The curious case of the coexistence of two “access-orders”: Explaining the Italian regional divide

This paper uses the conceptual categories of Open Access Order (OAO) and Limited Access Order (LAO) developed by North, Wallis and Weingast (2009) to explain the origins and persistence of Italian NorthSouth economic divide since the country unification in 1861. We argue that, despite the existence of the same set of formal institutions, historically the North of the country progressively developed into an OAO, while in the South only an “horizontal” transition took place whereby it remained a LAO, with aristocratic privileges being substituted by rents allocated to lobbies and political clienteles. Using original data on crime and participation to elections and referendums, we show that this evolution was the result of the failure of the State, in the South, to acquire the monopoly over the legitimate use of violence and to operate as an efficient and credible coordination mechanism. With the support of data on education and female labour participation, we claim that this led to a much more unequal access to resources and opportunities, leading to a gap in income per capita which persisted over time and it is still visible today being unparalleled in the Western world.