LD in Italy: Rich experience and big new challenges

Filippo Strati

1. INTRODUCTION

This paper reviews the emergence and evolution of local development in Italy, and discusses current challenges and policy orientations.

The relevance of local development in Italy needs to be seen in the context of the size, structure and diversity of the country. Italy is the fourth largest country of the EU 27 Member States in terms of population (12% corresponding to more than 60 million inhabitants). It produces 13% of the EU nominal GDP, having 19% of the EU total businesses and 11% of all employed persons. Small enterprises with 0-49 employees constitute 99% of all the Italian economic fabric and cover 69% of all employed people. There are big socio-economic variations between the North, the South and the Centre of the country.

The paper begins by sketching out the still evolving institutional landscape at national, regional and local levels (Section 2). It then presents a brief history of the three main components that contribute to local development in Italy: the gradual transformation of a top-down development approach focused on the “Southern Question” to widespread participatory planning and use of territorial pacts (Section 3); the industrial districts – from a spontaneous phenomenon to its institutionalisation (Section 4); and, the multiple and important roles played by the large and complex cooperative movement (Section 5).

The paper then considers the new challenges for local development arising from the main socio-economic impacts of the global financial crisis, as well as of the relevant austerity packages (Section 6), and concludes with an attempt to identify policy trends that may support local development in the future (Section 7).

Throughout this paper, data are derived from ISTAT (national institute of statistics), Bank of Italy, EUROSTAT and cited studies.

2. INSTITUTIONAL CONTEXT

There are 110 provinces and 8,101 municipalities that currently constitute local government in Italy. These authorities have delegated powers and they pre-existed the creation of the regions. There are 20 regions geographically distributed as follows:

• North: Piemonte, Valle d’Aosta, Lombardia and Liguria (North-West); Trentino Alto Adige, Veneto, Friuli Venezia Giulia and Emilia Romagna (North-East).

• Centre: Toscana, Umbra, Marche and Lazio.

• South (i.e. Mezzogiorno): Abruzzo, Molise, Campania, Puglia, Basilicata and Calabria; Sardegna and Sicilia (Islands),

Five regions have a special statute. Sicilia was the first region with an autonomous statute approved in 1946 before the Constitution of the Italian Republic (1948). Sardegna, Valle d’Aosta and Trentino Alto Adige (as the sum of the two autonomous provinces of Bolzano and Trento) followed in 1948, and Friuli Venezia Giulia in 1963.

Institutionalisation of the remaining (15) regions with an ordinary statute only took place with the regional elections held in 1970, very much later than foreseen in the Constitution (1948). However, the first large scale transfer of responsibility to the regions required more time (Law No 616/1977), while the “culture” of regional planning increased at different pace among the regions (Baldi P., Bruzzo A. and Petretto A., 2008). The largest set of institutional reforms began with a standing conference for cooperation between the State and the regions (Law No 400/1988), followed by a reform aimed at strengthening the role of local authorities (Law No 142/1990).

Active Regions introduced innovative processes of decentralisation at local level. These regional initiatives acted as catalysts of new important reforms at national level. In 1997, a series of national laws (starting with the “Bassanini” Laws No’s 59 and 127) reformed institutional mechanisms with the objective of modernising the State structure characterised by 140 years of administrative centralisation (Adorni D. and Magagnoli S., 2005; Bilancia P., Palermo F. and Porchia O, 2010). A permanent structure of co-operation between the national government and the regional and local authorities was also strengthened (Unified State-Regions Conference; Law No 281/1997).

A subsequent Constitutional reform (Law No 3/2001) recognised regional and local authorities as autonomous governments at the same level as the State, while councils of local authorities were introduced to support regional decision-making. The new institutional framework included fiscal decentralisation, for which regional and local authorities have financial autonomy (both in revenue and expenditure), national solidarity, equity and social cohesion.

The basic regulatory criteria were those of subsidiarity and the territorial dimension of issues and interests in order to allow citizens, actors, communities and authorities to solve problems. Vertical subsidiarity (between smaller and larger dimensions of decision making) was linked to horizontal subsidiarity, according to which the governmental and administrative levels favour the autonomous initiative of the citizens, both as individuals and in association, to implement activities of a general interest.

The reform attributed an exclusive legislative power to the regions in policy fields related to local development, such as: agriculture, industry, trade, craftsmanship, tourism, infrastructure networks (e.g. energy, water, mines, transport), housing and urban planning, training and employment and social services. A dual converging legislation between the State and the regions was established in policy fields that relate to inter-regional networks of services (e.g. health, education, scientific and technological research, labour protection, external trade, rural and saving banks) and infrastructures (e.g. land use, transports, energy, water and the environment). Exclusive legislative power was attributed to the State in citizenship rights, definition of basic levels of civil and social rights to be ensured throughout the national territory, migration policy, social insurance (e.g. pensions and unemployment benefits or the so called shock absorbing systems) and other nationally strategic fields such as defence, public order, protection of the environment, ecosystems and cultural heritage.

