NEW FIRM FORMATION AND REGIONAL-DEVELOPMENT - THE ITALIAN CASE

The Italian case appears to have had a very high firm birth rate, mainly in manufacturing, in comparison with the experience of other economically advanced countries. Regional differentiation in new firm formation has been very high in Italy in the analysed period (1987-1991). The paper deals with the hypotheses to be tested for the interpretation of the regional differentiation in firm birth and analyses the problem of the choice of socio-economic variables which must be examined. The results of the regression analysis prove that production structure (and mainly local productive specialization), firms' size, social structure and professional employment structure are the most important explanatory variables for new firm formation (and for its regional differentiation). The level of local demand does not seem to be a significant factor and increases in unemployment appear to reduce firm births. All this underlines the strong relationship between socio-economic environment and local development, stressing the role of external economies and emphasizing the good opportunities for endogenous development processes. All this means, from an economic policy point of view, that investment to improve the local social and economic 'milieu' is most important in fostering new firm formation.