Economic Growth and Social Capital in Italy

Abstract

We find strong convergence of per capita incomes among the Italian regions during the 1960s and 1970s. Convergence is faster, and equilibrium income levels higher, in regions with more social capital, using any of three measures: an index of civic community, the effectiveness of regional government, and citizen satisfaction with regional government. Our evidence also supports the idea that the post-1983 increases in regional dispersion of per capita GDP are due to the increased autonomy of regional governments being used more effectively in regions with higher levels of social capital. Both results confirm Putnam's view that social institutions matter, while also supporting a version of conditional convergence that makes catching-up a function of the size of the productivity gap between the richer and poorer regions.