The Impact of Institutional Factors on Economic Development of Backward Regions in Italy

Mezzogiorno — southern part of Italian peninsula together with Sicily and Sardinia is relatively backward to north part of Italy (North). North is well industrialized region having the same indicators of growth as high industrialized countries of Western Europe. Economic development of Italian backward regions seems to be impossible in market economy without wide range of government economic policy instruments. The government action is not only traditional intervention- education and public works. Public works were incorporated to general plan of creation of social overhead capital (infrastruttura). What more, there were published some bills on credit and financial facilities, on facilities in taxes and location of private firms; some institutions were established in this aim. But these incentives has taken partial success Then the mixed corporations (public-private) was compelled to invest 60% of their investment in South. We have to make allowances for nationalized firms also. In this state of affair government and mixed corporations investment are in the relation fifty-fifty to investment of private firms. Government planning changed from investment in social overhead capital and agriculture dissipated in all over the regions and of little economic effectivness (some of them beated the air), to investment in all sectors of regional economy and to concentration in the „industrial development areas" and „industrialization nuclei". In this second stage of development economic effectiveness is better but only part of population enjoys this situation. During this process of development income per capita in South has grown more than twice from 1951, rate of labor force in agriculture dropped from 60% to 40%, rate of industrial sector product in product of South has grown from 27% to 35%, living conditions of population were meliored to some extent. But disproportion between South and Nord did not vanish. The way of South development make new model of growth, different from neoclassical one. Influence of interest motive is limited to private firms. Government makes its action through system of incentives (as in French and British planning), but what more — it has created a range of its own institutions which have to fill the government decisions.Digitalizacja i deponowanie archiwalnych zeszytów RPEiS sfinansowane przez MNiSW w ramach realizacji umowy nr 541/P-DUN/201