An empirical take on the economic effects of insularity: the Italian regional case

Abstract

The paper investigates the effects of insularity on economic performance using a Random Coefficient Model (RCM) and the Italian regions as a case study. More in detail, the paper aims to analyse whether a specific ‘island effect’ can be detected in terms of the economic impact of export on GDP. To this end, building upon the theoretical framework of the export-based model of regional growth, the insularity is considered according to both transportation costs and proper spatial regression models. The very preliminary empirical results fail to detect such an insularity effect and show evidence that the main drivers of the multiplicative effects of export lay in regional efficiency indicators.