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This is a history of the economy of Italy. For more information on historical, cultural, demographic and sociological developments in Italy, see the chronological era articles in the template to the right. For more information on specific political and governmental regimes in Italy, see the Kingdom and Fascist regime articles. Until the end of the 16th century, Italy was the most prosperous land among the other parts of Europe. From the end of the 16th century, Italy stagnated relative to other parts of Europe. By the end of the 19th century, the Italian economy was less advanced than those in Western and Central Europe.


Renaissance

The Italian Renaissance was remarkable in economic development. Venice and Genoa were the trade pioneers, first as maritime republics and then as regional states, followed by Milan, Florence, and the rest of northern Italy. Reasons for their early development are for example the relative military safety of Venetian lagoons, the high population density and the institutional structure which inspired entrepreneurs. The Republic of
Venice Venice ( ; it, Venezia ; vec, Venesia or ) is a city in northeastern Italy and the capital of the Veneto region. It is built on a group of 118 small islands that are separated by canals and linked by over 400 bridges. The isla ...
was the first real international financial center, which slowly emerged from the 9th century to its peak in the 14th century. Tradeable bonds as a commonly used type of security, were invented by the
Italian city-states The Italian city-states were numerous political and independent territorial entities that existed in the Italian Peninsula from the beginning of the Middle Ages until the proclamation of the Kingdom of Italy, which took place in 1861. After th ...
(such as Venice and
Genoa Genoa ( ; it, Genova ; lij, Zêna ). is the capital of the Italian region of Liguria and the sixth-largest city in Italy. In 2015, 594,733 people lived within the city's administrative limits. As of the 2011 Italian census, the Province of Ge ...
) of the late
medieval In the history of Europe, the Middle Ages or medieval period lasted approximately from the late 5th to the late 15th centuries, similar to the post-classical period of global history. It began with the fall of the Western Roman Empire a ...
and early
Renaissance The Renaissance ( , ) , from , with the same meanings. is a period in European history marking the transition from the Middle Ages to modernity and covering the 15th and 16th centuries, characterized by an effort to revive and surpass ideas ...
periods.


17th–middle 19th century

After 1600 Italy experienced an economic catastrophe. In 1600 Northern and Central Italy comprised one of the most advanced industrial areas of Europe. There was an exceptionally high standard of living. By 1870 Italy was an economically backward and depressed area; its industrial structure had almost collapsed, its population was too high for its resources, its economy had become primarily agricultural. Wars, political fractionalization, limited fiscal capacity and the shift of world trade to north-western Europe and the Americas were key factors.


1861–1918

The economic history of Italy after 1861 can be divided in three main phases: an initial period of struggle after the unification of the country, characterised by high emigration and stagnant growth; a central period of robust catch-up from the 1890s to the 1980s, interrupted by the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagion ...
of the 1930s and the two world wars; and a final period of sluggish growth that has been exacerbated by a double-deep recession following the 2008 global financial crush, and from which the country is slowly reemerging only in recent years.


