Back to old happy days? The Italian government has decided to set up a new Cassa per il Mezzogiorno, a former development Agency for the southern Italian regions. This initiative, strongly supported by the Finance Minister, Giulio Tremonti aims to take back control on expenditure due to the inefficiency of the regions to manage EU funds.
The Casmez was created in 1950 with an initial allocation of a billion lire for a period of ten years, with 66% of the funds earmarked for major rehabilitation of contaminated sites and 20% for roads and sewage networks.
Between 1951 and 1992, the equivalent of 140 billion euro was granted to projects for the Mezzogiorno. Svimez, an Italian research institute for the Mezzogiorno, argues, however, that, between 1950 and 1989, transfers represented in real terms (in purchasing power standard of 1989 prices) about 2.5 billion on annual average, the equivalent of 0,7% of gross National Income. This is less than what the State transfers each year to pay for the deficit of the national railway company. But this expenditure is off budget, in other words it is additional to the normal transfers made by the State to all Italian regions.
The old Cassa was abolished in 1993 by the Italian Budget Minister, Beniamino Andreatta, due to serious budget problems. It left however a huge backlog of unfinished projects which absorbed a few billions of euros. In reaction to the crisis of the development policies for the Mezzogiorno, a new regional policy was set up in 1998 and led by Carlo Azeglio Ciampi, a former Treasury minister who became President of the Republic and Fabrizio Barca, an economist at Bank of Italy. It was meant to provide a strategic direction to investments with an integrated programming framework associated with defined , measurable objectives. This new approach was supported vigorously by the European Commission albeit with some criticism on the overambitious objectives, notably on growth targets: this would have implied huge increases in efficiency of public investment which never happened.
It is evident that the Mezzogiorno has been a big failure. Despite a sustained trend of investment over more than half a century, gross domestic product in per capita terms is still 43% lower than that of the Centre-North of Italy. The ratio between cost and results is, therefore, very low.
We should ask ourselves whether this ‘revamped’ body is really useful: will it truly serve the interests of the citizens and improve their daily lives? Will it be accountable vis-à-vis the tax payers? The experience to date of the former Cassa and the other bodies which came after, such as Sviluppo Italia has shown that this has not been the case.
I am not sure we need other structures to lead development policies from the centre. The risk is that it would inevitably be captured by the same lobbies and parties which prevailed in the past. There is no reason why this should change under current circumstances. We do not have at the moment any details on how this will actually work, but I am rather incline to believe that aid will continue to be delivered as before without any clear and transparent criteria and without a sound evaluation process which will ensure the relevance and the effectiveness of the investment projects.
The main problem of the Mezzogiorno is the lack of effective institutions to enforce market rules, but more simply the Rule of Law. There cannot be any sound development process if the mafias are still prospering and control a growing part of the economy- by controlling (or influencing) institutions, such as procurement mechanisms. Young skilled people are migrating massively to the North and abroad due to the lack of opportunities.
On the other hand, we need to exploit the underused human potential which exists in the Mezzogiorno. We must rely on the ‘creative class’ of the (few) entrepreneurs, craftsmen, men of art who can bring innovation and creativity. This is our hope to restart a ‘virtuous circle’ but there are still too many blockages from a system of power which is not subject to any effective control mechanisms. Democratic accountability which means true responsibility seems to belong to another planet.
The Casmez was created in 1950 with an initial allocation of a billion lire for a period of ten years, with 66% of the funds earmarked for major rehabilitation of contaminated sites and 20% for roads and sewage networks.
Between 1951 and 1992, the equivalent of 140 billion euro was granted to projects for the Mezzogiorno. Svimez, an Italian research institute for the Mezzogiorno, argues, however, that, between 1950 and 1989, transfers represented in real terms (in purchasing power standard of 1989 prices) about 2.5 billion on annual average, the equivalent of 0,7% of gross National Income. This is less than what the State transfers each year to pay for the deficit of the national railway company. But this expenditure is off budget, in other words it is additional to the normal transfers made by the State to all Italian regions.
The old Cassa was abolished in 1993 by the Italian Budget Minister, Beniamino Andreatta, due to serious budget problems. It left however a huge backlog of unfinished projects which absorbed a few billions of euros. In reaction to the crisis of the development policies for the Mezzogiorno, a new regional policy was set up in 1998 and led by Carlo Azeglio Ciampi, a former Treasury minister who became President of the Republic and Fabrizio Barca, an economist at Bank of Italy. It was meant to provide a strategic direction to investments with an integrated programming framework associated with defined , measurable objectives. This new approach was supported vigorously by the European Commission albeit with some criticism on the overambitious objectives, notably on growth targets: this would have implied huge increases in efficiency of public investment which never happened.
It is evident that the Mezzogiorno has been a big failure. Despite a sustained trend of investment over more than half a century, gross domestic product in per capita terms is still 43% lower than that of the Centre-North of Italy. The ratio between cost and results is, therefore, very low.
We should ask ourselves whether this ‘revamped’ body is really useful: will it truly serve the interests of the citizens and improve their daily lives? Will it be accountable vis-à-vis the tax payers? The experience to date of the former Cassa and the other bodies which came after, such as Sviluppo Italia has shown that this has not been the case.
I am not sure we need other structures to lead development policies from the centre. The risk is that it would inevitably be captured by the same lobbies and parties which prevailed in the past. There is no reason why this should change under current circumstances. We do not have at the moment any details on how this will actually work, but I am rather incline to believe that aid will continue to be delivered as before without any clear and transparent criteria and without a sound evaluation process which will ensure the relevance and the effectiveness of the investment projects.
The main problem of the Mezzogiorno is the lack of effective institutions to enforce market rules, but more simply the Rule of Law. There cannot be any sound development process if the mafias are still prospering and control a growing part of the economy- by controlling (or influencing) institutions, such as procurement mechanisms. Young skilled people are migrating massively to the North and abroad due to the lack of opportunities.
On the other hand, we need to exploit the underused human potential which exists in the Mezzogiorno. We must rely on the ‘creative class’ of the (few) entrepreneurs, craftsmen, men of art who can bring innovation and creativity. This is our hope to restart a ‘virtuous circle’ but there are still too many blockages from a system of power which is not subject to any effective control mechanisms. Democratic accountability which means true responsibility seems to belong to another planet.
It comes to my mind the words of A.Gramsci in 'La Questione Meridionale' (1921): 'The Mezzogiorno does not need special laws or any special treatment. It needs a general policy, external and internal, which is inspired by respect of the general needs of the country, and not by particular political or regional tendencies' "*. Maybe we should think, as suggested by Gianfranco Viesti*, about abolishing the Mezzogiorno.
* G.Viesti, Abolire il Mezzogiorno, Edizioni Laterza, 2003
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