TYPES OF TERRITORIAL CAPITAL AND ECONOMIC DEVELOPMENT

Both theoretical and empirical studies highlight local structural specificities (territorial capital) as constraints on the processes of regional growth and inter-regional convergence. The theoretical and empirical literature on economic development identifies as key factors for regional growth, elements that belong to territorial capital, such as: public and private fixed capital; human, social, cultural and natural resources; specific manufacturing vocations; agglomeration economies; internal organization of the territorial system. However the literature pays little attention to traditional localized resources and specifically to the local natural and cultural heritage. This paper aims at analyzing and identifying the impact of territorial capital, with a specific focus on natural and cultural resources, on local performance. Impact does not depend on mere endowment. Indeed, the capital of natural and cultural resources is a capacity that shifts from potential to actually utilized, and therefore acquires economic relevance, through the operation of tourism and leisure-cultural economic activities. In this paper we use a set of indicators that synthesize and measure the endowment of seven different types of territorial capital in the 103 Italian provinces since the mid 1990s. The first step consists of cluster analyses, which allow us to photograph the geographical distribution of natural and cultural heritage at the provincial level in order to restrict the macro area for regression analysis to all the provinces of North Italy, including the Marches and Tuscany. The second step consists of factor analyses, which allow us to reduce the number of variables in order to ensure enough degrees of freedom to regression analysis (only results for natural and cultural heritage and the tourism industry are shown). The subsequent analysis is carried out in both structural and dynamic terms. First, we specify a production function, which depends not only on private capital but also on all other elements of territorial capital, in particular on natural and cultural capital. Secondly, we specify absolute and conditional convergence functions. We then carry out an empirical cross section analysis. The aim of this analysis is to estimate how much impact the endowment of the various types of territorial capital, and especially of natural and cultural capital, have on the position and on the performance of the provinces of North and Central Italy. To perform this analysis we use data on the level and dynamics of GDP per employee (dependent variable) and different elements of territorial capital (independent variables) for the years 1995-2007 for the 60 provinces of our macro area.