Age of Industrialisation

Prior to unification, the economy of the many Italian statelets was overwhelmingly agrarian; however, the agricultural surplus produced what historians call a "pre-industrial" transformation in North-western Italy starting from the 1820s, that led to a diffuse, if mostly artisanal, concentration of manufacturing activities, especially in
Piedmont-Sardinia The Kingdom of Sardinia,The name of the state was originally Latin: , or when the kingdom was still considered to include Corsica. In Italian it is , in French , in Sardinian , and in Piedmontese . also referred to as the Kingdom of Savoy-S ...
under the liberal rule of the Count of Cavour. After the birth of the unified Kingdom of Italy in 1861, there was a deep consciousness in the ruling class of the new country's backwardness, given that the per capita GDP expressed in PPS terms was roughly half of that of Britain and about 25% less than that of France and Germany. During the 1860s and 1870s, the manufacturing activity was backward and small-scale, while the oversized agrarian sector was the backbone of the national economy. The country lacked large
coal Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen. Coal is formed when dead ...
and
iron Iron () is a chemical element with symbol Fe (from la, ferrum) and atomic number 26. It is a metal that belongs to the first transition series and group 8 of the periodic table. It is, by mass, the most common element on Earth, right in fr ...
deposits and the population was largely illiterate. In the 1880s, a severe
farm crisis A farm crisis describes times of agricultural recession, low crop prices and low farm incomes. The most recent US farm crisis occurred during the 1980s. Crisis of the 1920s and 1930s A farm crisis began in the 1920s, commonly believed to be a ...
led to the introduction of more modern farming techniques in the
Po valley The Po Valley, Po Plain, Plain of the Po, or Padan Plain ( it, Pianura Padana , or ''Val Padana'') is a major geographical feature of Northern Italy. It extends approximately in an east-west direction, with an area of including its Venetic ex ...
, while from 1878 to 1887
protectionist Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. ...
policies were introduced with the aim to establish a heavy industry base. Some large steel and iron works soon clustered around areas of high
hydropower Hydropower (from el, ὕδωρ, "water"), also known as water power, is the use of falling or fast-running water to produce electricity or to power machines. This is achieved by converting the gravitational potential or kinetic energy of a wa ...
potential, notably the Alpine foothills and Umbria in central Italy, while
Turin Turin ( , Piedmontese language, Piedmontese: ; it, Torino ) is a city and an important business and cultural centre in Northern Italy. It is the capital city of Piedmont and of the Metropolitan City of Turin, and was the first Italian capital ...
and
Milan Milan ( , , Lombard: ; it, Milano ) is a city in northern Italy, capital of Lombardy, and the second-most populous city proper in Italy after Rome. The city proper has a population of about 1.4 million, while its metropolitan city has ...
led a textile, chemical, engineering and banking boom and
Genoa Genoa ( ; it, Genova ; lij, Zêna ). is the capital of the Italian region of Liguria and the sixth-largest city in Italy. In 2015, 594,733 people lived within the city's administrative limits. As of the 2011 Italian census, the Province of Ge ...
captured civil and military
shipbuilding Shipbuilding is the construction of ships and other floating vessels. It normally takes place in a specialized facility known as a shipyard. Shipbuilders, also called shipwrights, follow a specialized occupation that traces its roots to befo ...
. However, the diffusion of
industrialisation Industrialisation ( alternatively spelled industrialization) is the period of social and economic change that transforms a human group from an agrarian society into an industrial society. This involves an extensive re-organisation of an econom ...
that characterised the northwestern area of the country largely excluded Venetia and, especially, the
South South is one of the cardinal directions or compass points. The direction is the opposite of north and is perpendicular to both east and west. Etymology The word ''south'' comes from Old English ''sūþ'', from earlier Proto-Germanic ''*sunþa ...
. The resulting
Italian diaspora , image = Map of the Italian Diaspora in the World.svg , image_caption = Map of the Italian diaspora in the world , population = worldwide , popplace = Brazil, Argentina, United States, France, Colombia, Canada, P ...
involved 29 million Italians (10.2 million of whom returned) between 1860-1985 and 9 million permanently left of 14 million who emigrated between 1876 and 1914 two thirds of whom were men; by many scholars it is considered the biggest mass migration of contemporary times. During the
Great War World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, the United States, and the Ottoman Empire, with fightin ...
, the still frail Italian state successfully fought a modern war, being able of arming and training some 5 million recruits. But this result came at a terrible cost: by the end of the war, Italy had lost 700,000 soldiers and had a ballooning sovereign debt amounting to billions of lira.


The agrarian crisis and the Italian diaspora

The
unification of Italy The unification of Italy ( it, Unità d'Italia ), also known as the ''Risorgimento'' (, ; ), was the 19th-century political and social movement that resulted in the consolidation of different states of the Italian Peninsula into a single ...
in 1861–70 broke down the feudal land system that had survived in the south since
the Middle Ages In the history of Europe, the Middle Ages or medieval period lasted approximately from the late 5th to the late 15th centuries, similar to the post-classical period of global history. It began with the fall of the Western Roman Empire a ...
, especially where land had been the inalienable property of aristocrats, religious bodies, or the king. The breakdown of
feudalism Feudalism, also known as the feudal system, was the combination of the legal, economic, military, cultural and political customs that flourished in medieval Europe between the 9th and 15th centuries. Broadly defined, it was a way of structu ...
, however, and redistribution of land did not necessarily lead to small farmers in the south winding up with land of their own or land they could work and profit from. Many remained landless, and plots grew smaller and smaller and thus more and more unproductive as land was subdivided among heirs. The
Italian diaspora , image = Map of the Italian Diaspora in the World.svg , image_caption = Map of the Italian diaspora in the world , population = worldwide , popplace = Brazil, Argentina, United States, France, Colombia, Canada, P ...
did not affect all regions of the nation equally, principally low income agricultural areas with a high proportion of small peasant land holdings. In the second phase of emigration (1900 to World War I) most emigrants were from the south and most of them were from rural areas, driven off the land by inefficient
land management Land management is the process of managing the use and development (in both urban and rural settings, but it is mostly managed in Urban places.) of land resources. Land resources are used for a variety of purposes which may include organic agri ...
policies. Robert Foerster, in ''Italian Emigration of our Times'' (1919) says, " migration has been��well nigh expulsion; it has been exodus, in the sense of depopulation; it has been characteristically permanent. ". ''
Mezzadria The metayage ; es, mediería ; it, mezzadria . system is the cultivation of land for a proprietor by one who receives a proportion of the produce, as a kind of sharecropping. Another class of land tenancy in France is named , whereby the rent is ...
'', a form of sharefarming where tenant families obtained a plot to work on from an owner and kept a reasonable share of the profits, was more prevalent in central Italy, which is one of the reasons why there was less emigration from that part of Italy. Although owning land was the basic yardstick of wealth, farming in the south was socially despised. People did not invest in agricultural equipment but in such things as low-risk state bonds.


