The Location of the Italian Manufacturing Industry 1871-1911: A Sectoral Analysis: (session 1: contributed lectures)

SESSION 1: Contributed lecturesInternational audienceUsing a new dataset on value added at 1911 prices at province level for 12 industries, we analyze the spatial location patterns of manufacturing activity in Italy during the period 1871-1911. We test the effect of domestic market potential and factor endowment, focusing on water supply. The results show that, as transportation costs decreased and barriers to domestic trade were eliminated, Italian provinces became more and more specialized, and manufacturing activity increasingly concentrated in a few provinces, mostly belonging to the North-West part of the country. The estimation results corroborate the hypothesis that both comparative advantages (water endowment effect) and market potential (home-market effect) have been responsible of this pro cess of spatial concentration. The location of some traditional industries characterized by a low capital-lab or ratio (such as clothing and wo o d) was mainly driven by water endowment, while the lo cation of fast growing new sectors characterized by a medium/high capital lab or ratio (such as engineering, metal-making, chemicals, textile and paper) was mainly driven by the domestic market potential