Fiscal decentralisation (Law No 42/2009 and subsequent acts) will be strengthened in the near future. All funding functions will be attributed to regional and local authorities. All the current allocations of financial resources from the State to the regional and local authorities will eventually end. Non-earmarked equalising funds will be created to help regional and local authorities with a weaker fiscal capacity.

However, key components are still missing such as the definition of basic levels of quality in social services to ensure civil and social rights throughout the national territory.

3. THE DEVELOPMENT OF PARTICIPATORY LOCAL DEVELOPMENT

For many decades the Italian strategy on development was largely focused on macro-economics, trying to tackle the “Southern Question” with “growth pole” type interventions. One example was the Cassa per il Mezzogiorno, which was a specific fund for the South established in 1950 and dissolved in 1984. Although the intervention produced some significant results especially in its first phases (Zazzaro A., 2010), its limited success was demonstrated by the amount of internal migration: 3,708,400 people from the South to the North between 1955 and 1974 (Pugliese E., 2002). This translates to one out of every four people living in the southern regions migrating to North.

With the dissolution of the Cassa per il Mezzogiorno, a new phase of participative planning started in the South. Programme agreements (accordi di programma) coordinated courses of action in an integrated manner between regional and local authorities, other public institutions and the State (Law No 64/1986). The framework reform on local authorities (Law No 142/1990) extended this approach to all the national territory as a model promoted by mayors, provincial and regional presidents to integrate plans with central public administrations and other public institutions.

Integrated programmes for urban re-qualification (programmi integrati di intervento) and for urban recovery (programmi di riqualificazione urbana) initiated the so-called complex spatial planning aimed at promoting development with environmental and social policies at a local level through participatory methods (Law No 179/1992). Another series of programmes (programmi di recupero urbano) strengthened these methods a year later (Law No 493/1993).

These innovative attempts coincided with the renewed path towards EU integration represented by the Maastricht Treaty (1993) and the 1994 – 1999 period of the EU Structural Funds. In 1994 the EU Commission launched several important Community Initiatives: URBAN to tackle social, environmental and economic problems present in urban agglomerations and LEADER to foster sustainable development in rural areas. The 1996 the EU pilot programme of territorial employment pacts also moved in this direction.

Beginning in 1986, the LEDA (Local Employment Development Action) Programme of the European Commission, allowed an analysis of experiences including those developed in Italy (LRDP, 1992, 1995 and 1995a). The final phase of the LEDA Programme consisted of a series of national synthesis seminars. The Italian seminar provided the following considerations (LRDP, 1996):

• regional (local) and national strategies should foster the incorporation of the employment dimension in every policy field, as well as the concepts of sustainable development;

• local development and employment initiatives need to be supported by a coherent and comprehensive (legal and operative) framework both at regional and national levels;

• fiscal regulations should be reformed in order to encourage sustainable economic activities (i.e. transferring taxation from labour to the environment);

• regions should act as catalysts in programming local developments to cope with the unbalanced situations between regions;

• both the regions and the State should stimulate partnership and networking as well as exchange of experiences, good practice, knowledge;

• subsidiarity should be strengthened both at national (in respect to regions) and regional levels (in respect to provinces and other local authorities).

Two important acts (Laws No 104/1995 and 662/1996) defined the Italian model for integrated and participative approaches, called negotiated planning (programmazione negoziata). This approach consisted of five institutional mechanisms: the institutional planning agreement (intesa istituzionale di programma) between national, regional and provincial governments to define a multi-year programme of common objectives; the framework programme agreement (accordo di programma quadro) to implement the measures functionally associated with the multi-year objectives; the territorial pact (patto territoriale) as an agreement between local authorities, social partners and other stakeholders (both public and private) to implement measures associated with specific objectives of local development; the planning agreement (contratto di programma) between public authorities, large enterprises, consortia of small and medium sized enterprises and representatives of industrial districts to carry out specific initiatives of negotiated planning; the area-based contract (contratto d’area) between public administrations (including local authorities), social partners and other stakeholders to foster new employment creation in territories whose development was lagging behind. These institutional mechanisms were innovative instruments to foster growth especially in disadvantaged regional and local areas through a bottom-up approach in contrast with the top-down approach of previous schemes.

