Leaving the South Behind. Origins of the South - North Divide Divergence in the Mechanic Industry

Abstract

The origins of the South – North disparity in Italy are heavily debated. Recent research has attributed the start of this dualistic economy to the Italian industrial take off during the 1880s, after unification. Accordingly, industrial concentration in the North occurred because of the attraction that natural comparative advantages exercised on mobile capitals in that period. This thesis, on the other hand, shows that institutional continuities between the Kingdom of Sardinia and the Italian state in post-unitary decades constituted a fixed resource that attracted mobile capitals such as favourable state involvement, public contracts and greater credit availability towards Northern engineering firms. This qualitative case study has compared privatization contracts, public contracts and credit availability of Pietrarsa (South Italy) and Ansaldo (North Italy), the two biggest firms of post-unitary Italy, using Mill’s method of difference in order to identity the cause that determined Pietrarsa’s failure and Ansaldo’s success. These elements have been tied to the role of three main aspects of political continuity in the Italian state-building process: the extension of Sardinian legislation, continuity of Sardinian nobility and military ranks in the cabinet of the Royal Navy, and the continuation of the pre-unitary relationship between government and the National Bank in the new state. Ultimately, the factor in which institutional continuities played the greatest role was credit availability. The institutional continuity between the Italian state and the Kingdom of Sardinia characterized a fixed capital that manifested itself into significantly greater credit availability for the Ansaldo, a factor which, according to Mill’s framework, was important enough to determine the failure of Pietrarsa and the success of Ansaldo during the first two post-unitary decades. This type of fixed capital, therefore, is likely to have played an important role in the geographical concentration of Italian industries in the North during the first post-unitary decades which needs to be investigated.