The Outlook for Southern Italy

in the Year 2000





"Italy ends at the Garigliano," said Francesco Forti1 in the middle of the 19th century, and this small river still marks the boundary between Lazio and central Italy, Campania and southern Italy today. Carlo Levi went even further in the title of his famous book, Cristo si e’jermato ad Eboli (Christ Stopped at Eboli). Christ stopped, not in the sense of staying there awhile, but rather that Eboli, in the Province of Salerno southeast of Naples was far enough for Him and He did not want to go further.

If Italy stops at the Garigliano, what begins there? What is its past? And most importantly, where is it going as we approach the third millennium of the Christian era? These are the questions I will try to address here.




The first question is easy. Southern Italy or "the Mezzo-giorno" is usually defined as continental southern Italy from the Abruzzo south to the tip of the "boot", plus Sicily and Sardinia (although some exclude the two south-central regions, Abruzzo and Molise). It is an area that comprises about 40 percent of Italy’s land area and 33 percent of Italy’s population. But, as we shall see, it represents a much lower percentage of Italy’s principal macroeconomic indices, except, unfortunately, unemployment.

Despite the stereotypes that come to us through television and the movies, Southern Italy is rich and varied both geographically and culturally. Everybody knows Capri and the Amalfi coast, but the coastline of the Gargarno Peninsula in Puglia, the Costa Viola in Calabria and the Aeolian Islands off Sicily should be equally famous. Everyone knows Vesuvius and Mt. Etna, but impressive mountain scenery is also to be found in the Apennine mountains in the Abruzzo and in the wild and little developed Pollino and Sila ranges in Basilicata and Calabria.

Culturally, southern Italians are proud of their rich heritage: The ruins of the Roman city of Pompeii are universally known, but fewer visit the National Archeological Museum in Naples which contains most of the finest treasures from Pompeii, or the incomparable Roman mosaics of Piazza America in Sicily? How many know that one gets a better picture of ancient Greece by visiting the archeological sites of Magna Grecia in Paestum, Agrigento, Segesta, Selinunte and Syracuse and the museums in Syracuse, Taranto and Reggio Calabria than by visiting Greece itself?

The Norman civilization in Sicily gave us the magnificent cathedrals at Monreale and Cefal with with their breathtaking Byzantine mosaics. In the South the Norman/German empire of Frederick the Second (Stupor Mundi) was in many respects the most modern state of its time. Even the much maligned regimes of the Spanish Viceroys and the Bourbons contributed a great deal culturally from the baroque city of Lecce in Puglia to the magnificent palaces (and art collections) of Capodimonte in Naples and Caserta to achievements in industry and transportation. One of the earliest planned industrial towns was San Leucio for the silk industry, and continental Europe’s first railroad ran from Naples to Portici.2

Finally, in music the South has given us Cimarosa and Bellini, the San Carlo Opera in Naples, Enrico Caruso and in the modern era, Peppino di Capri. More recently, "the Three Tenors," Cecilia Bartoli or Andrea Bocelli, give a great deal of attention in addition to famous operatic arias, to haunting, passionate and lyrical Neapolitan songs.


The History of the Problem of Development


With all this in the Mezzogiorno, why is there a "Southern Question" in Italy, what are the aspects of the problem, and what has been done and is being done about it? There has been a "Southern Question" ever since the deposing of the Bourbons and the unification of Italy in 1860. Although Garibaldi’s legions were greeted joyfully by many Southerners, to many others the northern regime of Victor Emanuel II seemed like a hostile invasion which looted the treasury of the Kingdom of the Two Sicilies, devastated the heavily protected local industries, and reduced Naples from the fourth largest city in Europe and the capital of a kingdom to a provincial town.3 True, the South was poor, largely agricultural, with a semi-feudal society, and infested with crime and corruption, but the immediate effects of unification did little to improve the situation for the average citizen. It is not surprising that the mass emigration from southern Italy started after unification and lasted until the 1920s. The socio-economic situation in the South did not change in a major way under Fascism. Mussolini’s regime did make some progress in combating the Mafia in Sicily, but American forces strengthened it again during World War II.4

After World War II, however, and the return of democracy, the Italian government and intellectuals began for the first time looking at the "Southern Question" in a systematic way. In accord-ance with economic development theory at the time, it was felt that endogenous factors were insufficient to get self-sustaining economic development underway in southern Italy. Only through the introduction of exogenous resources, through government spending and infrastructure projects could economic development get underway.

