Italy's dysfunctional political economy

Abstract

Italians are advanced in age, short in education, carry a heavy financial burden, and the road ahead is uphill. Although this picture is distorted (for the worse) by the ongoing underdevelopment of the south, the fact remains that since the 1970s Italy's elites have failed to meet the challenges of economic adjustment and political development, leaving the country's economy insufficiently prepared to meet the future. Against a background of declining total factor productivity growth, the decline of large industrial companies, their replacement in Italian production by small and medium-sized firms, and a diminishing share of world exports, the country's economy is responding poorly to the post-devaluation era of euro-zone membership.

Notes

1. The Programme for International Student Assessment, or PISA, is a triennial worldwide test of 15-year-old schoolchildren's scholastic performance. See OECD (2004a; 2004b).

2. The ‘putting-out’ system (also known as the workshop system), under which work was contracted by a firm to subcontractors who completed the work, often in their own homes, was originally used in British industrial trades and continued until the end of the nineteenth century.

3. Mezzeria, or ‘halving’ (in reality a division by agreement) of the produce of the land between landowner and landholder, was widespread in many parts of Italy.