Italy

Italy is a country of southern Europe comprising 20 regions. It is one of the largest economies in Europe, and in the world. Its growth rates are consistently among the highest in the European Community. Italy's economic growth has been characterized, since the political unification in 1861, by the following factors: the divergence between an industrialized north and a prevalently agricultural south; the interventionism of the state; the predominance of family capitalism; and the large number of small and medium-sized firms. More recently, the Italian economy has been affected by political instability and international competition.

The Italian economy is characterized by a rather marked division between an industrialized north, where the great maj ority of industrial and manufacturing activities are located, and a less developed south. The dichotomy between the northern and southern parts of the country has been a major problem for the implementation of equal economic policies. The northern regions of the Italian peninsula, especially Lombardy, Piedmont, Veneto, and Liguria, see the greatest concentration of industrial activities. By contrast, the southern part of the country has never experienced industrial development comparable to that of the northern regions. In the 1960s, when Italy went through an economic boom, the divergence between the north and the south heightened, and many people migrated from the south to the north in search of better-paid jobs. Although in recent decades new opportunities for the economic development of the southern region have arisen, thanks also to the financial aid of the European Community, the north-south [Page 950]dichotomy and its social and political implications continue to be a current issue.

Since the origin of Italy as an independent and unified country in the mid-19th century, the Italian state has been markedly interventionist, entering the country's economic life in many ways, especially by subsidizing several industrial sectors. Along with Japan and Germany, Italy has been considered one of the most interventionist states. Italian industries and banks have benefited, over time, from large state subsidies. For example, Sofindit (financial company of the Banca Commerciale Italiana), Ansaldo, Terni, and in recent times even Fiat have received frequent subsidies from the state. The reasons behind the interventionism of the Italian state are several and complex; they are closely linked on the one hand, to the atypicality of the Italian political and economic unification, and on the other to the specificity of the Italian economic growth that witnessed a rather peculiar combination of private and public capitalism.

Family ties have been extremely important for the growth of modern Italian business, and Italy owes much to “familial capitalism,” as the remarkably impressive persistence over time of family-run firms in the Italian economy evinces. Although the notion of family business has had for a long time a negative connotation that suggests economic backwardness and commercial weakness, the excellent performances of Italian family-run companies and industries in the past decades contradicts such generalized view. Family-run business can be, in practice, highly articulated forms of managing business that displays a remarkable flexibility, ability in negotiation, and noteworthy capacities of quickly responding to market changes. Well-known Italian companies such as Benetton, Missoni, Fiat, and Beretta, have been founded and run by families.

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