Mario Menegatti

This paper tests for the existence of neoclassical and/or technological catching up across Italian regions in the last three decades. The test is performed making use of a model based on the decomposition of output growth, similar to that proposed by Dowrick - Rogers (2002). The results imply that while the neoclassical convergence mechanism has occurred, the technological mechanism has failed. A possible explanation of the evidence found is that the regions initially endowed with better technology were subsequently characterised by a greater number of innovations and a higher share of GPD spent on research expenditure, which enabled them to maintain a substantial technological gap. These results suggest the policy conclusion that complete convergence across Italian regions requires the promotion of technological transfers and an increase in R&D expenditure in the least developed regions.

This paper examines the relationship between inequality and growth in the Italian regions in the period 1990-2004. Our results support the conjecture, formulated by the most recent economic theory, that greater inequality in the distribution of personal incomes reduces real growth. Furthermore, a detailed examination of the possible influence mechanisms of inequality on growth shows that both the credit rationing and the social instability channel are relevant in explaining the empirical evidence considered. Our analysis ultimately suggests that a decrease in income inequality in the Southern regions, achieved through adequate redistributive policies in the area, might contribute to reducing the lag in the economic development of the Mezzogiorno.