Urban transformation companies (società di trasformazione urbana) fostered public/private partnership for urban renovation (Law No 127/1997). As the interdepartmental committee for economic planning (CIPE) became established (21 March 1997) the area-based contracts were “expression of social partnership”. The participatory approach was echoed in the neighbourhood contracts (contratti di quartiere) and was enforced as a tool to recover unsafe environments and urban decay while promoting employment creation and social cohesion (ministerial decree No 238/1997). The programmes also aimed at fostering urban renewal and local sustainable development (PRUSST, programmi di riqualificazione urbana e di sviluppo sostenibile del territorio, ministerial decree 8 October 1998).

Following the experience of the territorial pacts, a new mechanism was introduced to carry out measures co-financed under the EU Structural Funds in the 2000–2006 period: integrated territorial projects (progetti integrati territoriali) to foster coordinated implementation of and cross-sectoral measures in the Objective 1 regions (Molise, Basilicata, Campania, Puglia, Calabria, Sicilia and Sardegna). The Community Support Framework strengthened the role of institutional and social partnership as well as the role of a decentralised negotiated planning with the relevant stakeholders (the so-called concertazione) in regional development throughout the national territory.

A new generation of neighbourhood agreements strengthened the role of public/private partnership (Law No 21/2001) and the participation of citizens in decision making (ministerial decree 27 December 2001).

A national fund for under-utilised areas (FAS, Fondo per le aree sottoutilizzate; Law No 289/2002) replaced the previous instruments of financial support. FAS was given a multi-annual remit mirroring the programming cycle of the EU Structural Funds, while strengthening the mechanisms of negotiated planning and programme agreements. More recently, FAS become the fund for development and cohesion (Fondo per lo sviluppo e la coesione, Law No 88/2011).

The interdepartmental committee for economic planning (CIPE resolution No 26/2003) assigned full responsibility and competence for the territorial pacts to regional authorities and streamlined the planning agreements through coordination mechanisms between national and regional authorities.

Territorial planning was at the centre of the 2007–2013 National Strategic Reference Framework (NSRF) concerning the new period of the EU Structural Funds. A wide range of stakeholders participated in decision making processes. The attention was focused on enhancing local identities and potential while capitalising on the above-summarised experiences.

Between 1998 and 2010, 50% of the total amount of financial resources devoted to negotiated planning was attributed to territorial pacts, 33% to programme contracts and 17% to the area-based contracts, (DPS, 2011). The area-based contracts were 766, mostly in the South (86%). The territorial pacts were 220 with 85,330 people additionally employed. 70% of these pacts were located in the South, 19% in the North and 11% in the Centre. The EU-funded territorial employment pacts (TEPs) were also important, totalling 10 (nine of them in the South). As a national average, it was estimated that territorial pacts have concerned geographical areas where 47% of the overall Italian population lived, a ratio that reached 80% in the southern regions and was 27% in the remaining regions of the North and the Centre (Formez, 2003).

Although the Italian TEPs were efficiently carried out and created a trust-based climate among local stakeholders, weaknesses were noted especially in terms of actual participatory processes, while technical management tended to prevail (Gambaro L., Milio S. and Simoni M., 2004).

In the case of nationally-funded territorial pacts, weaknesses consisted in: weak common strategic orientation; lack of real ownership of the processes by the part of relevant stakeholders; scarce capacity to design coherent projects; limited attention to define the concerned territorial areas; insufficient links to existing measures; little integration of instruments; deficiency of public financing; uncertainty in procedures, timing and coordination; inadequate monitoring and assessment mechanisms; and, failure to reach the expected targets (Formez, 2003; MEF, 2003; Accetturo A. and De Blasio G., 2011).

Seventy eight(78)urban renewal and territorial sustainable programmes (PRUSST) were financed as a whole through framework agreements (MIT, 2010). They consisted of more than 12,000 interventions through balanced public/private partnerships. 41 agreements will last until 2020. The PRUSST experience showed innovations in traditional approaches through the concentration of financial resources on a smaller scale of action (e.g. provincial and municipal levels), public/private partnership, and the integration of social, environmental and economic dimensions according to the principles of sustainable development. Attention was also given to poverty and social exclusion issues. Mobilisation of local stakeholders and citizens’ participation were intended as a driving force for a multi-dimensional approach and policy integration processes. However, it was argued that the selection criteria of PRUSST were not consistent with the goal of sustainability (Bonifazi A. et al., 2003), while the latter became a term to identify financial steadiness and project continuity instead of long-term strategy to reconcile “humanity” and “nature”. Indeed, only 9% of the measures contained in the 78 PRUSST concerned the environment, while the ongoing results were assessed as insufficient notwithstanding the interest and participation in these plans (Corte dei Conti, 2003).

