Dependency or subsidization? An input-output analysis of the interconnectedness of regional growth models in Italy

Our Assistant Professor in Political Economy Dr Donato Di Carlo has co-authored a new paper in the Socio-Economic Review with Sinisa Hadziabdic and Lucio Baccaro, which demonstrates the applicability of the growth model framework at the regional level using Italy as a paradigmatic case of persistent regional inequalities to test two theories of center-periphery relations between Northern and Southern Italy: the dependency theory and the subsidization theory.

Abstract

"This article demonstrates the applicability of the growth model framework at the regional level. Focusing on Italy as a paradigmatic case of persistent regional inequalities, we test two theories of center-periphery relations between Northern and Southern Italy: the dependency theory and the subsidization theory. Using EUREGIO regional input-output tables between 2000 and 2007, we decompose the GDP and GDP growth of Italian regions into final demand components and economic sectors. The results highlight the importance of distinguishing between static and dynamic analyses. The former reveal a greater reliance of the economy of the Southern regions on the public sector, corroborating the subsidization perspective. By contrast, the latter indicate that in 2000–2007 Southern Italy’s GDP growth was driven by low value-added exports to Northern regions, buttressing the Gramscian dependency argument. We link changes in regional growth models to the impact of EU fiscal policy rules."