Devolution and development--the Sardinian experience: the recent transition from Italian rule...

'THERE IS NOT in Italy what there is in Sardinia, nor in Sardinia what there is in Italy,' wrote the 18th century monk Francesco Cetti after a visit to the Italian island. A few centuries after Cetti, Sardinia still differs from the Italian mainland, especially when it comes to economic performance.

The high unemployment and low income figures in Sardinia sharply contrast with the welfare of the often praised 'industrial districts' in Northern Italy. Sardinia is part of the poor South ('Mezzogiorno'), including regions like Sicily, Calabria, and Campania. Within the Mezzogiorno, however, Sardinia has always had a special position: far away from the mainland, the island was seen by politicians as a fertile ground for questionable policy experiments. But in recent times, Sardinia and its economy have been on the move.

Cathedrals in the desert

Sardinia is the second-largest island in the Mediterranean Sea, after Sicily. The coastal area houses splendid bays, caves, and beaches. The interior is mountainous, with plateaus, gorges, and wooded hills. With 1.6 million inhabitants, Sardinia is far less densely populated than the rest of Italy. Nearly half of the Sards live in the urbanised area around Cagliari in the south and in Alghero-Sassari in the north west. The rough interior of Sardinia, which the Romans called 'Barbagia' (barbarian country), is a remote place and has Nuoro as its capital.

Over the centuries, Sardinia was invaded by foreign rulers who exploited its natural resources (silver, copper, lead, gold, and corn). After the mysterious Nuraghi tribe (see the panel below) in the Bronze Age, came the Phoenicians and Carthaginians, followed by the Romans that latinised the island. Thereafter, there was a stream of comings and goings of overseas peoples, such as the Arabs, Byzantines, Spanish, and finally the Italians.

Under Italian unification in 1861 Sardinia became part of Italy. Despite the constant cry for self-government, devolution was a long time in coming, in 1948 Sardinia was officially designated a 'special status region' with limited scope for self-determination. This autonomy, however, was largely cosmetic: the area was still an Italian colony subject to nepotism in Italian and Sardinian political circles. Only when the Maastricht Treaty of 1992 forced Italy to reform its highly centralised regional policy could the Sardinian regional government the Regione Sardegna--take on the island's problems independently.

Traditionally, the Sardinian economy has suffered from structural weaknesses. It has been an Objective 1 area ever since the launch of European regional policy: incomes per head were typically about 25 per cent below the EU15-average (and below the Italian average as well). Unemployment increased from 16 per cent in 1980 to 20 per cent in 1990 before decreasing slightly since 2000 (to 18.5 per cent in 2002). Many Sardinian youngsters still migrate to the Italian mainland; those that stay, however, increasingly choose to start a business in agriculture or services.

Thanks to this entrepreneurial spirit the Sardinian economy is gradually growing. Over the period 1995-2000, for example, the growth of average income in Sardinia was 2.2 per cent--0.3 per cent higher than in the rest of Italy. But although Sardinia is doing better than Southern Italy, the island is still a lull member of the Mezzogiomo. Like Sicily and Campania (think Mafia), Sardinia has little 'social capital': mutual trust is low, as is the level of participation of the population in social networks.

It is common practice now to see social capital as a condition for regional economic development. But this is an area in which Sardinia scores the lowest of all the West European regions: only 5 per cent of the Sards say that they trust other people (compared with the West European mean of 35 per cent), and just 3 per cent are members of a social-cultural association (average in Western Europe, 26 per cent). It is tempting to relate this limited stock of social capital to Sardinia's infamous criminal practices, such as banditry and kidnapping. It must be said, however, that these figures come from 1990. interestingly, the recent devolution process in Sardinia has coincided with lower crime rates and a higher social network density.

