Summing up on Italy

Abstract

AbstractEarly this century, Italy and Germany were labelled ‘the two sick nations’ of the advanced world because of their low growth. Both tried to deal with such a situation with reforms. Italy started introducing reforms in the early 1990s, and never stopped trying. However, more than thirty years of attempted reforms did not produce the expected results. According to the prevailing narrative, Germany made a new beginning after the round of reforms enacted from 2003 to 2005. Maybe the government made it clear that the nation was in a corner, calling for a robust boost to competitiveness. At any rate, the consequence was a long period of wage moderation, which gave Germany a solid competitive edge in exports and import-competing sectors. In today’s Italy, the tragedy of Covid-19 may be conducive to making Italians more aware of the importance of helping themselves, taking risks, and creating new activities. There may be similarities with the entrepreneurial spirit and reward for merit that animated the country in the first two decades after the war. After all, Italy is still the second industrial country in Europe. It has a group of small multinationals that have managed to withstand the challenges of international markets and thrive. And maybe the new apparently calm and constructive political climate around Mario Draghi might help make the reforms needed to create the right incentives for a genuinely new beginning. But, for now, it is just hope.