Planning Contracts in Southern Italy, 1986-1997: a Preliminary Evaluation

In this paper we analyse the so called “planning contracts” which were adopted by the Italian Government in 1986 to promote industrial development in the South, that is the least favoured area of the country. The paper is organised in two sections. First, we present a full and detailed picture of the planning contracts as they stood in December 1997, reconstructed on the basis of the CIPI (Inter-ministerial committee for industrial policy) and CIPE (Inter-ministerial committee for economic planning) deliberations and discuss the degree to which investment plans and objectives of regional policy coincide. Second, we attempt a stylisation by means of a simplified model. The aim of the exercise is basically to make some considerations of a methodological nature of the coherence between the contractual plan and the objectives of regional policy which should be pursued through the instrument of the planning contracts. The conclusions of our paper underline that interest in the planning contracts can be attributed to the offer of a public incentive which is "agile" and designed as far as possible to suit the specific case, so that it may attract productive capital from stronger areas to the less developed ones. However we suggest that the requisites of the planning contract need to be reformulated. In particular, the outpayments should be linked, at least in part, to progress made towards the objectives of the policy of technological and employment re-balancing. In this way the management will not “inflate” employment in the first period and reduce it when its contractual commitment expires. In this sense the ex-ante, initinere and ex-post evaluation mechanisms for the planning contracts would need to be thoroughly reconsidered.