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Economy of Italy

The Italian economy has changed dramatically since the end of World War II. From an agriculturally based economy, it has developed into an industrial state ranked as the world's seventh-largest market economy. Italy belongs to the Group of Eight (G-8) industrialized nations; it is a member of the European Union and the Organization for Economic Cooperation and Development (OECD). Italy has few natural resources. With much land unsuited for farming, Italy is a net food importer. There are no substantial deposits of iron, coal, or oil. Proven natural gas reserves, mainly in the Po Valley and offshore in the Adriatic, constitute the country's most important mineral resource. Most raw materials needed for manufacturing and more than 80% of the country's energy sources are imported. Italy's economic strength is in the processing and the manufacturing of goods, primarily in small and medium-sized family-owned firms. Its major industries are precision machinery, motor vehicles, chemicals, pharmaceuticals, electric goods, and fashion and clothing. Italy continues to grapple with budget deficits and high public debt--4.6% and 119% of GDP for 2010, respectively. Italy joined the European Monetary Union (EMU) in 1998 by signing the Stability and Growth Pact, and as a condition of this Euro zone membership, Italy must keep its budget deficit beneath a 3% ceiling. The Italian Government has found it difficult to bring the budget deficit down to a level that would allow a rapid decrease of the debt. The worsening economic situation undermined this aim, and the deficit grew well above the 3% ceiling in 2009 and 2010, to 5.4% and 4.5% respectively. The government plans to bring the deficit down to 3.9% in 2011 and below 3% in 2012. Modest GDP growth is likely to jeopardize this effort. Italy's economic growth averaged only 0.8% in the period 2001-2008. GDP contracted as the Euro zone and world economies slowed, decreasing 1.3% in 2008 and 5.2% in 2009 largely due to the global economic crisis and its impact on exports and domestic demand. GDP recovered only part of the ground lost, growing 1.3% in 2010. In 2011 Italy’s GDP is expected to grow below the EMU countries' average. Italy's closest trade ties are with the other countries of the European Union, with whom it conducts about 58.1% of its total trade (2009 data). Italy's largest European Union trade partners, in order of market share, are Germany (12.7%), France (11.6%), Spain (5.7%), and the United Kingdom (5.1%). Italy continues to grapple with the effects of globalization, where certain countries (notably China) have eroded the Italian lower-end industrial product sector. The Italian economy is also affected by a large underground economy--worth some 27% of Italy's GDP. This production is not subject, of course, to taxation and thus remains a source of lost revenue to the local and central government. U.S.-Italy Economic Relations The United States and Italy cooperate closely on major economic issues, including within the G-8. With a large population and a high per capita income, Italy was the United States' 16th-largest trading partner in 2010, with total bilateral trade of $42.7 billion comprised of exports to Italy totaling $14.2 billion and imports from Italy worth $28.5 billion. The U.S.'s $14.3 billion deficit with Italy in 2010 was largely in line with the $14.2 billion deficit registered in 2009. Machinery and aircraft are becoming important U.S. exports to Italy. U.S. foreign direct investment in Italy at the end of 2009 exceeded $28.7 billion. Labor Unemployment is a regional issue in Italy--low in the north, high in the south. Italy's unemployment rate, 8.5% in 2010, has crept up as a decade of low growth and the slowing world economy have taken their toll. The U.S. Embassy and various economists expect the unemployment rate to remain high in 2011 and 2012. Traditional regional labor market disparities remain unchanged, with the southern third of the country posting a significantly higher unemployment rate compared to northern and central Italy. The overall national rate is at its lowest level since 1992. Chronic problems of inadequate infrastructure, corruption, and organized crime act as disincentives to investment and job creation in the south. A significant underground economy absorbs substantial numbers of people, but they work for low wages and without standard social benefits and protections. Women and youth have significantly higher rates of unemployment than do men. Unions claim to represent 40% of the work force. Most Italian unions are grouped in four major confederations: the General Italian Confederation of Labor (CGIL), the Italian Confederation of Workers' Unions (CISL), the Italian Union of Labor (UIL), and the General Union of Labor (UGL), which together claim 35% of the work force. These confederations formerly were associated with important political parties or currents, but they have evolved into fully autonomous, professional bodies. The CGIL, CISL, and UIL are affiliated with the International Confederation of Free Trade Unions (ICFTU) and customarily coordinate their positions before confronting management or lobbying the government. The confederations have had an important consultative role on national social and economic issues. Agriculture Italy's agriculture is typical of the division between the agricultures of the northern and southern countries of the European Union. The northern part of Italy produces primarily grains, sugar beets, soybeans, meat, and dairy products, while the south specializes in fruits, vegetables, olive oil, wine, and durum wheat. Even though much of its mountainous terrain is unsuitable for farming, Italy has a large work force (1.4 million) employed in farming. Most farms are small, with the average size being only seven hectares. For further economic and commercial information, please refer to the Country Commercial Guide for Italy. GDP (purchasing power parity, 2010): $1.77 trillion. GDP per capita (purchasing power parity, 2010): $29,400. GDP growth: 1.3% (2010); -5.2% (2009); -1.3% (2008); 1.5% (2007); 2.0% (2006); 0.7% (2005); 1.5% (2004), 0.0% (2003 est.); 0.5% (2002); 1.8% (2001). Natural resources: Fish and natural gas. Agriculture: Products --wheat, rice, grapes, olives, citrus fruits, potatoes, sugar beets, soybeans beef, dairy products. Industry: Types --tourism, machinery, iron and steel, chemicals, food processing, textiles, motor vehicles, clothing, footwear, ceramics. Trade: Exports (2010)--$447.2 billion f.o.b.: mechanical products, textiles and apparel, transportation equipment, metal products, chemical products, food and agricultural products. Partners (2009)--Germany 12.7%, France 11.6%, U.S. 5.9%, Spain 5.7%, U.K. 5.1%. Imports (2010)--$483 billion c.i.f.: machinery and transport equipment, foodstuffs, ferrous and nonferrous metals, wool, cotton, energy products. Partners (2008)--Germany 16.7%, France 8.9%, China 6.5%, Netherlands 5.7%, Spain 4.4%, Russia 4.1%, Belgium 4.0%.