During most of the 20th century Sardinia was no more than an Italian colony. Until 1992 it was the government in Rome that determined economic development policy in the Mezzogiorno. From the late 1950s this centralised policy was carried out by the 'Cassa per il Mezzogiorno', a state-led regional development agency. Inspired by the concept of growth poles, the Cassa established massive industrialisation projects all over Southern Italy. Sardinia got petrochemical plants (at Cagliari and Porto Torres), chemical industries (for example at Ottana), and a large paper factory (at Arbatax). None of these industrial ventures has been profitable; some were closed, while others were continually threatened with closure.

With hindsight, one may say that the industrialisation of Sardinia failed for economic and political reasons. To begin with, the heavy industries simply did not fit into the rural structure of the island. Many Sardinian shepherds and farmers had trouble working in factories and quit their jobs. And the industrial companies barely used local resources and produced only for the export market. Consequently, instead of growth poles, they ended as 'cathedrals in the desert'. Furthermore, shady Italian party politics contributed to the failure of industrial planning in Sardinia. In the political scene in Rome personal rather than regional interests were pursued. It is even rumoured that the government was not interested in regional development, but actually tried to 'italianise' the obstinate Sards and their particular culture.

Sun, sea, and sand

According to a well-known Sardinian saying, 'Whoever comes from over sea, comes to steal.' Forewarned by history, the Sards have traditionally had little faith in what comes from outside the country.

Are modern-day tourists simply following foreign rulers and Italian politicians in 'conquering' the island? Initially it appeared so. In 1962 the Arabic prince Aga Khan 'discovered' Sardinia's north east coast as an ideal sailing and holiday resort for the international jet-set that was tired of the French Cote d'Azur. He set up a consortium of millionaires who bought the coast, largely from local farmers. Architects and developers transformed the coastal area into the 'Costa Smeralda' (emerald coast), where only the very rich can now afford a holiday. Italian President Silvio Berlusconi, oil sheiks, football players, and fashion designers--they all relax in or around Porto Cervo, the pretentious capital of the Costa Smeralda.

But despite the protests of critics that call the area the 'Costa Rubata' (stolen coast), most Sards have accepted the transformation of the Costa Smeralda into an exclusive leisure resort. The Costa is an engine behind tourism at the other coasts of Sardinia and has generated new jobs and earnings, and in the wake of the arrival of the jet-set ordinary Italian and foreign tourists have also discovered Sardinia. Mass tourism has concentrated around the north west and east coast, where there is plenty of sun, sea, and sand. This type of tourism, however, is very seasonal, peaking in July and August, when the Sards have their work cut out to please the island's many holidaying visitors.

Following the removal of the Cassa per il Mezzogiorno in 1992, the Regione Sardegna gained greater control over the development of the island. The Treaty of Maastricht has forced the Italian government to halt to its dirigiste policy, and has enabled regional autonomy. Like the majority of the Sards, the Regione Sardegna has regarded tourism and related activities as the mainstay of the island economy. In collaboration with the citizens and entrepreneurs, the regional government has tried to develop tourism in such a way that tourists also get to know the 'real' Sardinia and the strong island identity ('Sardita').

The aim is now to bring more visitors to the mountainous interior, notably through the promotion of 'agriturismo'--holidays on farms. The Consorzio Agriturismo di Sardegna advises, trains, and supports farmers that want to start a bed-and-breakfast venture. Additionally, networks of professional guides organise trips in the Sardinian wilderness for small groups of eco-tourists.

In line with these forms of quality tourism, the Regione Sardegna has encouraged the production, distribution, and marketing of typical Sardinian souvenirs, such as local products, jewels, and fabrics. Traditionally, Sardinia has been famous for its culinary specialties (carasau bread, pecorino cheese, and cannonau wine) and artistic crafts (cork processing, ceramics, and tapestry). In the time of the Cassa there was no room for co-operatives or family businesses specialising in these products. But just as the knowledge of these crafts was about to disappear, the regional authorities founded cheese-making farms, wine co-operatives, and ISOLA ('Instituto Sardo Organizzazione Lavoro Artigianato'), the Sardinian institute for the promotion of arts and crafts. ISOLA has been able to breathe new life into many traditional Sardinian crafts.