Fascist Italy

Italy had emerged from World War I in a poor and weakened condition. The
National Fascist Party The National Fascist Party ( it, Partito Nazionale Fascista, PNF) was a political party in Italy, created by Benito Mussolini as the political expression of Italian Fascism and as a reorganization of the previous Italian Fasces of Combat. The ...
of
Benito Mussolini Benito Amilcare Andrea Mussolini (; 29 July 188328 April 1945) was an Italian politician and journalist who founded and led the National Fascist Party. He was Prime Minister of Italy from the March on Rome in 1922 until his deposition in 194 ...
came to power in Italy in 1922, at the end of a period of social unrest. During the first four years of the new regime, from 1922 to 1925, the Fascist had a generally
laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups. A ...
economic policy: they initially reduced taxes, regulations and trade restrictions on the whole. However, "once Mussolini acquired a firmer hold of power... laissez-faire was progressively abandoned in favour of government intervention, free trade was replaced by
protectionism Protectionism, sometimes referred to as trade protectionism, is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. ...
and economic objectives were increasingly couched in exhortations and military terminology." Italy reached a balanced budget in 1924–25 and was only partially hit by the 1929 crisis. The Fascist government nationalized the holdings of large banks which had accrued significant industrial securities, and a number of mixed entities were formed, whose purpose was to bring together representatives of the government and major businesses. These representatives discussed economic policy and manipulated prices and wages to satisfy both the wishes of the government and the wishes of business. This economic model based on a partnership between government and business was soon extended to the political sphere, in what came to be known as
corporatism Corporatism is a collectivist political ideology which advocates the organization of society by corporate groups, such as agricultural, labour, military, business, scientific, or guild associations, on the basis of their common interests. The ...
. Throughout the 1930s, the Italian economy maintained the corporatist and autarchic model that had been established during the Great Depression. At the same time, however, Mussolini had growing ambitions of extending Italy's foreign influence through both diplomacy and military intervention. After the invasion of Ethiopia, Italy began supplying troops and equipment to the Spanish nationalists under General
Francisco Franco Francisco Franco Bahamonde (; 4 December 1892 – 20 November 1975) was a Spanish general who led the Nationalist forces in overthrowing the Second Spanish Republic during the Spanish Civil War and thereafter ruled over Spain from 193 ...
, who were fighting in the
Spanish Civil War The Spanish Civil War ( es, Guerra Civil Española)) or The Revolution ( es, La Revolución, link=no) among Nationalists, the Fourth Carlist War ( es, Cuarta Guerra Carlista, link=no) among Carlists, and The Rebellion ( es, La Rebelión, link ...
against a leftist government. These foreign interventions required increased military spending, and the Italian economy became increasingly subordinated to the needs of its armed forces. By 1938, only 5.18% of workers were state employees. Only one million workers, out of a total 20 million, were employed in the public sector. Finally, Italy's involvement in World War II as a member of the
Axis powers The Axis powers, ; it, Potenze dell'Asse ; ja, 枢軸国 ''Sūjikukoku'', group=nb originally called the Rome–Berlin Axis, was a military coalition that initiated World War II and fought against the Allies. Its principal members were N ...
required the establishment of a
war economy A war economy or wartime economy is the set of contingencies undertaken by a modern State (polity), state to mobilize its economy for Materiel, war production. Philippe Le Billon describes a war economy as a "system of Production (economics), p ...
. This put severe strain on the corporatist model, since the war quickly started going badly for Italy and it became difficult for the government to persuade business leaders to finance what they saw as a military disaster. The
Allied invasion of Italy The Allied invasion of Italy was the Allied amphibious landing on mainland Italy that took place from 3 September 1943, during the Italian campaign of World War II. The operation was undertaken by General Sir Harold Alexander's 15th Army G ...
in 1943 caused the Italian political structure—and the economy—to rapidly collapse. The Allies, on the one hand, and the Germans on the other, took over the administration of the areas of Italy under their control. By the end of the war the Italian economy had been destroyed.


