Secondary Economic Activities (Leaving Cert Geography): Revision Notes
Secondary Economic Activities
Introduction to manufacturing in the Mezzogiorno
The Mezzogiorno region of southern Italy represents a classic example of how geographic and economic factors can limit industrial development in peripheral European areas. Manufacturing in this region operates under significant government influence, with the state controlling or owning most major industries. Around one-quarter of the regional population works in secondary economic activities, though many of these workers lack specialised skills and training.
Despite government efforts spanning decades, several fundamental challenges have prevented the Mezzogiorno from developing a strong manufacturing base that can compete effectively with other European industrial regions.
Major challenges facing manufacturing development
Poor primary sector
Primary sector - Economic activities involving the extraction or harvesting of natural resources, including mining, agriculture, forestry and fishing.
The Mezzogiorno faces severe limitations in its primary sector that directly impact manufacturing potential. The region lacks essential natural resources such as oil, gas, minerals and even adequate water supplies. Only small deposits of oil and gas exist locally, forcing industries to import nearly all raw materials from abroad. Most natural gas arrives from Algeria through extensive pipeline networks, creating dependency on external suppliers.
Energy production faces significant constraints due to geographical and climatic factors. Hydroelectric power generation remains very limited because prolonged summer droughts cause reservoir and river levels to drop dramatically through evaporation.
While solar power investment has occurred since the early 2000s, it remains expensive and not widely adopted across the region. The underlying geology creates additional manufacturing challenges. Limestone bedrock covers much of the region and allows water to drain away easily. This lack of surface water makes it impossible to cool machinery effectively in heavy industries such as steelworks, further limiting manufacturing options.
Agricultural diversity also restricts food processing opportunities. While the region produces olive oil and wine from locally grown olives and grapes, and processes citrus fruits into vitamins, food production remains limited beyond these specific products.
Peripheral location
Peripheral location - A geographic position far from major economic centres and markets, creating disadvantages for business development and trade.
Geographic isolation creates substantial barriers to manufacturing success in the Mezzogiorno. The region sits approximately 1100 kilometres from Italy's capital, placing it far from the larger urban markets of northern Europe. This distance becomes even more problematic when considering that 85% of the region consists of steep or upland terrain, making it both expensive and technically difficult to construct high-quality road and rail connections.
Until the 1950s, businesses struggled with winding mountain roads and narrow tunnels that frequently became blocked by winter snowfall, disrupting transport routes. The completion of the Autostrada del Sole motorway in 1964 finally connected the Mezzogiorno to northern Italy. However, despite this modern transport link, the long distances mean transport costs remain significantly higher than for businesses located closer to major European markets.
This peripheral location has proved particularly problematic for attracting multinational corporations (MNCs). Companies find it difficult to justify locating operations so far from their target markets, and the region remains isolated from government influence and decision-making centres.
Without access to external capital from MNCs, local businesses struggle to modernise and develop competitive manufacturing capabilities. The economic disadvantages of this location are reflected in living standards. Income levels throughout the Mezzogiorno remain much lower than in northern Italy, which means local markets lack the purchasing power to support industrial products. This creates a cycle where insufficient local demand discourages business investment in new enterprises.
Limited labour force
Brain drain - The emigration of highly educated and skilled workers from one region to another, typically in search of better opportunities.
Apart from Naples and Palermo, the Mezzogiorno contains very few large cities capable of providing substantial labour pools or local markets for manufactured goods. This shortage of urban centres makes selecting suitable locations for industrial development both difficult and unattractive for potential investors.
Poverty levels remain a persistent challenge, with 23% of families still classified as living in poverty. These families are seven times less likely to access higher education compared to those in wealthier northern regions. Only three of the region's universities rank among Italy's top 20 institutions, limiting educational opportunities for local residents.
These economic and educational limitations drive large-scale outward migration as young people travel north seeking better educational opportunities, higher living standards and improved employment prospects. This pattern creates a brain drain effect, where the region loses its future workforce along with their skills and potential contributions. The departure of educated young people also reduces the local tax base, providing fewer resources for regional development.
Government intervention efforts
Early investment programmes
In 1957, the Italian government launched the Cassa per il Mezzogiorno scheme, aiming to improve manufacturing capabilities by investing €2.3 billion in industrial development over 25 years. This represented a massive commitment to transforming the region's economic prospects through direct state intervention.
The Vanoni Plan, beginning in 1965, created over 300,000 jobs in the region between 1965 and 1970. This programme introduced the concept of growth poles - selected centres of economic activity designed to concentrate development efforts for maximum impact.
Growth poles - Specific urban centres selected by governments to receive concentrated investment, with the aim of stimulating broader regional economic development.
