Italy - Berluscon's Challenge

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On the campaign trail, Berlusconi proclaimed himself a champion of Italy's private sector. While in office, however, he has put $11 billion in planned privatizations on ice and failed to take steps to liberalize key sectors. And contrary to campaign promises, he has frozen public investment in infrastructure and research and development at 2001 levels.

- Business Week, 19th November 2002

We have to give priority to creating new jobs, even if the economic situation is difficult at the moment.¹

- Silvio Berlusconi, Prime Minister, Italy

Introduction

In 2003, Italy, one of Europe's most important countries, was the sixth largest economy in the world after the US, Japan, Germany, Britain and France. Poor in natural resources, Italy's landscape was dominated by mountains and rugged hills, with some plains and coastal lowlands. Only about 30% of the terrain was composed of arable land. Despite these handicaps, Italy had made tremendous progress over the years. The country had some top class universities. Some of its scientists had even won the Nobel Prize. Unlike many other Europeans, Italians had not feared losing their national identity after the launch of the Euro.

Even after 140 years of reunification, the country had not developed a strong national identity. As the launch of the Euro approached, the general thinking seemed to be that any alternative was preferable, since Italy had been so badly managed by local politicians. Many of the recent positive developments including increased competition, reduced red tape and growing privatization had been prompted by the Euro. People believed that European institutions would impose necessary checks and balances on Italian politicians...

Excerpts >>

1] Elisa Cecchi, “PM promises reforms and economic recovery,” Italy Daily, 10th June 2003.

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