Resources and Industry in the North

December 30, 2011

In a recent post I showed how Italian geography favors the North when it comes to farming, trade and industry. The latter is a primary source of wealth in the modern world, and even though Southern Europe's coal reserves are small and of poor quality, Northern Italy has been able to compensate with hydroelectric power because of its geographical features and natural resources.

The objective of this article is to analyse the importance of one of the new energy sources, electricity, since the end of the nineteenth century until 1945, from the point of view of natural resource endowments. Not all countries had good or equivalent endowments of coal, the energy-producing mineral of the nineteenth century, and for this reason not all of them had the same opportunities to use it, given that the transport cost was very high due to its weight in relation to its caloric power. Electricity reduced the dependence on coal resources as it could be produced not only from coal but also from water.

[...]

The accessible coal endowments available...are presented in Table 1, both in the form of total coal reserves and coal reserves per capita in each country. Well endowed in coal were Canada and the US in North America and Germany, the UK, Austria and — in an intermediate position — France in Europe. The Northern European countries Denmark and Sweden and the Southern European countries Italy, Greece and Portugal all had poor coal endowments. Looking at coal quality, Spain and especially Italy lacked good quality coal; as for the cost of extraction, this was particularly high in France and Spain, due to the characteristics of its seams.

[...]

Natural resources also had effects on the type of electricity being produced in these countries when electricity eventually arrived. [...] The situation was worst in Italy because of the scarcity of coal and its low caloric power. As a result, coal had to be imported. For that reason, electricity was generated by hydraulic power, once the problem of long distance transmission was solved by means of the alternating current. The most important hydraulic resources were concentrated in the Alps and the Po Valley, between the Alps and the Apennines in the North of the country. The regions endowed with the most important sources of waterpower were the Piedmont and Lombardy, the Po Valley (Adda, Adige, Ticino, Tevere, etc.), the Venetia region and that of Umbria.

[...]

We have calculated the proportion of hydroelectricity and thermoelectricity in the total electricity production of each country. As shown in Figure 1, at the top of the countries using hydroelectricity were Canada, Italy and Spain. Hydroelectricity accounted for over 80 per cent of their electricity production. At the bottom, using less than 60 per cent, as already commented, were the coal intensive countries, i.e. the UK, the USA, and France, although, France had a lesser proportion of thermoelectricity.

[...]

The degree of electrification advanced substantially from the end of the nineteenth century until WWII, the height of the process being 1925, after WWI, when real electricity prices fell considerably. The behaviour of the relative prices electricity-coal, coupled with the new technical opportunities for electrification in the manufacturing sector where electricity competed with steam, produced important possibilities for economic growth. There was also a relationship between the accumulation of physical capital and electrification process and the increase in labour productivity, manufacturing and income per capita, especially in the countries that were badly endowed with coal deposits, but enjoyed better opportunities for the production of electricity.

Concha Betrán. "Natural Resources, Electrification and Economic Growth from the End of the Nineteenth Century until World War II". Revista de Historia Económica, 2005.

Related: Geography and Industry

2 comments

DagoRed said...

The point of view on the question is wrong. The production of electricity has been produced by state companies and spread it all over the country and at the same price, wherever it is produced. The main source of oil and the importance of hydropower is exaggerated.
The current gap between the north and the south is due to wrong policy choices that we all know in Italy, but which is too complicated to mention here, but also in the south there are industrial success.

Energy policy is an important point for the Italian economy, because Italy depends on foreign sources and its agreements with Russia for gas is one factor that led to the fall of the last government.

As well as agreements with Libya, which had made ​​Italy the mistress of Libyan oil, before the French and British attacked Ghaffafi

Italianthro said...

All you do is say how wrong everything is, but you never provide any evidence. Hydraulic power is needed for manufacturing, and most of Italy's water resources are in the North, so that became the main center of industry and the wealthiest part of the country. "Wrong policy choices" may have contributed to North-South disparities, but they're not the primary cause.