Does the Mafia suppress entrepreneurship in Italy?

Abstract

A great divide exists within Italy: the North is prosperous while the South remains relatively poor. The divide has persisted and regions have failed to converge, contradicting neo-classical growth theory. With this in mind, the following research aims to contribute toward the dialog pertaining to the divide and its persistence by discussing Mafia presence and entrepreneurship. Little has been done to establish a solid relationship between entrepreneurship and Mafia presence, and even fewer studies have been conducted utilising a solid measurement of Mafia presence that can be used for meaningful discourse. Using probit and ordered probit to obtain marginal effects, the research shows that Mafia presence has no sound relationship with entrepreneurial desire, yet has a significantly negative one with entrepreneurial outlook. The research exposes a pattern of discouragement and suggests that Mafia presence suppresses entrepreneurship; limiting the amount of firms and investment that flows through communities in the South. Policy makers should enact policy and increase enforcement to quell Mafia expansion and reduce Mafia presence in areas already under control.