Post-World War II economic miracle

:''Main: Post-World War II economic growth and increased industrial production in Italy'' The Italian economy has had very variable growth. In the 1950s and early 1960s, the Italian economy was booming, with record high growth rates, including 6.4% in 1959, 5.8% in 1960, 6.8% in 1961, and 6.1% in 1962. This rapid and sustained growth was due to the ambitions of several Italian businesspeople, the opening of new industries (helped by the discovery of hydrocarbons, made for iron and steel, in the
Po valley The Po Valley, Po Plain, Plain of the Po, or Padan Plain ( it, Pianura Padana , or ''Val Padana'') is a major geographical feature of Northern Italy. It extends approximately in an east-west direction, with an area of including its Venetic ex ...
), re-construction and modernization of most Italian cities, such as Milan, Rome and Turin, and the aid given to the country after World War II (notably the
Marshall Plan The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. The United States transferred over $13 billion (equivalent of about $ in ) in economic re ...
). After the end of World War II, Italy was in rubble and occupied by foreign armies, a condition that worsened the chronic development gap towards the more advanced European economies. However, the new geopolitical logic of the Cold War made possible that the former enemy Italy, a hinge-country between Western Europe and the
Mediterranean The Mediterranean Sea is a sea connected to the Atlantic Ocean, surrounded by the Mediterranean Basin and almost completely enclosed by land: on the north by Western and Southern Europe and Anatolia, on the south by North Africa, and on the ea ...
, and now a new, fragile democracy threatened by the
NATO The North Atlantic Treaty Organization (NATO, ; french: Organisation du traité de l'Atlantique nord, ), also called the North Atlantic Alliance, is an intergovernmental military alliance between 30 member states – 28 European and two Nor ...
occupation forces, the proximity of the
Iron Curtain The Iron Curtain was the political boundary dividing Europe into two separate areas from the end of World War II in 1945 until the end of the Cold War in 1991. The term symbolizes the efforts by the Soviet Union (USSR) to block itself and its s ...
and the presence of a strong
Communist party A communist party is a political party that seeks to realize the socio-economic goals of communism. The term ''communist party'' was popularized by the title of '' The Manifesto of the Communist Party'' (1848) by Karl Marx and Friedrich Engels. ...
, was considered by the United States as an important ally for the
Free World The Free World is a propaganda term, primarily used during the Cold War from 1945 to 1991, to refer to the Western Bloc and similar countries. It also more broadly refers to all non-communist and democratic countries. It has traditionally prima ...
, and received under the
Marshall Plan The Marshall Plan (officially the European Recovery Program, ERP) was an American initiative enacted in 1948 to provide foreign aid to Western Europe. The United States transferred over $13 billion (equivalent of about $ in ) in economic re ...
over US$1.2 billion from 1947 to 1951. The end of aid through the Plan could have stopped the recovery but it coincided with a crucial point in the
Korean War {{Infobox military conflict , conflict = Korean War , partof = the Cold War and the Korean conflict , image = Korean War Montage 2.png , image_size = 300px , caption = Clockwise from top:{{ ...
whose demand for metal and manufactured products was a further stimulus of Italian industrial production. In addition, the creation in 1957 of the European Common Market, with Italy as a founding member, provided more investment and eased exports. These favorable developments, combined with the presence of a large labour force, laid the foundation for spectacular economic growth that lasted almost uninterrupted until the "
Hot Autumn The Hot Autumn ( it, Autunno caldo) of 1969–70 is a term used for a series of large strikes in the factories and industrial centers of Northern Italy, in which workers demanded better pay and better conditions. During 1969 and 1970 there were o ...
's" massive strikes and social unrest of 1969–70, which then combined with the later 1973 oil crisis and put an abrupt end to the prolonged boom. It has been calculated that the Italian economy experienced an average rate of growth of GDP of 5.8% per year between 1951 and 1963, and 5% per year between 1964 and 1973. Italian rates of growth were second only, but very close, to the German rates, in Europe, and among the OEEC countries only Japan had been doing better.