The most well-known effort to promote economic development in the South was the Cassa per il Mezzogiorno established in 1950. The Cassa provided public sector infrastructure investments such as roads, water projects, etc. In addition, the government promoted investments in the South through credit subsidies and tax advantages.

The results were very mixed. Certainly, some of the investments brought rural villages in the South into the modem world for the first time. The Naples-Reggio Calabria autostrada was certainly one such project. On the other hand, much of the money was misallocated for political reasons such as dams which were not connected to irrigation projects or municipal water systems. "Cathedrals in the desert" such as the planned but never built Gioia Tauro steel mill became notorious. Noted historian Denis Mack Smith, writing in the late 1960s quoted estimates that "a good third" of the Cassa’s funds were completely wasted.5 Industrial development was not very successful. On the whole it was state-controlled firms which moved south. It was also capital-intensive rather than labor-intensive industries which located there because skilled labor was lacking, while at the same time officially sponsored credit made capital cheap. The result was to leave southern unemployment little improved.

This situation led to another period of emigration from the South. This time it was internal migration to the North of Italy, about two million people in the late 1950s and early 1960s.6 (There was also a significant emigration to the other member countries of the European Common Market and Switzerland.) The emigration did reduce unemployment in the Mezzogiorno, but created social problems in the North, "Rocco and his Brothers." By leaving behind the young, the old and women, a whole new set of social problems was created in the South.

Despite these difficulties, the 1950s and 1960s were a positive period for the Mezzogiorno and for all Italy. A rising tide, as the saying goes, lifts all boats. During this period, the gap in income levels between the Center-North and the South narrowed.

Things changed for the worse, however, in the 1970s and 1980s. Money continued to be poured into the South, but with less positive results. Corruption increased, organized crime grew stronger and public funds were increasingly used for political purposes, rather than for economic development. The weakness of the productive system in the South combined with a political system in which votes could be exchanged for favors meant that there was an incentive to seek a redistributive income, such as a public sector job, a pension, a subsidy or a government construction contract.7 This situation reinforced the power of established interest groups, which opposed social change and institutional reform. The interconnected networks of clientelism, welfare dependency, corporatism and organized crime combined with the growing inefficiency of public administration. The result, according to a recent study by Italian economist Silvio Goglio, has been, "a vicious cycle in that weak local communities and institutions (that is a weak civil society) constitute an institutional and organizational vacuum that has been filled by the system of values and incentives for redistributive behavior dominated by the business-politics-crime network, which inevitably generates distorted economic forms."8

While all this was widely known in Italy, it was not until the tangentopoli (bribesville) scandals broke in the early 1990s that the extent of the problem was disclosed. (It should be noted, however, that the scandals, which destroyed the Christian Democrat and Socialist Parties and eliminated a whole political class, were first uncovered in Milan, not in Naples or Palermo. In short, political corruption in Italy is a national and by no means an exclusively southern Italian problem.)


The Situation Today and the Outlook for

the Start of the New Millennium


The tangentopoli scandals have had a significant impact on the Mezzogiorno. One result has been a reduction in government resource flows to the South: fewer government jobs, fewer subsidies and a large cutback in government-funded construction projects which in some provinces were a principal source of economic activity. In part the reduced spending was a response to the outcry, especially by the Northern League and northern Italians

generally, against wasting more public funds in southern Italy. In part it was also due to the budgetary stringency required of the Berlusconi, Dini and Prodi governments to meet the deficit targets of the Maastricht Treaty on European Monetary Union.

As a result Mezzogiorno has fallen further behind the North economically, as can be seen by the latest statistics reported in Il Sole 24 Ore:9

] While at least temporarily the link between voters and corrupt politicians has been for the most part broken, public administration, particularly in the South, is proving resistant to reform. Government civil servants, having become accustomed to receiving favors (bribes) for doing their work, feel that they have little incentive to make any decisions or take any actions. Since it is almost impossible to fire them, many civil servants feel that the safest action is to take no action. They are aided in this stance by a complex and inefficient legal system (some 150,000 laws and regulations to follow) and an overlapping bureaucratic structure. Catania’s center-left reform mayor, Enzo Bianco, cited 14 separate permissions needed merely to move a bus stop.


