Reconstruction Aid, Public Infrastructure, and Economic Development: The Case of the Marshall Plan in Italy

98 Pages Posted: 17 Apr 2018 Last revised: 31 Dec 2019

See all articles by Nicola Bianchi

Nicola Bianchi

Northwestern University - Kellogg School of Management; National Bureau of Economic Research (NBER)

Michela Giorcelli

University of California - Los Angeles; National Bureau of Economic Research (NBER)

Date Written: December 30, 2019

Abstract

The Marshall Plan (1948–1952) was the largest aid transfer in history. This paper estimates its effects on Italy’s postwar local economic development. It exploits plausibly exogenous differences between Italian provinces in the value of reconstruction grants they received. Provinces that could modernize a larger portion of their infrastructure stock experienced higher increases in agricultural production, especially for perishable crops that benefited the most from an efficient transportation system. In the same provinces, we observe larger investments in labor-saving machines, the entry of more firms into the industrial sector, and a larger expansion of the industrial and service workforce.

Keywords: international aid, economic growth, reconstruction grants, Marshall Plan, innovation

JEL Classification: H84, N34, N44, O12, O33

Suggested Citation

Bianchi, Nicola and Giorcelli, Michela, Reconstruction Aid, Public Infrastructure, and Economic Development: The Case of the Marshall Plan in Italy (December 30, 2019). Available at SSRN: https://ssrn.com/abstract=3153139 or http://dx.doi.org/10.2139/ssrn.3153139

Nicola Bianchi (Contact Author)

Northwestern University - Kellogg School of Management ( email )

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Michela Giorcelli

University of California - Los Angeles ( email )

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HOME PAGE: http://www.giorcellimichela.com

National Bureau of Economic Research (NBER) ( email )

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HOME PAGE: http://www.giorcellimichela.com

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