FIRM’S FINANCING AND INDUSTRIAL STRUCTURE IN THE LESS DEVELOPED REGIONS OF THE SOUTH ITALY

The paper shows that there is a relationship between firm’s financial condition and the industrial specialization model of the Italian Mezzogiorno, that is the least developed area of the country. In order to analyze the financial status of the firms, the approach of the theory of the finance is adopted. The empirical model proposed by the Gibrat law literature is used to produce the estimates of the relationship between firms’ growth and cash flow. Then, the indices measuring the “financial dependence†on the internal finance or the “financial constraints†to the firm growth of the Mezzogiorno’s industries are compared to those of the other Italian regions. Finally, the analysis of the between the emerging financial condition of the firms and both the firm side distribution of the individual industries and the composition of the manufacturing of the South Italy is proposed. Our econometric analyses, carried out on a representative sample of manufacturing firms, confirm that there is a robust relationship between financial status of the firms and the specialisation model of manufacturing of the Italian Mezzogiorno.