The North-South Divide (Part I)


Comparison of Principal Macroeconomic Indicators


Cumulative Percentage Mezzogiorno Center-North

Growth 1992-97


Gross Domestic Product 1.7 8.5

Family Consumption 3.5 5.8

Gross Fixed Investment -23.9 -0.5

Employment -7.4 -0.9

Underground Employment 31.3 12.6

(as a Percentage of Total

Employment in 1997)




The North-South Divide (Part II)


Comparison of Principal Macroeconomic Indicators


1992 1997


Per Capita Gross

Domestic Product 58 54.5

(Mezzogiorno as a %

of the Center-North)

Unemployment Rate

Mezzogiorno 16.3 22.6

Center-North 6.2 7.4

Exports (billions of Lire)

Mezzogiorno 19,100 38,900

% of Italian Exports 8.9 9.6

% of Gross Domestic Product 5 8.2

Center-North (% of Gross

Domestic Product) 17.5 24.8



A concrete example of the inefficiency of Italian bureaucracy might help: in 1996 the U.S. Navy needed approval from the town of Castel Volturno near Naples to put up a temporary building for a year to house the Headstart Program on a piece of land already containing the dependent elementary school. The mayor indicated that he wanted to help but said that he had to get the approval of the Ministry of Foreign Affairs in Rome since it involved NATO. The Ministry of Foreign Affairs took the view that it was an educational rather than a diplomatic matter and forwarded the file to the Ministry of

Education. The Education Ministry opined that since it involved construction rather than didactics, the question should be referred to the Ministry of Public Works. That ministry, too, declined to get involved and sent the file back to the Mayor with the comment that it was the city administration’s responsibility to make the decision. But was it? The Mayor then stated that by law he still needed clearance from a number of national government agencies including the Ministry of Cultural Assets (because ancient artifacts might be encountered on the property), the Port Authority (because Castel Volturno is a port) and the Forest Service (because coastal pine forest land, which this had once been although it now was without trees, is under their jurisdiction). More than a year transpired, no action was taken: the Navy gave up and made other arrangements.

The partial decentralization of the government under the 1970 law granting limited authority to regional governments has not worked very well in practice. As Goglio has pointed out, it has given rise to "a proliferation of bureaucratic apparatuses without introducing robust autonomy or political participation."10 This can be seen in the overlapping roles of municipality, province and region. When the different levels are controlled by opposing political groupings, deadlock is often the result. For example, the center-left administration of the city of Naples and the center-right administration of the regional government of Campania have disagreed on plans for a major urban renewal program for the Bagnoli district of Naples, the site of a closed steel mill. As a result after several years, the whole project is still under discussion. In general, southern Italian local and regional governments also have a very poor record in coming up with development projects. In 1996, Italy managed to spend only 30 percent of its entitlement to European Union money to help disadvantaged regions (mostly the Mezzogiorno). Bureaucratic ineffectiveness and a lack of technical project-planning skills in addition to political rivalries are the causes of this inability even to collect handouts.

The Northern League, and indeed many in the North of Italy want to move to genuine federalism, including removing control over much of government spending from the national government (Roma ladrona — Rome the big thief). This type of decentralization would require nothing less than a complete overhaul of the structure of the state. For example, who would be responsible for law and order in a federal Italy? The Polizia di Stato whose responsibilities already overlap with the Carabinieri? New regional police forces? Special police forces such as the Finance Police? Unfortunately, given current practice, the answer would probably be all of the above, and only a new layer of bureaucracy would be added. Moreover, an expert on the Mezzogiorno, economist Alfredo Del Monte, has concluded that the administrative reform of the 1970s, which gave additional powers to regional governments led to increased corruption in nearly all of Italy (not just in the South) by increasing the margin for autonomous decision making by bureaucrats and politicians.11 Thus, further administrative and fiscal decentralization without an improved civic culture would provide the opportunity for more corruption in the Mezzogiorno and increase the risk that municipal and even regional, governments would come under the influence or even control of organized crime.

The most serious problem facing the Mezzogiorno is crime. It is not petty crime — although that is a problem, as it is in most large cities — but organized crime which has such a stultifying grip on much of the Mezzogiorno, especially the Camorra in Campania, the ‘Ndrangheta in Calabria and the Mafia in Sicily. Some progress has been made in putting the crime bosses behind bars, but the ensuing violence between rival gang lieutenants seeking to gain control of territory has resulted in a record number of murders in Naples and other cities. In 1997, after an innocent woman walking her child home from school in a Naples middle class neighborhood was killed in the crossfire of a Camorra shoot-out, Mayor Antonio Bassolino asked for 500 army troops to guard temporarily public buildings and consulates to free up more national police and Carabinieri to perform patrols and investigative work. Organized crime shakedowns of merchants and industrialists in the South are a major deterrent to domestic and foreign investment. In addition, the weakness of the financial sector -- four of the largest banks in the South posted combined losses of $4 billion in 1994-96 — encourages loansharking, much of which is controlled by organized crime. Finally, the poor economic situation and the dearth of legal employment opportunities give organized crime powerful tools for recruiting new adherents to the gangs.

