The Missing Link?: Trust, Cooperative Norms, and Industrial Growth in Italy

Despite recent research about the link between social capital and economic growth, the degree to which social norms influenced the first phase of Italy’s regional economic divergence remains largely unexplored. A methodology based on a multifaceted definition of social capital, employing data about charity, mutual aid, and crime permits estimates of the differences in the strength of trust and cooperative norms across Italy’s provinces at ten-year intervals between 1871 and 1911. Further analysis of trust and cooperative norms via regression models of conditional convergence in industrial value added per capita shows that, although regional disparities in social capital were large during the late nineteenth century, they are not strongly correlated with industrial growth. Instead, the evidence indicates that human capital, innovation, and formal institutions were far more instrumental in determining the economic fortunes of Italy’s provinces before the World War I.