Geography of Italy

Location: Southern Europe, a peninsula extending into the central Mediterranean Sea, northeast of Tunisia Map references: Europe Area: total area: 301,230 sq km land area: 294,020 sq km comparative area: slightly larger than Arizona note: includes Sardinia and Sicily Land boundaries: total 1,899.2 km, Austria 430 km, France 488 km, Holy See (Vatican City) 3.2 km, San Marino 39 km, Slovenia 199 km, Switzerland 740 km Coastline: 4,996 km Maritime claims: continental shelf: 200-m depth or to the depth of exploitation territorial sea: 12 nm International disputes: none Climate: predominantly Mediterranean; Alpine in far north; hot, dry in south Terrain: mostly rugged and mountainous; some plains, coastal lowlands Natural resources: mercury, potash, marble, sulfur, dwindling natural gas and crude oil reserves, fish, coal Land use: arable land: 32% permanent crops: 10% meadows and pastures: 17% forest and woodland: 22% other: 19% Irrigated land: 31,000 sq km (1989 est.)
Environment: current issues: air pollution from industrial emissions such as sulfur dioxide; coastal and inland rivers polluted from industrial and agricultural effluents; acid rain damaging lakes; inadequate industrial waste treatment and disposal facilities natural hazards: regional risks include landslides, mudflows, avalanches, earthquakes, volcanic eruptions, flooding; land subsidence in Venice international agreements: party to - Air Pollution, Air Pollution-Nitrogen Oxides, Air Pollution-Sulphur 85, Antarctic Treaty, Biodiversity, Climate Change, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Wetlands; signed, but not ratified - Air Pollution-Sulphur 94, Air Pollution-Volatile Organic Compounds, Antarctic-Environmental Protocol, Desertification Note: strategic location dominating central Mediterranean as well as southern sea and air approaches to Western Europe