On the brighter side, the removal of the old corrupt political class in the wake of the tangentopoli scandals has led to the election of a new group of dynamic, and thus far apparently honest local officials, especially in the large cities. Among them I would note Naples’s twice elected PDS major, Antonio Bassolino: Palermo’s anti-Mafia mayor of La Rete party, Leoluca Orlando; and Catania’s center-left mayor, Enzo Bianco. At times, Bassolino and Bianco, perhaps rhetorically, have called for a "partitio dei sindaci," (a mayors’ party), to call attention to the special needs of Italy’s big cities north and south. Bassolino and Orlando have the potential to play a role on the national political stage, and indeed, Bassolino was appointed Minister of Labor in the of new government of PDS leader Massimo D’Alema. The challenge is to be at the same time a national spokesman for the Mezzogiorno and the major of Naples.

What did the government of Romano Prodi do to deal with the problem of the Mezzogiorno and what are the first steps of the D’Alema government? Prodi launched two initiatives, "territorial pacts" and "area contracts." Both of these vehicles were intended to stimulate economic activity in the South by increasing involvement and coordination among regional, provincial, and municipal officials, unions, and the business community. The first was to encourage new private sector initiatives with limited government assistance and funding. The second was to permit limited local departures from nationally-negotiated wage rates.

The results to date have been disappointing. The territorial pacts have lacked sufficient funding and/or have been paralyzed by local political infighting. The area contracts have not been popular with the unions which have generally resisted attempts at increasing labor market flexibility — despite the fact that over 30 percent of workers in the Mezzogiorno are employed in the underground economy where there is total flexibility in wage rates and there are no benefits. The Governor of the Bank of Italy, Antonio Fazio noted in October 1998 that of the 412 initiatives launched under the territorial pacts/area contracts umbrella, 68 had been abandoned and only 18 had reached the point of being able to disburse funds.12 Fazio also repeated the call for greater labor market flexibility. The Prodi administration also provided funds to local governments in the South for "socially useful work." This program, similar to the Works Progress Administration (WPA) in the United States during the Depression, provides minimum wage public sector jobs to workers who have lost their positions.

Massimo D’Alema has indicated that the two priorities for his administration will be to tackle the national unemployment crisis and the problems of the Mezzogiorno.13 For the South D’Alema will move forward with the "Sviluppo Italia" agency, also called Agensud. The Agensud is a holding company with two roles: (1) territorial marketing: a promotional agency to attract northern Italian and foreign investment, and (2) support for local authorities in developing projects for European Union funding.

The Agensud is not to be a contracting office nor will it carry out infrastructure projects. Infrastructure funding and project monitoring will be the function of the Treasury’s Department of Development and Cohesion. The Industry Ministry continues to disburse the financial incentives for private investment in the Mezzogiorno. Press reports indicate that the labor Minister will be given some oversight responsibility for the Agensud and the interagency "Employment Taskforce". In the latter capacity he will be responsible for the administration of the area labor contracts in the South. How will this new team work together? Will the D’Alema initiatives be "deja vu" as some cynics are commenting? We will have to wait and see.




There are some encouraging developments which show that successful change can take place in the Mezzogiorno when circumstances are favorable:


- New investments: The American hi-tech firm EDS has made a major investment near Caserta. Mission Energy from California has made an investment in Sicily. The University of Pittsburgh has initiated a joint venture in Palermo to establish a state of the art cardiac treatment facility. American and Italian entrepreneurs using Danish equipment and Japanese financing have launched a wind power project in Avellino Province. Fiat’s new automobile plant in Basilifata is at the cutting edge of technology and employs significant numbers of local workers although its linkages with local suppliers are still weak. BAA, the British Airport Authority, has made a majority investment in the Naples Airport, and German investors have turned the once-abandoned Gioia Tauro industrial site into a thriving container port.

- Petroleum: Significant oil strikes have been made in the Province of Potenza in Basilicata. Although energy prices are currently very low, some analysts are predicting a new energy shortage in the first decade of the next century. Such a development could bring considerable revenue and potential development to this part of the South.

