Geography and Regional Economic Development: The Role of Market Potential in Italy, 1911-2011
Geography and Regional Economic Development: The Role of Market Potential in Italy, 1911-2011

Author(s): Francesco Sama
Subject(s): Social Sciences
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Regional disparities; Economic development; Market potential; Italy 1911-2011; North-South
Summary/Abstract: This article analyses the evolution of regional economic inequalities in Italy from 1911 to 2011, focusing on the role of market potential as a determinant of economic development. The Italian case is particularly relevant for two reasons: First, the process of industrialization has significantly widened the gap in GDP per capita between regions; second, it allows us to examine whether factors such as market potential have influenced and exacerbated regional development differences. Using methods from New Economic Geography (NEG), the study quantifies market potential and integrates it with variables such as industrialization, education and urbanization to explain income differences between Italian regions. The results show that market potential is a key variable for understanding regional differences in development. Despite improvements in the transport sector, the South's greater distance from the main domestic and foreign markets is the main obstacle to its economic development.

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