Italy's North-South Gap Widens as Even Mafia Flees Mezzogiorno

  • Lombardy-Calabria wealth gap wider than Germany-Greece divide
  • Mafia crime bosses no longer investing in south, Saviano says
Photographer: Tony C French

A large portion of Italy is being left behind.

The economic gap between Italy’s prosperous north and its depressed south has widened so much that the difference between Lombardy near the Swiss Alps and Calabria in the toe of the boot-shaped peninsula is wider than that between Germany and Greece.

“With the latest recession, a whole chunk of the south’s productive structure has disappeared,” said Stefano Prezioso, head of forecasts at research institute Svimez, which seeks to promote industry in the south. “The process of decoupling that began in 2001 has quickened and it may now take many years to get back to a growth pace similar to the north.”

Italy has suffered through two recessions in seven years and its recovery is lagging behind other euro-area countries. That means a large part of the country’s population living in the south, known as Mezzogiorno, may not even see an improvement in economic conditions. Bank of Italy Director General Salvatore Rossi, who comes from the southern city of Bari, highlighted the issue in a Dec. 3 speech by saying the regional disparity is at a record and widening.

Successful companies in northern Italy were increasingly subjected to “contamination” by organized-crime groups, including those from the south, as the businesses tried to weather the effects of the nation’s recession, Milan-based Assolombarda, the Lombardy industrialists’ association, said earlier this year. Prosecutors have also said the Mafia and other organized crime gangs are moving more of their operations to the north.

Roberto Saviano, author of the international bestseller “Gomorrah” about the Naples-area mob, also highlighted the criminals’ northward move in an open letter to the government.

“Those who flee the south are no longer just those seeking hope in emigration,” Saviano said in the letter to Prime Minister Matteo Renzi in August in which he demanded government action. “Even the mafias flee the south now -- they do not invest but merely plunder.”

Ferrari, Luxottica

While there’s long been a wealth divide between the two parts of Italy, the economies expanded at roughly the same pace from 1995 to 2001, before starting to diverge around the time the country was making the transition to the euro. Today, the north remains the industrial heartland where brands such as Ferrari SpA and Luxottica Group SpA originated. In the south more than 18 percent of households,  or about twice the national average, experience difficulties with their water supply, according to national statistics office Istat.

The economic gap reached a high point in 2014, the last year for which data are available, according to Bloomberg calculations based on figures from Istat.

Renzi likes to tout the strength of Lombardy and neighboring regions, saying their overall economy fares better than Germany’s. Yet, he speaks only occasionally about the south, which consists of six regions and the islands of Sicily and Sardinia. The area is known as the Mezzogiorno, or noon, some say because at midday the sun faces south, and others say it comes from a southerly wind of the same name.

As of June, joblessness in the south exceeded 20 percent, more than twice the rate in the north and about 8 percentage points more than the national average. House prices have plunged since 2008 due to the financial crisis and show no sign of recovery. Finance Minister Pier Carlo Padoan reiterated on Dec. 1 that the government is considering a variety of measures for the poorer regions of southern Italy.

Weakening Recovery

Italy’s economic recovery, real but weakening, could leave the south without any growth for the eighth consecutive year, Prezioso said. In a report earlier this year, his Svimez institute, which is partly funded by the government, had forecast the area returning to economic expansion in 2015, though only barely.

Raffaella Tenconi, founder of London-based consultancy ADA, said the government could help sustainable development by looking at comparable economies with low per-capita gross domestic product and difficult business environments such as Serbia or other European Union candidate countries.

“This would mean introducing there a fiscal treatment that is as attractive as it is in those nations,” she said.

The chart below shows a tendency to seek jobs in public administration and traditional agriculture leading to a heavier contribution from those two sectors to the south’s GDP. In the north, the private sector’s contribution to the economy is higher.

There are some bright spots. Fiat Chrysler Automobiles NV hired more than 1,500 workers at its Melfi plant in the Basilicata region in the south to produce Jeep SUVs. The company plans to have shipped more than 80,000 Renegades to North America by the end of this year, according to the company’s Europe chief, Alfredo Altavilla.

Regional leaders are also counting on tourists wary of violence in north Africa coming to Sicily or Apulia instead. Yet, the expected influx has also highlighted the need for better transportation networks and other infrastructure improvements. The extra commercial traffic coming through the expanded Suez Canal in Egypt may make use of docks in Calabria’s Gioia Tauro port facilities.

Still, there’s a long way to go to escape the description offered by Svimez last year: “a land risking industrial and human desertification.”

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