Christoph Hauser (p), Gottfried Tappeiner, Janette Walde

Dario D'Ingiullo

Social trust is increasingly seen as an important determinant of economic growth and social prosperity in regions and nations. Even in a comparatively homogeneous area such as Europe, there are stark sub-national differences in levels of generalized trust. It is thus of crucial importance to identify the driving forces of regional trust and analyze the dynamics of its formation. The present paper considers these issues based on four waves of the European Values Study collected in an almost 30 years timeframe from 1990 until 2017. Evidence is provided to demonstrate that values of regional trust remain substantially stable over the entire period and are modified only through spatially correlated random noise processes. This finding is consistent with additional analyses based on spatial regression models identifying slow-moving factors responsible for the geographic distribution of trust scores and buried deep in the cultural background of a society. Whereas the low values in post-communist countries are exhaustively explained based on their institutional and cultural setup, the high Nordic scores remain significant even after inclusion of control variables. The dominant driving force of regional trust is represented by an open society with emphasis on free expression rather than survival values rooted in a focus on economic physical security. Whereas both institutional and educational frameworks are only of minor importance, a high degree of social heterogeneity is clearly detrimental for trust after controlling for GDP per capita. Hence, in spite of its economic significance, social trust does not appear to be amenable to political intervention in the short to medium term but neither should it be responsive to sudden crisis effects.

Dario D'Ingiullo (p) Adriana Pinate, Davide Quaglione

Enza Simeone

The paradigm of economic complexity, focusing on the role of tacit knowledge ("knowhow" or "productive capabilities") in the development of products and services, states that more complex or sophisticated product basket requires the accumulation of a large variety of non-tradable productive capabilities, implying a faster and lasting economic growth. Yet, on the determinant side, research that look at the drivers of production sophistication is scant and the gaps in existing research require a deeper understanding of the mechanisms that promote the creation of new knowledge, its circulation and accumulation. To this end, recent theoretical and empirical reflections on the concepts of relation, institutional, and cognitive proximity can be crucial to explaining the elements at the basis of knowledge exchange. Relational proximity enhancing interactions among economic actors through social and cultural homogeneity, facilitates collective learning processes and knowledge diffusion. Institutional proximity, defined by norms, regulations, and social conventions, fosters cooperative behavior, enables interactive learning processes, and reduces transaction costs, particularly in contract-intensive industries. Cognitive proximity ensures mutual understanding of technological aspects, facilitating interactive learning and innovation, particularly in sectors with shared or complementary capabilities. In this context, the present study contributes to the literature on the determinants of economic development and productivity by empirically analyzing the effects of different forms of proximity—relational, institutional, and cognitive—on the economic complexity of Italian provinces (NUTS-3 level) between 2008 and 2019.
To conduct the analysis, we employ a unique dataset combining regional export data (ISTAT’s Coeweb) to elaborate a provincial Economic Complexity Index (ECI); a widely accepted measure to identify the degree of sophistication of regional economy as it captures the knowledge- and skill-intensity of goods and services locally produced. Concerning the forms of proximity, we employ the Institutional Quality Index (IQI) and its components (rule of law, regulatory quality, government effectiveness, voice and accountability, corruption), and sectoral relatedness of manufacturing industries and services activities.
Preliminary findings reveal that better formal and informal institutions, playing a key role in lowering transaction costs and uncertainty, and by favouring knowledge circulation, lead to diversified and sophisticated production that fuels economic complexity. Furthermore, the study highlights the importance of relatedness and its interactions and complementarities with institutions that seem to support complex and innovative productions through knowledge spillovers and related diversification.

Enza Simeone (p), Ambra Poggi

Bogdan-Constantin Ibanescu

Social capital is a key factor in creating a supportive environment to healthy aging in the EU. Social capital is an individual resource embedded in one’s social networks. Collective-owed regional level resources (e.g. sharing norms, institutional settings, etc.) can be mobilised by the individuals to build up their own social capital. Our aim is to investigate regional differences in the level of social capital held on average by older adults as well as the complexity of the relationship between individual social capital and regional level resources. Our analysis is twofold. First, using graphical methods and logistic nonlinear models, we investigate changes in social capital levels in specific groups of regions after the Covid-19 pandemic, changes that we interpret as the consequences of the different Covid management strategies implemented in the EU regions. Second, using econometric methods, we investigate the determinants of social capital. We find that disparities in (unobserved) regional level resources explain a significant share of social capital inequality among the elderly.

Bogdan-Constantin Ibanescu (p), Alexandra Gheorghiu, Mioara Cristea

Ugo Fratesi

Trust can be a powerful predictor of human behaviour in modern societies, as represents the glue that maintains long-term and beneficial social relationships between both individuals and groups. Trust in national and local authorities can differ based on several factors, such as the level of proximity between citizens and authorities, the scope of responsibilities of the authorities, and the complexity of issues they deal with. Research suggests that people tend to have higher levels of trust in local institutions compared to national institutions. For example, a study conducted in the US (Pew Research Center, 2020) found that 68% of Americans had a favourable view of local government, while only 31% had a favourable view of the federal government.

While local and regional authorities in many European countries were given more responsibilities, our understanding of the factors that shape citizens' support for these levels of government remains limited. As such, we were interested in examining the level of trust in local institutions in a representative sample of Romanian citizens and its potential historical, social, political, and economic predictors. We also focused on the territorial characteristics (rural versus urban, economic prowess, responsibilities of various territorial policymakers) that may explain the variations in trust.

Our sample included 1205 Romanian respondents (45.4% rural, 51.7% women, Mage = 48.35, SD = 16.22). Participants filled in a Computer Assisted Telephone Interviewing (CATI) questionnaire. We measured overall trust in local institutions, perceived level of assistance during crises, satisfaction with local institutions, drivers of trust, and respect for rights and freedoms.

Our results indicated that trust in local institutions varied depending on factors, such as the geographical regions with trust being the lowest in the Bucharest-Ilfov region - the most developed economic region - compared to all other regions in Romania). Furthermore, the best predictors for trust are linked to satisfaction with local institutions’ decisions and the assistance provided during crises, e.g. sanitary crises such as Covid-19.

Ugo Fratesi (p), Felipe Livert

Christoph Hauser

A large number of studies investigate the role of administrative capacity on regional economic development, the determinants of its effectiveness, how to improve it and which context conditions favour its functioning.
One important aspect of local administrative capacity is the ability of local administrations to effectively implement rules and directions coming from the central government. This may depend on several factors, and partly due to sheer capacity (e.g. in terms of personnel and administrative resources endowment in general), partly to behavioural aspects (e.g. the ownership of the policies), partly to purely political aspects (e.g. the alignment of local authorities with the central government).
This paper focuses on the role of local institutions in determining the behaviour of local authorities and uses a unique natural experiment to do it. In fact, the Italian law introduced a compulsory registration of public projects, but only with subsequent reforms this was accompanied with sanctions in case of non-compliance.
This experiment is exploited by looking at the discontinuity introduced in the behaviour of local administrations by the reforms introducing the sanctions. These did not affect the behaviour of some local administrations, while they introduced statistically significant discontinuities in the behaviour of others.
Using a very large database of public project, the presence of these discontinuities in the behaviour of local administrations is first detected and then put in relationship with the level of institutions in the region. In this way, it is possible to demonstrate the extent to which regions with a lower level of institutions had administrations which only complied with the rule after the introduction of specific sanctions.