Italian Infrastructure: Priorities for North and South Are Not the Same
The role of infrastructure in economic development is still controversial: there are research studies pointing toward very positive impact, and others that tend to demonstrate that infrastructure has almost no economic impact.
In Italy the debate has focused on the appropriateness of investing more in infrastructure either in the South, because of its relative backwardness, or in the North, because it's relatively more advanced and in need of removing external diseconomies that affect its international competitiveness. No matter if you talk transport, energy, water resources or telecommunications, infrastructure in the North and in the South respond to two different sets of development objectives. While in North the emphasis is on removing constraints impeding further development, in the South built infrastructure serves to create conditions of economic attractiveness for firms and citizens alike.
However infrastructure alone is not able to accelerate Southern development in a self-sustaining process: highways and airports, harbors and railways do not trigger a virtuous circle if demand coming from production and consumption entities is insufficient. Betting on the development of infrastructure in the South must thus be accompanied by public incentives in terms of the cost of setting up and doing business, of security, good administration, services to companies and households. Otherwise the risk is to build infrastructure irrespective of the implicit or explicit demand for the services the local economy can express (for example, in relative terms, the South has a larger endowment of transport infrastructure than the North!).
On the other hand, in the North reducing congestion and pollution in road networks, achieving security in energy supplies at reduced costs, better quality in water services are important for business competitiveness. In this case, demand is already existent and infrastructure aims at qualitative rather than quantitative improvement. Malpensa airport already exists and the challenge is not to build a new airport, but making its territory more accessible for global destinations; the high-speed train network must ensure faster international interlinking; development of clean energy sources must satisfy the objectives of environmental sustainability and lower energy costs, and so on. It is thus hard to imagine a single, common set of priorities between North and South in terms of infrastructure.
What's needed is to set distinctive objectives and deploy the right tools to evaluate them. For instance, cost-benefit analysis only makes sense in relative terms, but its usefulness is very limited if the political objective is to accelerate the economic development of a less advanced region. Otherwise the North will always end up being favored, and the South being penalized. We need more sophisticated tools, such as multi-criteria analyses, to frame the priorities for infrastructure in terms of the larger development needs of the country.