Italy’s economic decline: a review of the debate
An increasing number of scholars tend to interpret the weak performance of
the Italian economy as a consequence of structural decline, in particular since the
early 1990s. This view is supported by adverse trends in a wide range of indicators:
real per capita GDP, labour productivity, total factor productivity and international
competitiveness measured by both net exports and foreign direct investments.
The major structural weaknesses that have been identified in the Italian
economy feature: low research and development activity, weak innovative
capacity, a human capital gap relative to other industrial countries, an excessive
number of small-size firms, rigidities in the labour market, various inefficiencies
of financial markets, low competitive pressures owing to heavily regulated product
markets, inadequacy of public infrastructures, poor quality of certain public
institutions. There is a broad consensus that a sustained growth strategy requires
a set of structural reforms, both of product, labour and financial markets and of
the public institutional setting. Nevertheless, for a number of reasons considered
in this paper, the implementation of such a reform program appears to be slow
and difficult.