All these experiences allowed local actors to define local areas and “to build the territory” according to their needs, issues and identities, instead of traditional administrative boundaries and top-down decisions (Sparano V., 2005). However, it was noted that these initiatives were conditioned by procedural techniques, resembled improvised actions promoted by central government and were undertaken by the most efficient and dynamic local authorities (Palermo P., 2004). A bureaucratisation of the experiences was translated into formal procedures, pre-existing power relationships among local actors tended to favour traditional leaderships and territorial government institutions, reference to local actors and territory tended to be more similar to ritualistic practices than to pro-active development strategies (Governa F. and Salone C., 2005).

Several participatory processes of Local Agenda 21 should also be considered. They followed the 1992 Rio Declaration and other strategic documents such as the 1997 Gothenburg Resolution of regional policy ministers. An Italian document (the Ferrara Charter) was the basis for the national association of Local Agenda 21, founded in 1999 by nearly 40 regional and local authorities. Some surveys reported that 401 local authorities had activated Local Agenda 21 processes in 2006 (LA21-IT, 2010). In 2010, the membership of the national association of Local Agenda 21 reached 523, 72% made up by municipalities and 14% by regional, provincial authorities, mountain communities and local public consortia.

In 2010, this association elaborated the Charter of the Cities and Territories of Italy for the Climate in collaboration with the national associations of municipalities (ANCI) and provinces (UPI), while presenting 24 best practices carried out in Italy to implement 12 commitments towards an integrated and sectoral approach for territorial planning and local development (LA21-IT, 2010a).

Eight hundred and eighty-two (882) Italian local and regional authorities (33% of all participants) adhered to the 1994 Aalborg Charter of European Cities & Towns Towards Sustainability, while 136 of them (21% of all participants) signed the 2004 Aalborg Commitments to initiate local, participatory processes on sustainable development by identifying specific targets and time frames to monitor progress towards them. In early 2012, with 1,672 local authorities, Italy constituted the largest share of signatories (47%) of the 2008 Covenant of Mayors aimed at meeting the EU 20% CO2 reduction target by 2020 through sustainable energy action plans. 293 local action plans were prepared by the Italian signatories corresponding to 26% of all submitted plans at a European level.

Other networks should be added since they play an important role in the Italian scenario, such as those of the transition towns (26 municipalities), slow food (287 local sites), micro-credit (diffused in 8 regions) and ethic banks (covering all the national territory).

The role of municipalities was paramount in building and disseminating new patterns of local development based on local identities; their “immaterial”, productive, environmental and cultural heritage. A large number of quality labels certify local integrated systems of typical production, eco-tourism and environmental rescue of old villages (ANCI, 2011).

All the above-mentioned territorial initiatives developed by trial and error. They attempted to correlate several components of the local development complexity. They adopted several ingredients, some of them very interesting such as: inter-institutional cooperation between different public administrations, national and sub-national authorities; integration between top-down and bottom-up approaches; public and private partnerships; a multi-stakeholder involvement and citizen participation in decision-making.

Present endeavours utilise lessons from the past. This is the case of an Action Plan for Cohesion in the South agreed by the Italian government and the EU Commission at the end of 2011. By reprogramming the utilisation of the EU Structural Funds, the plan sought to avoid the risk of losing EU and national resources due to low institutional capacity in investment and spending. The focus is on vulnerable social groups and regional disparities. Priority areas are education, employment, social inclusion, civil justice, digital agenda and railway transport. The plan is constantly monitored and updated through the participation of regional authorities and other relevant stakeholders.

4. “THIRD ITALY” AND THE RISE OF INDUSTRIAL DISTRICTS

In the 1970s, awareness of a more diffused fabric of regional and local disparities increased. In the North/South dichotomy, several studies (Bagnasco A., 1977; Bagnasco A., Messori M. and Trigilia C., 1978) identified spatial dynamics formed by: small industrial firms (seen as marginal and highly dependent on large firms operating economies of scale); traditional craft-based industries (seen as pre-capitalistic activities in comparison with large firms acknowledged as technologically advanced); and, continuity between agricultural and industrial activities, home-based work, self-employment and entrepreneurship.

Strong links were discovered between extended families and small enterprises, but also between neighbourhoods and local communities where volunteer associations often organised social services and managed physical infrastructures. While the family was both a unit of consumption and a unit of production, social networks were the driving forces for flexibility, skills development and low-cost labour.

