Regional convergence and public spending in Italy. Is there a correlation?

The aim of this paper is twofold. Firstly, it examines the evolution of regional disparities among the Italian regions during the period 1980-2007. Secondly, the paper analyses the relationship between public spending and regional productivity growth. This analysis is based on the Regional Public Accounts (RPA), a detailed database which measures public financial flows at the territorial level for the period 1996-2006. Results show how the process of both σ and β convergence has mainly concerned labour productivity, while the convergence in per capita GDP has been very weak. The impact of public spending has been different, depending on the expenditure categories and the regions considered. While in the more developed regions of the Northern area of Italy we found a positive correlation between capital expenditure and growth, in the less developed Mezzogiorno the correlation was found only for current expenditure.