- Tourism: This holds great promise for the Mezzogiorno. At the outset I mentioned just a few of the natural and cultural attractions that the South possesses. Much needs to be done to develop them, but a start has been made. In Naples, for example, a considerable effort has been made to restore historic churches and monuments and to develop user-friendly tourist itineraries. The newly refurbished Capodimonte Palace Art Museum, the National Archeological Museum in Naples and the archeological museum in Syracuse are now world class facilities — except for their still primitive museum shops. In a real sense, the Mezzogiorno’s future is its past. The Smithsonian Institution and other groups have started offering cultural tours in southern Italy. With millions of pilgrims coming to Italy for the great Christian Jubilee Year of 2000, the Mezzogiorno should be able to attract a good number of them. Additional lodging will be needed, however, to accommodate the expected influx.

- Education: This is the real key to positive change in the Mezzogiorno. A long-term educational investment to promote civic and moral responsibility will be just as essential to changing mentalities and breaking the hold of organized crime as are increased police and a more effective judicial system. This was also the view of Benedetto Croce — one of the Mezzogiorno’s most celebrated philosophers. In his 1924 work, History of the Kingdom of Naples, Croce concluded:14

Since history is a spiritual action, every political and practical problem has a spiritual and moral character. Every problem must be seen in this framework and be solved as best it may; there is no specific, complete remedy. The job is up to educators, by whom I do not mean schoolteachers or schoolteachers alone; we must all strive to be educators, each in his own circle, and educators, in the first place, of ourselves. In the face of such a task the individual has a humbling sense of his own limitations and of his need for help and support; he spontaneously turns to what I can only call prayer. . . . In searching for a political tradition in southern Italy I have found that the only thing in which it can fully take pride is its teachers and thinkers. It was they — the soul of the country — who accomplished whatever good was done in this country, whatever endowed it with decency and nobility, whatever gave it the vision and laid the groundwork of a better future and joined it to Italy.

The Mezzogiorno will remain part of a united Italy despite what the Northern League might say. It is a region of promise as well as of problems, and it is not clear which will dominate in the years ahead. We can only hope, as did Croce, that a new generation of southern Italians, educated both civically and spiritually, will lead the Mezzogiorno in the new millennium.




1. Quoted in Benedetto Croce, History of the Kingdom of Naples (Chicago: University of Chicago Press, 1970), p. 232.

2. For Information on San Leucio and the first railroad in the Kingdom of the two Sicilies see Antonio Ciano, I Savoia e il Massacro del Sud (Rome, Italy: Grandmelo’ s.r.l., 1996), pp. 65-71.

3. For a discussion of the immediate negative economic impact of unification on the Mezzogiorno see Denis Mack Smith, Italy: A Modern History (Ann Arbor: The University of Michigan Press, 1969), pp. 49-51. The noted Neapolitan historian Vittorio Gleijeses is quoted by Ciano in op.cit., 0. 62 with regard to the use of the treasury of the Kingdom of the Two Sicilies to restore the shaky finances of the new Kingdom of Italy.

4. Mack Smith, op.cit., p. 505.

5. Ibid., p. 506.

6. Ibid., p. 507.

7. Silvio Goglio, "The Crisis of the Italian Unitary State: An Economic Analysis," Mediterranean Quarterly (Summer, 1998), p. 85.

8. Ibid., p. 85. All of Italy is considered to have a weak civic culture, at least relative to that of the Anglo-Saxon democracies [See: Gabriel A. Almond and Sidney Verba, The Civic Culture (Princeton, NJ: Princeton University Press, 1963). Nevertheless, there is a considerable tradition of local self-government in parts of central and northern Italy that is generally lacking in the Mezzogiorno.

9. "Sviluppo e Mezzogiorno," II Sole 24 Ore, internet site,, October 20, 1998.

10. Goglio, op. cit., p. 82.

11. Alfredo Del Monte, "Fallimenti del mereato e fallimenti del governo: quale politica per il Mezzogiorno?," Meridiana, (n. 11-12, 1991), p. 142.

12. Rossella Lama, "Fazio: il Sud e’ ancora piu’ lontano," II Messiqgero, internet site,, October 20, 1998.

13. "Lavoro e Mezzogiorno nell’accordo programmatico del nuovo Governo D’Alema," II Sole 24 Ore, internet sit www.ilsole.24, October 20, 1998.

14. Croce, op. cit., p. 248.