Dependency or subsidization? An input-output analysis of the interconnectedness of regional growth models in Italy

Donato Di Carlo, Sinisa Hadziabdic and Lucio Baccaro

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This article demonstrates the applicability of the growth model framework at the regional level. Focusing on Italy as a paradigmatic case of persistent regional inequalities, we test two theories of center-periphery relations between Northern and Southern Italy: the dependency theory and the subsidization theory. Using EUREGIO regional input-output tables between 2000 and 2007, we decompose the GDP and GDP growth of Italian regions into final demand components and economic sectors. The results highlight the importance of distinguishing between static and dynamic analyses. The former reveal a greater reliance of the economy of the Southern regions on the public sector, corroborating the subsidization perspective. By contrast, the latter indicate that in 2000–2007 Southern Italy’s GDP growth was driven by low value-added exports to Northern regions, buttressing the Gramscian dependency argument. We link changes in regional growth models to the impact of EU fiscal policy rules.

Keywords: regional inequality; Europe; dependency; public expenditures; economic growth (search for similar items in EconPapers)
JEL-codes: P51 R12 R15 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2026-03-08
New Economics Papers: this item is included in nep-eur and nep-hme
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Published in Socio-Economic Review, 8, March, 2026. ISSN: 1475-1461

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