1964–1991

After 1964, Italy maintained for a while a constant growth rate of above 8% every year. Later on, due to political, economical and social problems in the country during the late-1960s and most of the 1970s, the economy went stagnant and in 1975, entered its first recession after that of the late-1940s. The problems included an increasingly high inflation rate, high energy prices (Italy is highly dependent on foreign oil and natural gas resources). This economic recession went on into the early-1980s until a reduction of public costs and spendings, tighter budgets and deficits, a steady economic growth, and a lowered inflation rate resulted in Italy left recession by 1983 as a result of this recovery plan. This plan led to an increasing GDP growth, lower inflation, and increased industrial/agricultural/commercial produce, exports and output, yet made the unemployment rate rise. A decrease in energy prices and lowered value of the dollar led to foreign exchange being liberalised and the economy to re-grow rapidly. In 1987, Italy briefly surpassed the
British economy The economy of the United Kingdom is a highly developed social market and market-orientated economy. It is the sixth-largest national economy in the world measured by nominal gross domestic product (GDP), ninth-largest by purchasing power p ...
, becoming the sixth in the world. The 1970s and 1980s was also the period of investment and rapid economic growth in the South, unlike Northern and Central Italy which mainly grew in the 1950s and early 1960s. The "Vanoni Plan" ensured that a new programme to help growth in the South called "Cassa per il Mezzogiorno" (Funds for the "Mezzogiorno" - the latter being an unofficial term for Southern Italy, literally meaning "midday") was put in place. Investment was worth billions of US dollars: from 1951 to 1978, the funds spent in the South was $11.5 billion for infrastructure, $13 billion for low-cost loans, and outrighted grants were worth $3.2 billion. On 15 May 1991, Italy became the fourth worldwide economic power, overcoming France, called the "secondo sorpasso" with a GDP of US$1.268 trillion, compared to France's GDP of US$1.209 trillion and Britain's of US$1.087 trillion. Despite the alleged 1987 GDP growth of 18% according to
the Economist ''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econo ...
's Italy was then re-overtaken by all countries due to currency value change.


The 1970s and 1980s: from stagflation to "il sorpasso"

The 1970s were a period of economic, political turmoil and social unrest in Italy, known as Years of lead. Unemployment rose sharply, especially among the young, and by 1977 there were one million unemployed people under age 24. Inflation continued, aggravated by the increases in the price of oil in 1973 and 1979. The budget deficit became permanent and intractable, averaging about 10 percent of the gross domestic product (GDP), higher than any other industrial country. The lira fell steadily, from 560 lira to the U.S. dollar in 1973 to 1,400 lira in 1982. The economic recession went on into the mid-1980s until a set of reforms led to the independence of the
Bank of Italy The Bank of Italy (Italian: ''Banca d'Italia'', informally referred to as ''Bankitalia''), (), is the central bank of Italy and part of the European System of Central Banks. It is located in Palazzo Koch, via Nazionale, Rome. The bank's cur ...
and a big reduction of the indexation of wages that strongly reduced inflation rates, from 20.6% in 1980 to 4.7% in 1987. The new macroeconomic and political stability resulted in a second, export-led "economic miracle", based on
small and medium-sized enterprises Small and medium-sized enterprises (SMEs) or small and medium-sized businesses (SMBs) are businesses whose personnel and revenue numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Ba ...
, producing clothing, leather products, shoes, furniture, textiles, jewelry, and machine tools. As a result of this rapid expansion, in 1987 Italy overtook the UK's economy (an event known as '' il sorpasso''), becoming the fourth richest nation in the world, after the US, Japan and
West Germany West Germany is the colloquial term used to indicate the Federal Republic of Germany (FRG; german: Bundesrepublik Deutschland , BRD) between its formation on 23 May 1949 and the German reunification through the accession of East Germany on 3 ...
. The
Milan stock exchange Borsa Italiana, based in Milan, is the Italian stock exchange. It manages and organises domestic market, regulating procedures for admission and listing of companies and intermediaries and supervising disclosures for listed companies.italy24.il ...
increased its market capitalization more than fivefold in the space of a few years. However, the Italian economy of the 1980s presented a problem: it was booming, thanks to increased productivity and surging exports, but unsustainable fiscal deficits drove the growth. In the 1990s, the new Maastricht criteria boosted the urge to curb the public debt, already at 104% of GDP in 1992. The consequent restrictive economic policies worsened the impact of the
global recession A global recession is recession that affects many countries around the world—that is, a period of global economic slowdown or declining economic output. Definitions The International Monetary Fund defines a global recession as "a decline i ...
already underway. After a brief recovery at the end of the 1990s, high tax rates and
red tape Red tape is an idiom referring to regulations or conformity to formal rules or standards which are claimed to be excessive, rigid or redundant, or to bureaucracy claimed to hinder or prevent action or decision-making. It is usually applied to ...
caused the country to stagnate between 2000 and 2008.


