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An Executive Summary
Decades of interventionism have failed to address the economic disparities between Italian regions.
Instead of closing the gap, over time Italy’s powerful central government has engaged in policies of equalization that have made conditions worse for poor regions.
A very expensive “Fund for the South” merely expanded rent-seeking and public interference in the economy.
Despite significant political pressures for reform, the system of equalization and the negative incentives it creates are entrenched.
Attempts at fiscal equalization between regions have done nothing to spur needed development in the South.
A bias towards public infrastructure for “have not” regions has expanded dependency and criminality.
Efforts to equalize employment have driven poorer regions into unproductive activity and accentuated the dominant role of the private sector in the North.
Wage equalization prevents the South from attracting more private investment.
A better solution lies in a less powerful, decentralized state and free markets.
Full Backgrounder in PDF