An intensive activity of social and institutional actors resulted in building consensus and regulatory mechanisms to prevent potentially social conflicts (Trigilia C., 1986; Criscuolo A., 2002). For instance, a close collaboration between trade unions, friendly societies, cooperatives and municipalities prevailed in the “Red Regions” (e.g. the left policy oriented Emilia Romagna, Toscana and Umbria). A similar pattern of collaboration was found in the “White Italy” (e.g. the centre policy oriented Veneto and Friuli Venezia Giulia) with a network of rural banks, agricultural organisations, cooperatives, friendly societies and charities linked to the Church. These governance capabilities were generally denominated as political “sub-cultures” and they provided a favourable socio-economic environment to spatially concentrated forms of small business development (Bagnasco A. and Trigilia C., 1985).

Comparisons between local areas showed three patterns: a central economy based on large scale mass production in the so-called industrial triangle of the north – western regions (Torino – Piemonte; Milano – Lombardia; Genova – Liguria); a marginal economy in the so-called underdeveloped South; and a peripheral economy formed by clusters of small firms and craftsmanship workshops in regions of the Centre (Toscana, Umbria and Marche) and in the regions of the North-East. The latter was called the “Third Italy” or NEC, the acronym of north-eastern and central regions (Fuà G. and Zacchia C., 1983).

Third Italy was defined as a Marshallian industrial district (Garofoli G., 1983 and Becattini G., 1988). The “conceptual image” (Bianchi G., 1984) was that of a territorial agglomeration of small firms, normally identified by product type, product components or process phases, held together by interpersonal links, a common “social culture” amongst workers, entrepreneurs and policy makers, surrounded by an “industrial atmosphere”, which circulates information, favours vocational training and facilitates the dissemination of innovation, thereby generating important flows of external economies to individual firms but internally coherent with local production systems (Becattini G., 1979 and 1987; Bellandi M., 1982).

Boundaries of the industrial districts were not easily defined due to geographical proximity, knowledge and social interrelationships, flows of external – internal economies and the continuity between communities and territorial agglomerations of small firms. The administrative districts did not necessary correspond to local clusters of small firms, while continuous modifications in the territorial economic fabric made it impossible to consider their boundaries fixed and unchangeable.

At the beginning of the 1980s, 61 industrial districts were identified (Sforzi F., 1990). In 2001, according to census data, the industrial districts (ISTAT, 2005) were 156, mostly concentrated in Marche, Veneto, Emilia Romagna and Toscana, which are the regions previously identified as the Third Italy or NEC: 49% in terms of local-area-units and 47% in terms of employed people.

The distinction between the three macro-regional patterns of development no longer accurately described the multi-regional development. Third Italy, in particular, showed a “diaspora” of communities in a variety of development arrangements (Bianchi G., 1984).

The first legal framework for industrial districts (Law No 317/1991) defined them as locally based territorial areas characterised by significant concentration of small enterprises with particular reference to the ratio between firms and inhabitants, as well as to the sectoral specialisation of the concerned industrial fabric. It was up to the regions to identify these local areas using criteria defined at a national level. Financial support and investment were provided to support technological and organisational innovation. In 1994 the national Federation of the Italian Districts was founded. National schemes favoured services development, information and communication technology (ICT) in the industrial districts, as well as administrative streamlining and simplification (Laws No 266/1997 and 140/1999).

More recently (Law No 266/2005), industrial districts were defined as voluntary associations of enterprises aimed at developing territorially-based systems of sectoral industries, at improving organisation and production efficiency according to the principles of vertical and horizontal subsidiarity also in collaboration with business associations. Further financial and normative supports were provided (Law No 296/2006). Rules were introduced to favour flexible networks of firms as mechanisms to strengthen industry clusters and chains, arriving at the legal definition of “network agreements” aimed at improving innovation and competition also at an international level (Laws No 133/2008, 33/2009 and 99/2009).

In 2008, 15 out of the 20 Italian Regions identified 201 production districts, 187 of which typically industrial and 14 in other sectors: 106 in the North, 54 in the South and 41 in the Centre (IPI, 2009).

Furthermore, technological districts were created to encourage cooperation between enterprises on innovative projects within two national operational programmes (2005–2007 and 2010–2012) co-financed by the EU Structural Funds. In 2010, the approved technological districts were 29 and five in a negotiation phase: 16 in the South, 12 in the North and six in the Centre as a total (Miceli V., 2010).

5. THE ORIGINS AND EVOLUTION OF THE COOPERATIVE MOVEMENT

The cooperative movement is usually associated with the so-called third sector. The third sector is also referred to as the social economy that includes besides cooperatives, mutual societies, non-profit associations, foundations, social enterprises and also charities. Only estimates exist on the number of people involved in the third sector. It is likely that more than 10 million volunteers participate in not-for-profit associations. Data (Euricse, 2011) show that 71,600 cooperatives (19.5% as social cooperatives) with 1,155,300 employed people (27.5% in social cooperatives) were active in 2008, representing nearly 7% of total enterprises and employment in Italy.

