No. 1503 - Place-based industrial policies and local agglomeration in the long run
This study evaluates the impact of the industrial development area (IDA) incentive policy, implemented in the 1960s and 1970s to promote economic growth in Southern Italy. The IDAs were groups of municipalities within the territories covered by the Cassa per il Mezzogiorno that were identified as suitable for fostering industrial agglomeration. The causal effect of the policy is assessed by comparing the economic outcomes of municipalities within the IDAs with those of neighboring municipalities, using census and administrative data over the period 1911-2011.
The IDAs had positive and persistent effects on the agglomeration of productive activities. This persistence is explained by the development of services, including innovative ones, even though they were not a direct target of the incentives. In the long run, wages were also higher in IDA municipalities, due to greater human capital accumulation and higher firm productivity. The success of the IDAs appears to be linked to the decision to concentrate on areas with the highest potential for development, unlike other interventions run by the Cassa per il Mezzogiorno.
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18 November 2025
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