Italy Economic Conditions

In the first five years of the 21st century. the Italian GDP grew by 0.4 % overall, defining a picture of serious stagnation, which only at the beginning of 2006 seems to be overcoming. Both public finances, investment levels and household budgets, forced to contain their consumption, were heavily affected. The value of $ 26,000 in per capita income hides social imbalances that are on the way to accentuating, in particular between the 10 % of the population that holds over 45 % of net wealth and that 13% which is placed in the ‘relative poverty’ range (particularly felt by those who do not have their own housing). As a rule, in the period considered, the incomes of self-employed workers increased by more than 10 %, against less than 2 % for those employed and retired; on a territorial level, there was a worsening of the traditional gap (40 % in 2005) between the product of the Center-North and that of the South, which in some years even recorded negative results. The total level of employment appears stable, but unemployment has dropped to around an average of 8%, even in this case, however, a marked contrast emerges for the South, where the employment balance was negative and especially youth unemployment remains very high. It should also be noted that the country’s employment situation is difficult to estimate in its real extent due to the importance recently assumed by the various forms of fixed-term contracts and the persistence of very large pockets of undeclared work and informal economy, especially in the South..

The contribution of the primary sector to the formation of GDP stabilized at around 3 % against an employment share of 4 %. Although many traits of backwardness remain, it is in the excess of company fragmentation (less than 5 % of companies over 20ha) and in the relief of outdated cultivation systems, valid innovative pressures are also being consolidated, which have stimulated a slight recovery in employment. In the sense of relaunching, among other things, the decisive increase in land destined for organic crops and the widespread search for quality productions, enhanced through local brands of origin (in the first place for wine, oil and dairy products) should be read. The large presence of foreign labor, generally commuters and cheap, contributes to the containment of the costs of many crops, whose exploitation – especially in some countryside of the South – has unfortunately re-proposed hateful forms of illegal hiring and performances without any control. and warranty. From the industrial sector comes the 27% of gross product with employment valued at 31%. The early 2000s saw the difficulties of many branches grow under the joint attack of the great global hubs of advanced technologies, on the one hand, and low-cost production of emerging economies, on the other. In the leading sectors, in particular, defects in strategic vision and modest investments in innovation have rapidly demolished the potential, albeit significant, of the Italian IT and chemical poles, have eroded many market outlets for consumer electronics, have stirred the waters of a branch as brilliant as electromechanics. Even businesses still rich in technological skills, such as civil aeronautics and aerospace, suffer from shortages of critical mass. Only the leading auto industry seems to be regaining momentum after a crisis that has shaken its roots, causing fear of its ‘capture’ by foreign multinationals. The result of this process is a further reduction in the employment of large companies, with high social costs and with the reduction of8 % of the incidence of high-tech goods on the export of manufactured goods.

The more traditional productions and small businesses, which have their strong point in the textile-clothing sector, are enduring a tough confrontation with the modest price offered by competitors from the newly industrialized countries (China in the lead). For some time now, the winning responses have been based on quality improvement and organization in specialized local districts; but in the most recent period the tendency to leave the local dimension has strengthened, involving in the production phases the foreign areas able to offer better skills and lower costs. In fact, the geography of the Third Italy, which had more or less vast and articulated district cells at its base, is undergoing a profound mutation: districts with cohesion and weaker productions enter into crisis; others break their original territorial anchorage, projecting themselves with the factories in a relative continuity beyond the eastern borders (for example, from Friuli-Venezia Giulia, from Veneto, from Emilia-Romagna to Slovenia, Croatia, Slovakia, Hungary and, above all,, Romania; from Puglia to Albania and Monte-negro); finally, other districts seek a further complement through partners or direct investments in various Asian countries.

In addition to the breakdown of the territorial scheme, the 21st century. brings a significant change in the dimensional structure of the Italian manufacturing company, which has always centered on the dualism between a few giants and a multitude of small operators. In fact, a marked protagonism of medium-sized enterprises is emerging: more than 4000 would already be found in an ‘enlarged North’, and they would have an employment – growing – of over 600,000 workers; above all, many of them would boast a strong internationalization and export levels increased by 50 % in the first five years of the millennium, heralding a real revolution in the panorama of Italian industrial capitalism.

According to Usaers, the country’s journey towards a service economy has now been completed: 70 % of GDP is attributed to the tertiary sector against 65% of employment. The trade component continues its evolution with the gradual decline of employees in retail businesses and the decisive increase in the weight of large-scale distribution: the phenomenon does not lack significant repercussions on the landscape and on the circulation of the cities and their suburbs. The branch most marked by innovative parables and hard comparisons of interests – given its economic centrality – is that of banks, in which a season of mergers, European agreements and attempts to penetrate foreign capital has begun. In the general framework of a privatization policy, also for the management of infrastructures (water and energy networks, motorways, railways, airports, telecommunications), lively confrontations have emerged between collective interests, Italian and foreign public actors and private operators. The control of the port docks has taken on particular importance, after the increase in merchant traffic between Europe and East and South-East Asia has re-evaluated the position of the peninsula along the Mediterranean routes. In the overall movement (next in 2002 to 460 million tonnes), without prejudice to the primacy of Trieste and Genoa, the participation of southern merchant landings has increased, starting from Taranto (operational base of a large Australian company) and Naples (chosen by the Chinese national airline) to touch then Gioia Tauro (which stands as a privileged platform for the movement of containers). The introduction of the ‘motorways of the sea’, intended to relieve heavy vehicle traffic along the peninsula with specialized ferries, has benefited a lot from the Salerno and Naples airports, while the latter has reassembled the rankings also for transits cruise ships. If cruises have marked the growing fortunes of some large Italian shipping companies, the rest of the tourism movement has withstood the psychosis of international terrorism and the strong competition from new, less expensive and better organized holiday destinations with some difficulty. In particular, the slight decrease in total arrivals (on 82 million individuals) was accompanied by a contraction in the average periods of stay; but the share of foreign visitors (out of 37 million) still makes up the Italy the fifth tourist destination in the world, generating a positive balance of the sector in the order of 10 billion euros per year. More or less the same amount was the positive value of the balance of trade flows before the prevalence of incoming goods occurred in 2004: in the same year the share of international trade held by the country fell below 4 % due to an index of competitiveness that sees him fall back in the world rankings even to 45Th place. If the rise in the energy bill weighs heavily on imports in particular, which acts as a corollary to the heavy dependence on foreign supplies, the repercussions of the winning offensives conducted by the new producers of consumer goods, especially in civil electronics and fields, are increasingly felt., such as textiles and clothing, where the barriers to the spread of emerging economies have eased. Moreover, it should not be forgotten that part of the goods imported in some branches are now semi-finished products destined to resume their way abroad with prestigious Italian labels. After all, the productions of the fashion sector remain (with 10%) on top of our exports after those of mechanics and cars. A good half of our exchanges take place within the borders of the European Union, with increasing attention to its eastern section; in exports, the United States followed; the oil countries and East Asia emerge. Perhaps foreign trade is the area in which the imbalance in production structures and openings to globalization within the Italy is best read, given that the propensity to export from the Center-North is estimated at 25 % compared to the GDP of the ‘area, while that of the South and the islands still does not exceed 10 % (which is also their share of the country’s exports).

Italy Economic Conditions