The strongest commercial links are with Germany and France. The economy is divided into a highly developed, industrial north, where private companies dominate, and a less industrial, agricultural south. Major international Italian companies use the stock markets, and a program has been implemented to privatize state assets. However, the majority of Italian companies are not driven by share price. The overall level of business sophistication is high in Italy, and there is an open attitude toward foreign investment, with a number of development agencies on both the national and regional levels, as well as numerous trade associations that provide help in approaching potential Italian partners.
On the flip side of the coin, there are also several negative aspects to the Italian business climate. One of the leading factors for these somewhat discouraging rankings is that bureaucracy at all levels—local, regional, and national—is notorious for delays and inefficiencies.
As the U. Admittedly, the national government does have a policy aimed at reducing bureaucracy, and there have been modest improvements in the streamlining of bureaucratic processes over the past couple of years. But there is still a long way to go.
By developing strong export-related industries, the industrial triangle of Milan-Genoa-Turin led the economic boom. Italian exports became attractive, and the growth of exports led to a strong internal demand for goods and services.
Small and medium enterprises began establishing themselves and prospering in Northern Italy. These companies were the force behind economic growth as they exported machinery, engineering products, textiles, and clothing. Meanwhile, southern Italy remained impoverished, and its inhabitants migrated north in large numbers until the late s.
In the following decades, Italy was able to consolidate its economic success, even though the economy was never again as strong as it had been in the s. Comparatively, the Italian economy grew faster in the s than any other European country, while around the world only the Japanese economy fared better. The s and s saw much more uneven development.
Italy is heavily dependent on Algerian gas and Arab oil supplies, so it was hit hard by the oil crises of the s. Despite this trouble, Italy's economy grew over 3 percent annually during the s, though it began to slow at the end of the decade. The second oil crisis in and domestic political turmoil created high unemployment and high inflation. Strikes, demonstrations, flight of capital, and confrontations between the trade unions and businesses plagued the country.
To steer the country away from this troubled period, political parties formed a Grand Alliance to find a solution that would satisfy most of the people. A national solidarity government was formed and managed to deal with the problem of stagflation high inflation combined with high unemployment and stagnant consumer demand , reduce civil unrest, and lay the foundations for future growth.
The country began to recover about and moved toward a new period of economic expansion. Strong economic performance allowed successive governments to make improvements in the welfare state that provides health care, education, pensions, infrastructure , and benefits. Before the s, Italy was a free market economy with a strong element of state control and state ownership.
Many state-owned companies had operated efficiently and contributed to economic growth. By the mids, however, the state sector was beginning to create distortions in the economy. Many Italians employed by the state lived well above their means, accumulating debts and enjoying a free ride at the public expense.
By the mids, appointments to the civil service and to the management of state-owned enterprises were handed out as political favors, leading to widespread corruption. The mismanagement of public resources drained the economy.
Furthermore, the high costs of the welfare system put a strain on the country's finances, thanks to widespread corruption and waste in the health care, social security, transport, and education systems. The economic slump of the early s highlighted the burden of the public debt and brought about radical measures to cut costs, privatize , and reduce the role of government in the economy. The phenomenon of corruption may not be reduced by the deregulation, because other harmful activities such as lobbying can create a much higher risk.
Corruption may occur in the political, bureaucratic or private sphere, with a criminal intention and a misuse of power. Lobbying is a legal and widely accepted mechanism of influencing power, however the lack of transparency may allow that the results of lobbying could be against the interests of the public at large Dobvsek, Many attempts to build a more transparent system at the Italian level have failed.
Furthermore, Italian history has been characterised by mafia strength and by economic actors seeking compensation and protection, rather than to engage in seeking new forms of competitiveness. In other terms, criminal organisations as criminal lobbies have been traditionally present in southern Italy, have exerted their territorial strong control trough an extortion-protection mechanism and have accumulated social capital and trust relationships with politico-administrative and entrepreneurial actors.
Gambetta has argued that the supply of protection provided by Mafia meet a demand caused by the lack of trust in the state. The Italian economy is mixed, and until the beginning of the s the state owned a substantial number of enterprises. The Italian economy is now much more free-market oriented than at any previous time.
With the GDP growth of 1. Italy is a mixed economy Italy is a market economy because Supply and Demand influences the items sold and bought. Therefore Italy is both a market and a command economy making it mixed. A World Health Organization report listed it as the 2nd globally, after France, in Life expectancy is the 4th highest among OECD countries Italy is the sixth largest country in Europe and has the second highest average life expectancy, reaching
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