ISOLA has set up a lot of local cooperatives which engage unemployed artisans and artists. For example, workshops and exhibition spaces were opened in many villages for use by weavers, goldsmiths, and potters. ISOLA also runs shops where tourists can buy Sardinian products. Of course, these activities cannot employ all Sards, but the success of this 'trend through tradition' approach suggests that the island is better off with place-specific strategies than with the earlier 'cathedrals in the desert'.

The bottom-up policy of the Regione Sardegna has been more successful than the top-down policy of the Italian central government. Regional initiatives from below, such as ISOLA, certainly contribute to the development of Sardinia. They not only combine local traditions with global trends, but also take advantage of the well-developed regional identity, the Sardita.

Evidence that the Sards embrace this strategy came in the first round of regional elections in the summer of 2004, in which Mauro Fili--a confidant of Silvio Berlusconi--lost out to a political newcomer, the Sardinian leading entrepreneur Renato Soru. With an absolute majority of votes, Soru, founder and chief executive officer of internet provider Tiscali (see the panel on the preceding pages), was elected Governor of the island. 'Mister Tiscali' was perceived as the opposite of Berlusconi and his friends: no display of power or hollow phrases, but simplicity and a clear message. In the course of three months he managed to visit all parts of the island to campaign for his party 'Progetto Sardegna' (Sardinian Project).

Under the banner of 'better export than emigrate', Sore has championed the adoption of more measures that build on the endogenous strengths of the island. In his programme he has combined green, social, and typical Sardinian issues, like the intensification of high-quality tourism, attention for community entrepreneurs, and preservation of the Sardinian identity. After age-long foreign and Italian oppression, the time has come for the Sards to regain their dignity., says Soru. Knowing that most Sards stand behind him, he has given himself five years to realise this regionalist ideal.

Proud to be different

Francesco Cetti, the monk who visited Sardinia in the 18th century, was right: the differences between the island and the Italian mainland are large. For a long time these differences hindered the development of Sardinia, but the efforts of the politicians in Rome to industrialise and Italianise the island largely failed. Only when a real process of devolution took place after 1992 could the Sardinian authorities take the unique character of the island into account in development plans. Since then, Sardita has been important in the development of tourism and associated activities, and agri-tourism, the marketing of local products, and traditional arts and crafts have emerged as future growth sectors.

While Sardinian income and employment figures still lag behind the Italian average, the gradual growth of authentic and place-specific activities has stimulated the Sardinian economy and has laid the foundations for further structural development of the island--in a way that is to the satisfaction of the Sards. Sardinia now brands itself as 'Sardegna--Proud to be Different'. The recent election of Governor Renato Soru, who wants 'to give back the Sards their dignity', indicates that the future of Sardinia lies in a combination of trend and tradition. Under Soru's leadership the economic differences between Sardinia and the rest of Italy might be reduced--while preserving the Sardita of which the islanders are so proud.

From Tiscali to Tiscali

Only little is known about the Nuraghi, the earliest inhabitants of Sardinia. They left behind more than 8,000 towers ('nuraghi') that probably served as refuges in case of war. Also the enormous natural cave in the Tiscali mountain in Sardinia's interior was a hiding-place for the Nuraghi, in this case against invasions of the Phoenicians and Romans. This Nuragic village of Tiscali--currently a famous tourist attraction--is a strong symbol of Sardinian indomitability and pride. Consequently, when the Sardinian entrepreneur and regionalist Renato Soru set up his internet business in 1997, it was not hard to find a suitable company name. Tiscali has since developed into one of Europe's largest internet providers. This growth is partly due to its 'freelosophy': free internet for reduced phone costs. Since July 2004, when Soru began his term as Governor of Sardinia, the Dutchman Ruud Huisman has taken over the management of Tiscali.

Dr Gert-Jan Hospers is an Assistant Professor of economic and strategy at the University of Twente in Enschede, The Netherlands. This article is based on a case study of Sardinia in his recent book Regional Economic Change in Europe: A Neo-Schumpeterian Vision (LIT--Verlag, Munster/London).