The location of the Italian manufacturing industry, 1871–1911: a sectoral analysis

This study focuses on industrial location in Italy during the period 1871–1911, when manufacturing moved from artisanal to factory-based production processes. There is general agreement in the historical and economic literature that factor endowment and domestic market potential represented the main drivers of industrial location. We test the relative importance of the above drivers of location for the various manufacturing sectors using data at the provincial level. Estimation results reveal that the location of capital intensive sectors (such as chemicals, cotton, metalmaking and paper) was driven by domestic market potential and literacy. Once market potential and literacy are accounted for, the evidence on the effect of water endowment on industrial location is mixed, depending on the manufacturing sector considered.