1990s

By the 1990s, the Italian government was fighting to lower the internal and external debt, liberalise the economy, reduce governmental spending, selling business and enterprises owned by the state, and trying to stop
tax evasion Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to reduce the taxp ...
; the liberalisation of the economy meant that Italy was able to enter the
EMU The emu () (''Dromaius novaehollandiae'') is the second-tallest living bird after its ratite relative the ostrich. It is endemic to Australia where it is the largest native bird and the only extant member of the genus ''Dromaius''. The em ...
(European Monetary Union) and it later, in 1999, qualified to enter the
eurozone The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro ( €) as their primary currency and sole legal tender, and have thus fully implemented EMU polici ...
. However, the main problem which plagued the 1990s, and still plagues the economy today, was tax evasion and underground "black market" business, whose value is an estimated 25% of the country's gross domestic product. Despite social and political attempts to reduce the difference in wealth between the North and South, and Southern Italy's modernisation, the economic gap remained still pretty wide. In the 1990s, and still today, Italy's strength was not the big enterprises or corporation, but small to middle-sized family owned businesses and industries, which mainly operated in the North-Western "economic/industrial triangle" (
Milan Milan ( , , Lombard: ; it, Milano ) is a city in northern Italy, capital of Lombardy, and the second-most populous city proper in Italy after Rome. The city proper has a population of about 1.4 million, while its metropolitan city has ...
-
Turin Turin ( , Piedmontese language, Piedmontese: ; it, Torino ) is a city and an important business and cultural centre in Northern Italy. It is the capital city of Piedmont and of the Metropolitan City of Turin, and was the first Italian capital ...
-
Genoa Genoa ( ; it, Genova ; lij, Zêna ). is the capital of the Italian region of Liguria and the sixth-largest city in Italy. In 2015, 594,733 people lived within the city's administrative limits. As of the 2011 Italian census, the Province of Ge ...
). Italy's companies are comparatively smaller than those of similar countries in size or of the EU, and rather than the common trend of less, yet bigger businesses, Italy concentrated on more, yet smaller enterprises. This can be seen in the fact, that the average workers per company in the country is of 3.6 employees (8.7 for industrial/manufacturing-orientated businesses), compared to the Western European Union average of 15 workers. In the recent decades, however, Italy's economic growth has been particularly stagnant, with an average of 1.23% compared to an EU average of 2.28%. Previously, Italy's economy had accelerated from 0.7% growth in 1996 to 1.4% in 1999 and continued to rise to about 2.90% in 2000, which was closer to the EU projected growth rate of 3.10%. In a 2017 paper, economists Bruno Pellegrino and Luigi Zingales attribute the decline in Italian labor productivity since the mid-1990s to familyism and cronyism:
 We find no evidence that this slowdown is due to trade dynamics, Italy’s inefficient governmental apparatus, or excessively protective labor regulations. By contrast, the data suggest that Italy’s slowdown was more likely caused by the failure of its firms to take full advantage of the ICT revolution. While many institutional features can account for this failure, a prominent one is the lack of meritocracy in the selection and rewarding of managers. Familyism and cronyism are the ultimate causes of the Italian disease.


