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.
Read PDF – FB049ItalianEqualizationMarch07draft
