The economic divide in Italy

Italy as a country has a steep gradient in economic prosperity. The further south you go, the poorer the regions become. Why is this? It is commonly believed that the north’s closer ties to trade with the rest of Europe, the Middle East, and Asia were a major driving force behind the north becoming economically stronger.

One common assumption is that this started with the rise of Venice as a key European trading hub in the 1300s, but a new study showed that this divergence likely started three hundred years earlier.

The evidence: Churches.

Carla Salvo and Jacob Weisdorf realised that one way to demonstrate economic prosperity is to build large buildings, like churches. So, they measured the number of churches and their size built across Italy (did I mention that Friday posts are about the quirky side of economics and finance?).

The chart below shows the difference in church construction between the North and Centre of modern-day Italy (i.e. everything from the Alps to Rome) and the South and Islands. It is clear that starting around the year 1000, the square metres of churches per square kilometre of area started to rise much more quickly in the north than the south. And this can only happen if the church suddenly has more money in the north than in the south.

The north’s economic advantage seemed to drop twice in the Middle Ages (around 1300 and around 1500), which can plausibly be explained by black death pandemics reaching Italy.

What this shows is once again that more trade is better for the economy and leads to more prosperity, but can also lead to the import of pandemics, which hit a more open economy harder than a more closed one. In the long run, however, trade wins and regions in Italy that were more closed to trade have seen lower economic growth for centuries.

Not that this would be relevant to any current developments.

Growth differential for churches between north and south Italy