The third sector can be interpreted as a product of the “art of association”, a concept used by Alexis de Tocqueville (1838). In Italy this capacity to create not-for-profit and non- governmental associations is centuries old ranging from the Roman collegia and sodalitia, and the medieval guilds to arrive at the friendly societies (Società di Mutuo Soccorso). Before the unification of Italy, nearly 230 friendly societies existed and were concentrated in the North (Tomassini L., 1995). Several voluntary associations aimed at promoting education, the emancipation of labour, the establishment of banks for the people, artisan brotherhood and so on (Holyoake G. J., 1908).

The birth of the cooperative movement was closely linked to the friendly societies. Traditionally (Ianes A., 2011), the beginning of cooperative movement was in the North with the first consumer cooperative created in Torino (Piemonte, 1854). The combination of European experiences in the mid-1800s (e.g. in England the Robert Owen inspired consumption cooperatives – Rochdale Society of Equitable Pioneers, in France the utopian socialism inspired worker cooperatives, in Germany the Christian-inspired social credit banks) encouraged the Italian cooperative movement, which covered a large variety of sectors.

Friendly societies co-existed with charitable congregations, mainly organised by the Church. With the unification of Italy, a centralised model of public control was introduced for charitable congregations supported by the state funds (Law No 753/1862). The 1882 Commercial Code recognised cooperatives according to their mutual aims and governance principles. The friendly societies were officially recognised as providers of social insurance mechanisms to individuals, worker categories and social groups (Law No 3818/1886). This law remains operative.

In parallel, an important act (Law No 6972/1890), which lasted until 2000, introduced the public institutions for assistance and charity. The law represented a clear intervention of the state in social issues, while other acts introduced the first schemes of social insurance. The beginning of the Italian welfare state was recognised to be paternalistic (some assistance for the poor), sectoral (for some categories of workers) and motivated by public order reasons because of the risks of proletarian revolts (Cinelli M., 2008; Rossi E. and Zamagni S., 2011).

The rise of trade unions (in 1891 with the locally-based chambers of labour, Camere del Lavoro; in 1906 with the national Confederation of Labour) was important to claim universal labour and social rights, as well as it provided further support to the cooperative movement. The number of cooperatives tripled during the 1920s from nearly 5,000 in 1885, especially in regions where commitments of local authorities and solidarity networks (e.g. friendly societies, trade unions and catholic associations) constituted an interesting amalgam of human, social and institutional capitals (Borzaga C. et al., 2010).

With the rise of fascism (1922), systematic violence (including murders and property destruction) was used against trade unions, friendly societies and the cooperative movement. The main national cooperative organisations, as well as the national federation of friendly societies, were dissolved by law and one state-controlled body was created in 1926 under the fascist principles (the National Fascist Organism of Cooperation). However, the fascist institutionalisation did not slow down the increase in the number of cooperatives. They were used to tackle unemployment problems associated with the 1929 economic crisis. With the fall of fascism (1943), the cooperative movement regained its autonomy and initiated a new expansion. Immediately after the Second World War, cooperatives were estimated to reach some 12,000 with 3 million members (Zamagni V., 2006).

The Constitution of the Italian Republic (approved in December 1947) recognised the social function, mutual character and non-speculative role of cooperation. Parliament approved a basic reform of cooperation (Law No 1577/1947) that still constitutes a reference framework, based on solidarity and democratic principles and rules. In two decades (1950s and 1960s), the cooperative movement developed from a fabric of small artisan-based shops to structured small enterprises, as a consequence of the “Italian miracle”.

During the 1960s, important examples of associations, communities and cooperatives demonstrated the value of the third sector as a provider of social services for the most vulnerable groups. However, it was only with the creation of the Regions that the role of the third sector was recognised by a series of regional laws on social services.

During the 1970s, the slow-down in economic growth affected also the cooperatives but they were capable of maintaining and generating new employment and services. This was apparent during the 1980s when a twenty-year experience of worker takeovers of failing and bankrupt enterprises determined a new act (Law No 49/1985) to face the problem of redundant workers and to reform the cooperative sector with a stable credit system (Gheradi S. and Strati F., 1987). Cooperatives initiated also the provision of social and health care services (e.g. the first national assembly of social cooperatives was held in 1985).

Surveys and consultations on local employment initiatives were carried out at European level during the 1980s and they identified the significant role played by the cooperative movements, non-governmental organisations, other third sector associations and local authorities in several regions of Italy (Kuenstler P., 1985, 1986 and 1987). This was confirmed by regional studies (Strati F., 1987) and conferences (Regione Toscana, 1987). It was noted that all regions enforced laws in favour of the cooperative movement (Strati F., 1987a).