21st century

Italy's economy in the 21st century has been mixed, experiencing both relative economic growth and stagnation, recession and stability. In the
late 2000s recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...
, Italy was one of a few countries whose economy did not contract dramatically, and kept a relatively stable economic growth, although figures for economic growth in 2009 and 2010 averaged in the negatives, ranging from around -1% to -5%. The late-first decade of the 21st century recession has also gripped Italy; car sales in Italy have fallen by almost 20 percent over each of the past two months. Italy's car workers' union said; "The situation is evidently more serious than had been understood." On 10 July 2008 economic think tank ISAE lowered its growth forecast for Italy to 0.4 percent from 0.5 percent and cut the 2009 outlook to 0.7 percent from 1.2 percent. Analysts have predicted Italy had entered a recession in the second quarter or would enter one by the end of the year with business confidence at its lowest levels since the September 11 attacks. Italy's economy contracted by 0.3 percent in the second quarter of 2008. In the 4 quarters of 2006, Italy's growth rates were approximately these: +0.6% in the Q1, +0.6% in the Q2, +0.65% in the Q3, and +1% in the Q4. Similarly, in 2007's 4 quarters, these were the figures: +0.25% in the Q1, +0.1% in the Q2, +0.2% in the Q3, and -0.5% in the Q4. In the 4 of 2008's quarters, the results, mainly negative, were these: +0.5% in the Q1, -0.6% in the Q2, -0.65% in the Q3 and -2.2% in the Q4. In the Q1 (1st quarter) of 2009, Italy's economy contracted by 4.9%, a greater contraction than the predictions of the
Italian government The government of Italy is in the form of a democratic republic, and was established by a constitution in 1948. It consists of legislative, executive, and judicial subdivisions, as well as a Head of State, or President. The Italian Constitutio ...
, which believed that it would be of at most 4.8%. The Q2 (2nd quarter) saw a smaller decrease in GDP, more or less that of -1%, and by the Q3 (3rd quarter), the economy began to re-grow slightly, with GDP increase rates of about +0.2% to +0.6%. Yet, in the Q4 (4th quarter) of the year 2009, Italy's GDP growth was of -0.2%. ISTAT predicts that Italy's falling economic growth rate is due to a general decrease in the country's industrial production and exports. However, the Government of Italy believes that 2010 and beyond will bring higher growth rates: anything from circa +0.7% – +1.1%.


Great Recession

Italy was among the countries hit hardest by the
Great Recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At t ...
of 2008–2009 and the subsequent
European debt crisis The European debt crisis, often also referred to as the eurozone crisis or the European sovereign debt crisis, is a multi-year debt crisis that took place in the European Union (EU) from 2009 until the mid to late 2010s. Several eurozone membe ...
. The national economy shrunk by 6.76% during the whole period, totaling seven-quarters of recession. In November 2011 the Italian bond yield was 6.74 percent for 10-year bonds, nearing a 7 percent level where Italy is thought to lose access to financial markets. According to
Eurostat Eurostat ('European Statistical Office'; DG ESTAT) is a Directorate-General of the European Commission located in the Kirchberg quarter of Luxembourg City, Luxembourg. Eurostat's main responsibilities are to provide statistical information to ...
, in 2015 the Italian government debt stood at 128% of GDP, ranking as the second biggest debt ratio after
Greece Greece,, or , romanized: ', officially the Hellenic Republic, is a country in Southeast Europe. It is situated on the southern tip of the Balkans, and is located at the crossroads of Europe, Asia, and Africa. Greece shares land borders with ...
(with 175%). However, the biggest chunk of Italian public debt is owned by Italian nationals and relatively high levels of private savings and low levels of private indebtedness are seen as making it the safest among Europe's struggling economies. As a shock therapy to avoid the debt crisis and kick-start growth, the
national unity government A national unity government, government of national unity (GNU), or national union government is a broad coalition government consisting of all parties (or all major parties) in the legislature, usually formed during a time of war or other nati ...
led by the economist
Mario Monti Mario Monti, (born 19 March 1943) is an Italian economist and academic who served as the Prime Minister of Italy from 2011 to 2013, leading a technocratic government in the wake of the Italian debt crisis. Monti served as a European Commiss ...
launched a program of massive
austerity measures Austerity is a set of political-economic policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both. There are three primary types of austerity measures: higher taxes to fund spend ...
, that brought down the deficit but precipitated the country in a
double-dip recession Recession shapes or recovery shapes are used by economists to describe different types of recessions and their subsequent recoveries. There is no specific academic theory or classification system for recession shapes; rather the terminology is us ...
in 2012 and 2013, receiving criticism from numerous economists.


