Top-down or Bottom-up? What the Cassa Del Mezzogiorno Reveals about Industrial Policy Design

Marie Ciampi, Sapienza University of Rome
Augusto Cerqua, "Sapienza", University of Rome
Guido Pellegrini, Sapienza University of Rome

This paper investigates how alternative implementation designs of industrial policy shape long-run local development, using the historical case of the Italian Cassa per il Mezzogiorno (1951-1991), one of the largest place-based development programs in postwar Europe. The analysis is motivated by renewed policy debates on strategic autonomy and industrial policy, which increasingly emphasize competitiveness but often overlook territorial disparities. In this context, the paper contrasts two stylized policy models: a centralized, coordinated “top-down” approach and a more diffuse “bottom-up” model in which financial support is distributed broadly without explicit spatial planning. The central research question is whether, holding overall public funding constant, differences in policy design and governance structures influence long-run economic outcomes. To address this question, the study exploits institutional heterogeneity within the policy itself. Beginning in the late 1950s and especially after the mid-1960s, industrial development was partly organized through territorially defined "industrial consortia" that concentrated infrastructure, incentives, and administrative coordination. Municipalities inside these consortia were exposed to a coordinated implementation regime, while those outside received similar subsidies but without integrated planning. This internal variation provides a quasi-experimental setting that isolates the effect of policy design rather than spending intensity. Empirically, the paper combines newly digitized archival records from the ASET Historical Archive—covering firm-level industrial subsidies and public works between the 1950s and 1990s—with harmonized municipal-level census data from 1951–1991. These data allow reconstruction of long-run local trajectories and sectoral investment patterns. The identification strategy relies on a difference-in-differences framework estimating dynamic treatment effects between consortium and non-consortium municipalities. By focusing on variation within a single policy environment, the paper contributes to the literature on industrial policy design and place-based interventions, providing new evidence on how coordination, governance, and spatial targeting shape development outcomes in lagging regions.

No extended abstract or paper available

 Presented in Session 130. State Institutions and Development