Regional growth with spatial dependence: a case study on early Italian industrialization

This paper estimates a onditional β-convergence model of labor productivity growth in Italy's manufacturing industry during 1871-1911, accounting for spatial dependence. The empirical evidence is based on a recent set of data at provincial (NUTS 3) level on manufacturing value added at 1911 prices, and a new set of data on human and social capital, political participation, and infrastructures. By focusing on a country and a time when the agglomeration forces and spillover effects advocated by the new economic geography were only starting to operate, we investigate a particularly interesting case study. Our results suggest that human capital, a cooperative culture, and initial productivity in neighboring provinces explain much of the geographical variability of productivity growth in manufacturing in ineteenth-century Italy.