Italy’s Long Way into the Crisis
The current government crisis in Italy is raising concerns that the eurozone's third-largest economy could collapse. The fact that this development has a long history can be seen in the article by Giuseppe Bertola, University of Turin, in our current EEAG report.
“To understand how a country can fail to react constructively to the challenges ansd opportunities of a changing world, consider Italy’s 25 years of stagnation and creisis experience,” writes Bertola.
Italy is hovering at around 60 percent of the European average of the real income per capital throughout Word War I and the depression, then crashing to 40 percent after world war II. Later Italy was shooting from 70 to 105 percent of the European average, outshining both France and Germany. Fast post-war growth originated in opportunities for change that Italy exploited effectively: Adoption of American technology, urbaization, and internal migration increased the economy's productivity. The striking relative decline starts in the 1990s, accelerates in the 2000s, and continues over the past decade.
Article
Andersen, Torben M. / Bertola, Giuseppe / Driffill, John / Fuest, Clemens / James, Harold / Sturm, Jan-Egbert / Uroševic, Branko
CESifo Group Munich, Munich, 2019
in: EEAG Report on the European Economy 2019, 38-60