After ten years of parliamentary debate, an act (Law No 381/1991) introduced two main typologies of cooperatives: a) delivering social, health and educational services; b) producing goods and services in order to integrate disadvantaged groups. Another act (Law No 266/1991) reformed the volunteer sector.

Non-governmental organisations were recognised as democratic agencies of social utility (Law No 460/1997), documented as the most important act in the third sector history for Italy (Rossi E. and Zamagni S., 2011). The way was opened to welfare communities and welfare mix through a close collaboration between the public sector and the third sector based on horizontal subsidiarity, local and inter-local solidarity. A framework reform aimed at providing an integrated system of social policies and services (Law No 328/2000) was a catalyst for promoting social economy and fostering in all regions to involve stakeholders (e.g. volunteer associations, NGOs and social partners) in local planning and in providing social services.

An act introduced rules that recognised the social value, function and utility of associations (Law No 383/2000). Eventually, the definition of social enterprises (Law No 155/2006) clarified their social utility as having a key role in meeting collective needs and safeguarding general interests.

6. IMPACT OF THE CURRENT GLOBAL FINANCIAL AND ECONOMIC CRISIS

The crisis acted on structural weaknesses present in the Italian socio-economic fabric.

Regional disparities constitute a century-old process. Expressed in terms of income distribution and real GDP per capita, they have remained substantially unchanged (Vecchi G., 2011; Daniele V. and Malanima P., 2011).

Forty-five per cent (45%) of the population live in the North, where the largest share of the national disposable income (53% at current prices), real GDP (55%), labour force (50%) and employed people (51%) were concentrated between 2001 and 2009.

On the contrary, 54% of all unemployed and 69% of the poor were located in the South, where 36% of the population reside, having a lower real GDP per capita (between 44 and 39 percentage points (“pp”) less) than in the North and the Centre.

However, the global financial and economic crisis has heavily concerned Italy as a whole. Between 2008 and 2010, significant decreases were recorded in real GDP per capita (-7 pp) and in nominal disposable income per capita (-4 pp), while the cumulative inflation rate increased (+6 pp). Inequality in income distribution remained unchanged, meaning that 10% of households with the lowest income received 2% of the total income, nearly 11 times less than the 10% of households with the highest income. Net wealth concentration increased by 1.6 pp compared to 2008, meaning that the richest 10% of households owned 46% of the total household net wealth.

Italy presented in 2010 a 25% rate of people at risk of poverty or social exclusion and a 18% rate of persons at-risk-of-poverty after social transfers. Most vulnerable groups were children, young people, women, immigrants, the elderly and not-self-sufficient persons, the homeless, Roma and similar ethnic communities.

Between 2008 and 2011, there was an overall decrease in employment (-437,000 jobs). The number of legally employed immigrants increased (+501,000), while the loss of jobs concerning the Italians was almost the double (-938,000). The employment rate of immigrants decreased (from 67% to 62%) more than that of the Italians (from 58% to 56%). The unemployment rate of immigrants reached 12% (4 pp higher than for the Italians).

The crisis increased the number of “hidden unemployed” (i.e. redundant workers, many of them expected to lose their job), “underemployed” (i.e. part-time workers wishing to work more hours) and “potential labour force” (i.e. persons who could be seeking a job). Adding these social categories, the unemployment rate can be estimated to reach 22% instead of the official 8.4% in 2011.

At the same time, the NEET (not in education, employment or training) rate arrived at 24% for young people aged 15-34 years.

Precariousness characterised the majority of new employment, e.g. atypical and fixed-term labour contracts accounted for 76% of the new jobs created during the first semester 2011 (MLPS, 2011).

Social conditions worsened between 2010 and 2012. Wages decreased in real terms to a degree not seen since 1995. The household debt corresponded to two thirds of disposable income, which fell while the savings rate reached its lowest value since 1995.

Four austerity packages in one year (2011) resulted in significant cuts in pension schemes, in the state transfers to regional and local authorities (which provide essential services to their citizens), while major cuts in national funds relevant to local welfare systems characterised the last four years.

The risk is to reduce the role of the welfare state in Italy while maintaining the role of family as the primary “shock absorbing” mechanism and provider of social services. For individuals and households, the austerity packages resulted in additional costs, which may easily foster “compulsory familism” and individualism, while further relegating women to main carers for children and other dependant relatives. Women suffer in fact from structural gender discrimination. This can be found in lower activity rates (52%, i.e. -22 pp), lower employment rates (47%, i.e. -21 pp) and higher unemployment rates (10%; i.e. +2pp) than men in 2011.