Pescara, Naples and the Bari-Brindisi-Taranto triangle were chosen as growth poles based on their higher populations and access to port facilities. The strategy assumed that success in these concentrated areas would eventually spread to surrounding regions, creating wider economic benefits.
The Vanoni Plan strategies
The Vanoni Plan employed multiple approaches to attract investment and modernise the regional economy:
Industrial incentives: Well-serviced industrial estates, tax exemptions and transport subsidies were offered to MNCs willing to establish operations in the region or relocate from northern Italy to the Mezzogiorno.
Workforce development: Funding was allocated to help businesses educate and train the local workforce, creating a larger pool of skilled labour to support industrial development.
Infrastructure investment: Large-scale improvements included completing the Autostrada del Sole motorway, enabling industries like food processing to transport goods more efficiently to markets.
Transport improvements: A new airport was constructed at Calabria, reducing the region's isolation from major EU markets and improving accessibility for business development.
Port development: Government investment focused on improving port facilities to support heavy industries such as oil refining, petrochemical production and gas distribution. Port improvements accounted for 60% of all regional investment during this period.
The Act of Parliament mandated that all state-owned companies must invest at least 60% of their new investments in the Mezzogiorno. Large, state-owned facilities such as the steelworks at Taranto provided 75% of all new employment opportunities in the region.
Industrial development outcomes
Case Study: Finsider Steelworks Development
Finsider Steelworks, established in Taranto in 1964, exemplifies both the successes and limitations of government intervention:
Achievements:
- Increased port activity significantly
- Made Taranto the most important Mediterranean port
- Became Italy's third most important port
- Now handles over 35 million tonnes of freight annually
Impact: As a direct result of the Cassa Scheme, industrial employment tripled in the region, reaching 1.4 million people, demonstrating the potential for government-led development to create substantial employment opportunities.
Lasting problems and current challenges
Despite significant government investment and policy interventions, several fundamental problems persist in the Mezzogiorno's secondary sector:
Capital-intensive industry limitations
The large steelworks and similar heavy industries that formed the focus of development proved to be more capital-intensive than labour-intensive. While these industries required substantial financial investment to establish, they generated relatively few employment opportunities compared to their cost. Furthermore, such industries have become increasingly prone to job losses due to automation and mechanisation, reducing their long-term employment benefits.
Companies like Finsider often produce more steel than they can sell profitably, forcing them to sell surplus production at reduced rates. This undermines the economic sustainability of these major industrial investments.
Continued demographic challenges
Although declining, outward migration persists as young workers continue seeking better-paying employment in northern regions. This ongoing brain drain prevents the region from building the skilled workforce necessary for economic diversification and modernisation.
Uneven regional development
The government's growth pole strategy created significant disparities within the Mezzogiorno itself. Coastal areas received far more investment than inland regions, leading to increased income gaps within the region. This uneven development has concentrated benefits in a few locations while leaving other areas relatively unchanged.
Economic vulnerability
The economic recession beginning in 2008 highlighted the region's continued vulnerability. Higher numbers of workers in the Mezzogiorno lost their jobs compared to northern Italy, partly due to the lack of employment flexibility in the region where workers typically receive training for only one specific role.
Current situation and ongoing efforts
Recent efforts focus on addressing some of the persistent challenges through new approaches:
Decentralisation initiatives: The government continues working to spread industrial development to areas further inland, attempting to create more balanced regional growth.
EU partnership: Since the Cassa Scheme ended in 1984, the European Union has provided part-funding for infrastructural improvements in port regions such as Naples and Taranto. The Regional Development Fund also supports efforts to improve transport connections throughout the region.
Poverty reduction: Government programmes must continue addressing the high levels of regional poverty, which remain a fundamental barrier to creating the local markets necessary for sustainable industrial development.
However, significant challenges remain evident in current statistics:
- 23% of residents live in poverty
- Unemployment rate reaches 20%
- Infant mortality rates are four times higher than in northern Italy and twice the EU average
- One-quarter of children leave education after primary school
- Infrastructure development still lags significantly behind northern regions
Key Points to Remember:
- The Mezzogiorno faces three main manufacturing challenges: poor primary sector resources, peripheral location from markets, and limited labour force availability
- Government intervention through the Cassa Scheme and Vanoni Plan created significant industrial employment (tripling to 1.4 million workers) but focused on capital-intensive rather than labour-intensive industries
- Growth poles strategy concentrated development in coastal cities like Naples, Taranto and Bari, but created uneven development within the region
- Brain drain continues to limit development as educated young people migrate north for better opportunities, reducing the skilled workforce and tax base
- Current challenges require ongoing intervention including decentralisation efforts, EU partnership funding, and poverty reduction programmes to create sustainable economic growth