Ilaria Mariotti, Politecnico di Milano, Dipartimento di Ingegneria Gestionale, Milan, Italy, Alessandra Faggian, University of Reading, Economics Department, Reading , United Kingdom
THE DETERMINANTS OF FIRM LOCATION AND RELOCATION IN THE ITALIAN MEZZOGIORNO - A MICRO-LEVEL ANALYSIS (assigned to theme A)

Long-distance relocation from the centre-north to the Mezzogiorno has become a less common phenomenon since the 1950s-1960s. Business investments in the South have always been promoted by the regional incentives. In 1950-1980s the Intervento Straordinario encouraged new industrial settlements in the South, mainly large state-owned plants, by providing direct assistance in the form of subsidies; in 1992-2000s the new Aid Policy (Programmazione Negoziata) and Law 488 promoted southward relocation of Italian and foreign SMEs as well as the development of local business initiatives. In particular, the two measures of the Programmazione Negoziata subsidising long-distance relocation are the Program Contract and the Area Contract (from now on AC). The purpose of this paper is twofold. First, to identify the location/relocation determinants of firms that have been AC grant recipients; second, to investigate the commonalities and differences among firms that invested in different areas and the role played by so-called “pull” factors in the location/relocation process. In order to achieve our goal, we used a micro-level analysis on a sample of 254 firms and implement a factor and cluster analysis. The results of this analysis support the EU debate about the utility of financial aid schemes to foster the development of depressed areas, although in recent years, there has been an increased emphasis of framework measures and on regional strategy development and a reduced stress of regional incentives. After an historical overview on the relocation of Italian firms in the Mezzogiorno in 1950-2000, and a brief description of the policy measures promoting the ‘external’ investments, the paper focuses on the firms that have been AC grant recipients in 1998-2003. Descriptive statistics and factor and cluster analysis are presented and, by way of conclusions, the results are discussed.

submitted 2005-06-14 17:13:34.860

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