Economic recovery

From 2014 to 2019 the economy had almost fully recovered from the
Great Recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At t ...
of 2008 despite not having growth rates like the rest of the countries in the
Euro area The euro area, commonly called eurozone (EZ), is a currency union of 19 member states of the European Union (EU) that have adopted the euro ( €) as their primary currency and sole legal tender, and have thus fully implemented EMU policie ...
.


Resilience to the Covid-19 pandemic

Italy was the first among the countries of Europe to be affected by the COVID-19 pandemic, which in the months after February 2020 expanded to the rest of the world. The economy suffered a very severe shock as a result of the
lockdown A lockdown is a restriction policy for people, community or a country to stay where they are, usually due to specific risks (such as COVID-19) that could possibly harm the people if they move and interact freely. The term is used for a prison ...
of most of the country's economic activity. By the end of May 2020, however, the epidemic was under control, and the economy began to start up again, especially the manufacturing sector. The economy remains
resilient Resilience, resilient, resiliency, or ''variation'', may refer to: Science Ecology * Ecological resilience, the capacity of an ecosystem to recover from perturbations ** Climate resilience, the ability of systems to recover from climate change * ...
, although far below the values prior to the COVID-19 pandemic. The Italian government has issued special BTP Futura to compensate for the rising costs of
health care costs Health, according to the World Health Organization, is "a state of complete physical, mental and social well-being and not merely the absence of disease and infirmity".World Health Organization. (2006)''Constitution of the World Health Organiz ...
to deal with the COVID-19 pandemic in Italy, waiting for Europe to proceed with a unitary support through the European Recovery Fund.


GDP (PPP) growth

A table showing the growth of Italy's
GDP Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...
(PPP) growth from 2000 to 2008:


GDP (PPP) per capita growth

A table showing Italy's GDP per capita (PPP) growth from 2000 to 2008:


GDP sector composition

A table showing the different compositions of the Italian economy:


Other statistics

* Central Bank discount rate: 0.25% (31 December 2013), 0.75% (31 December 2012) * Commercial bank prime lending rate: 5.2% (31 December 2013), 5.22% (31 December 2012) * Stock of domestic credit: $3.407 trillion (31 December 2013), $3.438 trillion (31 December 2012) * Market value of publicly traded shares: $480.5 billion (31 December 2013), $$431.5 billion (31 December 2012), $318.1 billion (31 December 2006) * Industrial production growth rate: -2.7% (2013 est.) * Electricity – exports: 2.304 billion kWh (2012 est.) * Electricity – imports: 45.41 billion kWh (2013 est.) * Crude Oil – production: (2012 est.) * Crude Oil – exports: (2010 est.) * Crude Oil – imports: (2010 est.) * Crude Oil – proved reserves: (1 January 2013 est.) * Natural gas – production: 7.8 km³ (2012 est.) * Natural gas – consumption: 68.7 km³ (2012 est.) * Natural gas – exports: 324,000,000 m³ (2012 est.) * Natural gas – imports: 67.8 km³ (2012 est.) * Natural gas – proved reserves: 62.35 km³ (1 January 2013 est.) * Current account balance: -$2.4 billion (2013 est.), -$14.88 billion (2012 est.) * Reserves of foreign exchange and gold: $181.7 billion (31 December 2012 est.), $173.3 billion (31 December 2011 est.) * Debt – external: $2.604 trillion (31 December 2013 est.), $2.516 trillion (31 December 2012 est.) * Stock of direct foreign investment – at home: $466.3 billion (31 December 2013 est.), $457.8 billion (31 December 2012 est.) * Stock of direct foreign investment – abroad: $683.6 billion (31 December 2013 est.), $653.3 billion (31 December 2012 est.) * Exchange rates: euros (EUR) per US dollar – 0.7634 (2013), 0.7752 (2012), 0.755 (2010), 0.7198 (2009), 0.6827 (2008)


Notes

*


References


Further reading

* * Cipolla, Carlo M. “The Decline of Italy: The Case of a Fully Matured Economy.” ''Economic History Review'' 5#2 1952, pp. 178–187
online
on 1600 to 1670. * Federico, Giovanni, Alessandro Nuvolari, and Michelangelo Vasta. "The origins of the Italian regional divide: Evidence from real wages, 1861–1913." ''Journal of Economic History'' 79.1 (2019): 63-98
online
* * *Gabbuti, Giacomo. 2020. " Labor shares and inequality: insights from Italian economic history, 1895–1970." ''European Review of Economic History.'' * * * * * * *
online reviewanother online review
* {{DEFAULTSORT:Economic History Of Italy