44th Congress of the European Regional Science Association: "Regions and Fiscal Federalism", 25th - 29th August 2004, Porto, Portugal
Among the reasons underlying the slow economic convergence of some regions towards the national and the European Union average, the strong gap in technological endowment and innovation capacity has been indicated as one of the most important factors. The requirements of the current ‘knowledge economy’ and the contribution of the Information and Communication Technology (ICT) to socio-economic change are very likely to have a significant impact upon regional differentials in the Union: so far, however, it is rather unclear whether the new paradigm will spur greater socio-economic cohesion or, on the contrary, stronger territorial polarisation. This paper looks at the geographical distribution of ICT-producing small and medium enterprises (i.e. with less than 100 employees) in Italy, comparing locational patterns - as well as other crucial structural indicators - with labour productivity levels. Ultimately, the objective is to shed some light on the role that ICT-producing sectors might have on regional gaps in the Italian economy, traditionally characterised by geographical polarisation and imbalances which are among the sharpest in the “Europe of regions”. The first result of our analysis (carried out by using experimental micro data) is that a clear linkage seems to emerge between high labour productivity and the IT industry. This is in line with the insights of the economic theory of technical change, suggesting that IT-producing sectors are those where gains in productivity are by far the most evident. As expected, the geographical location of firms accounts for a good deal when looking at labour productivity levels across the sectoral range, casting some concern on the development perspectives of the Italian regional divide.