for reasons of short-term political consensus, which I mentioned earlier, has difficulty engaging adequately in countering localist pressures.
It rather determines a sort of division of interventions between ministries and regions with an evident difficulty in planning resources in an integrated way both those of the European funds and the national ones (which, even on the basis of the FSC's founding legislation, should be planned as a unit, providing for the FSC the destination reserved for large tangible and intangible infrastructural interventions).
THE USE OF EUROPEAN FUNDS AND DEVELOPMENT POLICIES
Ultimately, the factors to which I have referred schematically leave a clear glimpse the risk that the new cycle of European funds 2014-20 will not be able to effectively counteract the defects already emerged in previous experiences: fragmentation, dispersion, delays especially on non-divisible interventions with widespread benefits (collective goods and protection and enhancement of common goods).
The first data available in terms of expenditure and progress of projects for the current cycle, also in comparison with other countries, confirm these concerns. It would therefore be necessary a profound reform of the governance of development policies that takes into account the specificities of the institutional context. But this is politically expensive, it takes time and an adequate political commitment, capable of involving regional and local governments and at the same time directing and controlling their work; on the policy side, it requires the choice of a clear selective strategy and an authoritative and qualified center of responsibility at the government level to support it.
All of this has not been achieved in recent years, despite the emphasis on the results achieved, precisely in order not to compromise the balance of consensus with the local powersthe. The crisis that hit the South even more deeply would have required instead a change, with a more selective and rapid use of resources not negligible that are potentially available. And it would have required a clear awareness that the country's development is strongly linked to that of the South. That didn't happen. An economic and social hardship and dissatisfaction with public institutions has therefore increased, which influenced the vote. However, it remains to be seen whether this dissatisfaction will find an answer in a change that places the issue of institutions at the center of the problem of development in the South.
* The author, professor of economic sociology at the University of Florence, was minister for territorial cohesion in the Letta Government and the text published here is that of his report at the seminar of the Group of 20 organized by Professor Paganetto in Florence