7. LIKELY TRENDS TO SUPPORT LOCAL DEVELOPMENT IN ITALY: FIRST CONCLUSIONS

Important reforms were introduced in Italy during the last two decades to improve governance between and within national, regional and local levels of government. These reforms included aspects aimed at building processes of participative planning that combined bottom-up and top-down approaches, and modified the “centralistic” policy orientation of development. The present analysis showed their potential to increase institutional capacity and social capital, as well as to support social economy and the economic fabric necessary for local development with mobile boundaries within a polycentric Italy.

All these factors contributed towards transforming the conceptual image and the factual narrative of development in those of territorial systems, multi-actor and multi-level governance. The process of change was the result of combined flows of innovation between local, national and international dimensions. Examples can be found in: the UN strategic orientations towards sustainable development; the EU Treaties that foster citizenship and social rights as well as environmental consciousness; the EU 2020 Strategy challenges and targets. The European Commission proposals concerning community-led local development for the period 2014 – 2020 may support Italy to tackle its structural weaknesses. They can be summarised in regional disparities, imbalanced income distribution, risks of poverty and social exclusion, environmental decay, gender gaps and discrimination, job precariousness and segmentation in the labour markets, ethnic division of labour and discrimination against immigrants and ethnic minorities.

However, appropriate arrangements and procedures should take into account critical aspects of development in Italy, as suggested by several studies (Ciapetti L., 2010; Barca F., 2011; Italiadecide, 2011; Trigilia C., 2011). The following considerations can be made to foster more coherent and responsible strategies.

Decentralising through harmonisation

Universal criteria, integrated policies and targeted measures in Italy should be better connected. Overarching reforms should: reduce inequality in income distribution through a progressive fiscal system based on wealth taxation; shift taxes away from labour in order to stimulate new employment; reduce precariousness in labour markets and to improve labour rights; eradicate any discriminatory restriction (mainly against immigrants and ethnic minorities) from existing laws; introduce minimum income schemes embedded in local welfare systems, while refinancing the associated public funds; define basic levels of quality services necessary to ensure civil and social rights between different territories (as clearly established by the Constitution); stimulate an integrated efficiency between territorial networks to ensure access for all to quality services.

Making local development sustainable

A national plan is necessary in Italy to move from fiscal consolidation packages towards supporting regional and local plans that more decisively identify overarching objectives of sustainable development based on a unitary vision of territorial dynamics. Priorities are identified in the following policy fields. Urban and rural renovation, social housing, transport and infrastructures, social and health services should improve territorial quality and the livelihood of the concerned communities.

Sustainable management of natural resources should be applied in all economic fields. New enterprises and jobs should be created in environmental risk prevention, low-carbon industrial production and districts, eco-efficiency technology, energy saving, energy production through renewable sources, organic farming and eco-tourism. Green economy should address the reduction in poverty risks and social exclusion.

Improving territorial governance

A national governance framework on local development is necessary in Italy in order to promote inter-regional synergies, avoid the risk of localism, and provide evaluation and monitoring instruments. The constitutional principles of subsidiarity and inter-regional solidarity must associate fiscal decentralisation with local development. Aims should be to foster endogenous capacity and increase local autonomy and accountability from external aids, without externalising the costs of a better economic and social well-being to other territories.

The main components of the governance framework can be identified as follows. A combination of different measures is needed at a local level, supported by cross-sectoral management, coordination and integration of different financial resources; being of European, national, regional and local origin. Vertical and horizontal coordination (e.g. multi-level governance) should be improved in decision making. All actors should be mobilised and all tiers of government should be involved in the strategic phases of design, evaluation and implementation of territorial policies. Public/private partnership should be fostered to invest local actors with responsibility and to increase the available resources in terms of adequate financial and technical support.

Several methods of territorial development (e.g. those experimented with LEADER, URBAN and Local Agenda 21 processes) and partnership mechanisms (e.g. local action groups and forums) should be revamped. They should include simplification of procedures and reduction in bureaucracy to move from “management by procedures” to “management by results”. More research should allow comparison, benchmarking, monitoring and exchange of good practices. Assessment of social and environmental impacts is recommended.

Associating and connecting

As a concluding remark, it appears necessary to link the “art of association” to “the art of connecting” (Morin E., 1999). Put together, these arts produce an iterative process that nourishes open-ended but interlinked feedback loops of concepts, approaches, methods and tools. They can be discovered in local initiatives that are not sufficiently recognised, analysed and codified, but form a breeding ground for a plurality of reforming paths for the future of humanity (Morin E., 2011).

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ACKNOWLEDGEMENTS

The author of this paper is extremely grateful to all those who have helped in the preparation of the final version of this paper, in particular Dr Rosalba La Grotteria and Mr Haris Martinos. Anyway, the responsibility of how their comments and suggestions were treated is attributable only to the author.

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