The Italian Variety of Capitalism and Its Constraints on Regional Development

Since the second half of the 90s, Italy has slowed its pace of growth and Italian firms have reduced their innovation capabilities and the gap between the most dynamic regions (North-Centre Italy) and the more backward regions (Southern Italy) has further broadened. The paper focus on institutional factors that triggered territorial disparities, bringing together the literature on varieties of capitalism with the debate on regional development. Adopting a qualitative and quantitative methodological approach, we highlight the national and regional institutional factors that have framed a dysfunctional institutional environment for regional development processes. In particular, we will show how these institutional architecture created three major weaknesses: a) the constraints for innovation and the knowledge transfer, b) the decline of firms’ productivity and c) the lack of local collective competition goods. We will show how this three major weaknesses hindered regional development and promoted the rise of territorial disparities.