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AbstractDespite the richness of contributions on the effects of agglomeration on economic activity, the empirical evidence still falls short, especially at the microeconomic level, where they should matter the most. This paper adds to this literature by performing an empirical exploration of the role of Marshallian, Jacobian, and Porterian externalities for the productivity of Italian firms. In particular, a large dataset of small and medium enterprises is first employed to estimate firm‐level total factor productivity (TFP). Then dynamic panel and instrumental variables estimation methods are used to assess the effects of agglomeration externalities. The findings seem to suggest that these effects may vary depending whether the level or growth of TFP is considered. While the first is mostly influenced by the extent of Marshallian economies, the latter is higher when Jacobian and Porterian economies are at work.

Since the beginning of the 1990s, the Italian Government has attempted to implement a new generation of policies aimed at reducing regional disparities. It is claimed that compared to the past, these policies should be more far reaching since they emphasize the importance of the structural economic conditions in promoting growth and convergence. In this paper, we use a dataset of regional social and economic indicators in order to look at the evidence surrounding the outcome of these policies. A frontier approach seems to be suitable for the purpose of this research, as it yields a ranking of performance scores where regions can be compared in cross-sectional and a temporal dimension. Additionally to the traditional measures of economic development such as GDP per capita, we also run the analysis on competitiveness and entrepreneurship measures. Early results seem to provide interesting evidence with respect to the regional features of the development policies.

In this paper, we employ panel unit root tests to investigate convergence in Total Factor Productivity amongst Italian regions. These tests provide us with inference valid in the presence of heterogeneity and cross-sectional dependence, and when the cross-sectional dimension is smaller than the time dimension, allowing us to investigate convergence among different subset of regions. Our results add a futher dimension to the conventional view on growth dynamics in the Italian peninsula depicting a lack of regional TFP convergence not only at the national level, but also at the level of geographical disaggregations where regions are conventionally thought to converge.