Italy - Berluscon's Challenge

Case Code: ECOA124
Case Length: 15 Pages
Period: 2003
Pub Date: 2003
Teaching Note: Not Available

Price: Rs.300
Organization : -
Industry : -
Countries : Italy
Themes: -

Excerpts

Background Note

Despite massive destruction of its infrastructure, Italy rebounded from World War II quickly. The 1950s saw an industrial boom that brought prosperity to the northern and central regions and shifted the focus from agriculture to manufacturing. Family-owned businesses became the mainstay of the economy. They focused on industries like textiles, machinery and food processing and started exporting goods around the world. In an attempt to bridge the economic gap between the North and the South, the State pumped funds to improve the South's infrastructure, and accelerate its economic and agricultural development...

Economic Policies

In the 1990s, Italy had embarked on a journey of wide ranging economic reforms. It had focused on cutting taxes, tackling unemployment, enhancing competitiveness and reducing the budget deficit. But Italy's large bureaucratic government sometimes made it difficult to implement market-oriented reforms. Economic and cultural differences between Italy's North and South regions also hindered the development of a market economy...

Industry

Like most other advanced OECD economies, Italy had a small primary sector. The country was strong in manufacturing, which accounted for about 25% of GDP and about 90% of total merchandise exports. Services contributed close to two-thirds of gross value added. However, apart from tourism and design, Italy was not internationally competitive in most service industries and advanced technologies. In the 1990s, a number of business groups had emerged as forces to be reckoned with, in particular Benetton, Marzotto, Del Vecchio and Ferrero...

Trade

Thanks to its dynamic SMEs, Italy had emerged as the largest exporter in the world of food-processing machines, washing machines, fridges, shoes, shoe-making machines, ski-bolts, ceramic tiles, jewels, woolen and silk clothes, boilers, optical frames and neck-ties. In 2000, the value of goods exported by Italy, amounted to $238.7 billion (fob) and imports $228 billion (fob), resulting in a foreign trade surplus of $10.7 billion...

Human Resources

Italy had the second-highest unemployment rate among the EU countries. Unemployment in the southern part of the country was as high as 22% in 2001. Italy's unemployment rate was 2.2% more than the average unemployment rate for the EU-15. Among EU countries Italy had the lowest proportion of working-age people in jobs (54%)...

Future Outlook

In the early 2000s, most of Italy's politicians seemed to be in agreement about the need for market oriented reforms. Privatization, pension reforms, lower taxes and flexible labor markets were being supported by parties both on the left and the right. But despite this consensus, economists believed a lot remained to be done if Italy did not want to be left behind other G-7 countries...

Exhibits

Exhibit I: Italy at a Glance, 2001
Exhibit II: Italy: Maastricht Treaty Time table
Exhibit III: Italy: EMU Convergence Criteria
Exhibit IV: Italy: Main Privatizations in the 1990s
Exhibit V: Italy: Berlusconi's Tangles with the Law
Exhibit VI: Italy: Macro Economic Indicator
Exhibit VII: Comparative Analysis: Economic Indicators, 2001
Exhibit VIII: Italy: International Trade Profile
Exhibit IX: Italy: Rigid Labor Market
Exhibit X: Italy: Unemployment Rates

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