Semantron 23 Summer 2023

Italy’s pallid growth

Severe inequality of opportunity stymies long-term growth by reducing its potential and entrenching poverty. 6 Such inequality was (and still remains) prevalent in Italy, in the form of social prejudices rooted in the historical ‘North - South divide’ – a distinctive feature of Italian economic development since the country’s political unification in 1861. Political forces of the north treated the south as a ‘barbaric region in need of governmental intervention’, 7 which persisted due to the worsening southern economy, leading to high rates of poverty, organized crime, and a divide sustained by cultural, social, and commercial tensions and disparities. It is important to note that although Italy’s economic indicat ors for the 21 st century, from per capita income to labour productivity, document long- term (or ‘secular’) stagnation, aggregate national values conceal the rise in regional disparities. Hence, this essay will consult data on regional incomes, wealth, and employment, as it is these that are necessary to provide an accurate picture of the economic conditions of certain groups of Italians.


Italy: an economic and demographic profile

With a collapsed political structure, occupation by foreign armies, and a chronic development gap among the more advanced European economies, post-war Italy was in ruins. However, multiple favourable developments in subsequent decades 8 laid the foundation for spectacular economic growth, often called the ‘Italian economic miracle’. 9 The doubling of Italian GDP between 1950 and 1962, and average of 5.0% growth until 1973 allowed the Italian economy to be rapidly modernized and its culture to flourish. In 1987 Italy overtook the UK's economy in nominal GDP (an event known as il sorpasso ), becoming the fourth richest nation in the world, after the US, Japan and West Germany, with the Milan stock exchange increasing its market capitalization more than fivefold in the space of a few years. 10 From around the year 2000, however, Italy has experienced economic stagnation (Fig. 2) which continues to the present day. Real national output before the COVID-19 pandemic was still 5 per cent below its pre-crisis peak of 2008. Italy and Greece were the only EU countries that failed to recover to the levels of 15 years ago. 11

6 Aiyar and Ebeke 2021. 7 Deakins 2020.

8 Such developments included aid from the Marshall Plan ($1.2bn from 1947 to 1951), increased demand for metal and manufactured products during the Korean War (1950-53), which further stimulated Italian industrial production, the creation of the European Common Market in 1957, with Italy a founding member, providing more investment and easing of exports, as well as a large labour force. Italy experienced stagflation (and recession) during the 1970s, as political turmoil, social unrest, and sharply rising unemployment rates (among the young especially, with over 1 million unemployed between the ages 16-24 by 1977) was coupled with the increases in the price of oil in 1973 and 1979. It was only until reforms that led to the independence of the Bank of Italy in the mid- 1980s (which reduced the indexation of wages and strongly reduced inflation rates, from 20.6% in 1980 to 4.7% in 1987) that ended the economic recession before the second, export- led ‘economic miracle’ based on small and medium-sized enterprises, producing clothing, leather products, shoes, furniture, textiles, jewellery, and machine tools occurred.

9 ‘Italian economic miracle’ 2022 . 10 2022: ‘Principali indicatori 2012’ . 11 ‘Why Italy’s economy is stagnating’ 2018 .


Made with FlippingBook - Online catalogs