Government of Italy

Italy has been a democratic republic since June 2, 1946, when the monarchy was abolished by popular referendum. The constitution was promulgated on January 1, 1948. The Italian state is centralized. The prefect of each of the provinces is appointed by and answerable to the central government. In addition to the provinces, the constitution provides for 20 regions with limited governing powers. Five regions--Sardinia, Sicily, Trentino-Alto Adige, Valle d'Aosta, and Friuli-Venezia Giulia--function with special autonomy statutes. The other 15 regions were established in 1970 and vote for regional "councils." The establishment of regional governments throughout Italy has brought some decentralization to the national governmental machinery, and recent governments have devolved further powers to the regions. Many regional governments, particularly in the north of Italy, are seeking additional powers. The 1948 constitution established a bicameral parliament (Chamber of Deputies and Senate), a separate judiciary, and an executive branch composed of a Council of Ministers (cabinet), headed by the president of the council (prime minister). The president of the republic is elected for 7 years by the parliament sitting jointly with a small number of regional delegates. The president nominates the prime minister, who chooses the other ministers. The Council of Ministers--in practice composed mostly of members of parliament--must retain the confidence of both houses. The houses of parliament are popularly and directly elected by a proportional representation system. Under 2005 legislation, the Chamber of Deputies has 630 members (12 of whom are elected by Italians abroad). In addition to 315 elected members (six of whom are elected by Italians abroad), the Senate includes former presidents and several other persons appointed for life according to special constitutional provisions. Both houses are elected for a maximum of 5 years, but either may be dissolved before the expiration of its normal term. Legislative bills may originate in either house and must be passed by a majority in both. The Italian judicial system is based on Roman law modified by the Napoleonic code and subsequent statutes. There is only partial judicial review of legislation in the American sense. A constitutional court, which passes on the constitutionality of laws, is a post-World War II innovation. Its powers and the volume and frequency of its decisions are not as extensive as those of the U.S. Supreme Court. POLITICAL CONDITIONS Until recently, there had been frequent government turnovers (more than 60 and counting) since 1945. The dominance of the Christian Democratic (DC) party during much of the postwar period lent continuity and comparative stability to Italy's political situation. From 1992 to 1997, Italy faced significant challenges as voters--disenchanted with past political paralysis, massive government debt, extensive corruption, and organized crime's considerable influence--demanded political, economic, and ethical reforms. In 1993 referendums, voters approved substantial changes, including moving from a proportional to a largely majoritarian electoral system and the abolishment of some ministries. However in 2005, parliament passed a new electoral law based on full proportional assignment of seats. Major political parties, beset by scandal and loss of voter confidence, underwent far-reaching changes. New political forces and new alignments of power emerged in March 1994 national elections. The election saw a major turnover in the new parliament, with 452 out of 630 deputies and 213 out of 315 senators elected for the first time. The 1994 elections also swept media magnate Silvio Berlusconi--and his Freedom Pole coalition--into office as Prime Minister. Berlusconi, however, was forced to step down in January 1995 when one member of his coalition withdrew support. The Berlusconi government was succeeded by a technical government headed by Prime Minister Lamberto Dini, which fell in early 1996. New elections in 1996 brought a center-left coalition to government for the first time after World War II. A series of center-left coalitions dominated Italy's political landscape between 1996 and 2001. In April 1996, national elections led to the victory of a center-left coalition (the Olive Tree) under the leadership of Romano Prodi. Prodi's government became the second-longest to stay in power before he narrowly lost a vote of confidence (by three votes) in October 1998. A new government was formed by Democratic Party of the Left leader and former-communist Massimo D'Alema. In April 2000, following a poor showing by his coalition in regional elections, D'Alema resigned. The succeeding center-left government, including most of the same parties, was headed by Giuliano Amato, who had previously served as Prime Minister in 1992-93. National elections, held on May 13, 2001, returned Berlusconi to power at the head of the five-party center-right Freedom House coalition, comprising the prime minister's own party, Forza Italia, the National Alliance, the Northern League, the Christian Democratic Center, and the United Christian Democrats. This Berlusconi government served its entire term. In national elections held April 9-10, 2006, Romano Prodi's center-left Union coalition won a narrow victory over Berlusconi's Freedom House coalition. The Union coalition included the Democratic Party (born of the November 2007 fusion of the Democrats of the Left and the Daisy Party), UDEUR (Union of Democrats for Europe), Rose in the Fist (made up by Italian Social Democrats and Italian Radical Party), Communist Renewal, the Italian Communist Party, Italy of Values, and the Greens. In May 2006, the parliament elected Giorgio Napolitano as the Republic's President. President Napolitano formerly served as a lifetime senator, Minister of the Interior, and a member of the European Parliament as a member of center-left parties. President Napolitano's term ends in May 2013. The Senate, lower house, and regional representatives will vote to elect his successor. In January 2008, the Prodi government fell when small coalition partner UDEUR withdrew support. In February, the President dissolved parliament and Silvio Berlusconi returned to power after defeating former Rome Mayor Walter Veltroni by a comfortable margin in elections on April 13-14, 2008. Berlusconi's winning coalition was composed of the People of Liberty (a union of Forza Italia and National Alliance), the Northern League, and the Movement for Autonomy. Berlusconi was sworn in as Prime Minister on May 8. Veltroni resigned as leader of the opposition in February 2009. His deputy, Dario Franceschini, was elected new Democratic Party (PD) leader until party primary elections held in October 2009, when Pierluigi Bersani was elected PD national secretary. In April 2010, Gianfranco Fini, cofounder of the People of Liberty, and a number of adherents broke from it and established a new opposition party called Future and Liberty, weakening Berlusconi’s coalition, which continued nevertheless to govern. Political Parties Italy's dramatic self-renewal transformed the political landscape between 1992 and 1997. Scandal investigations touched thousands of politicians, administrators, and businessmen; the shift from a proportional to majoritarian voting system also altered the political landscape. Party changes were sweeping. The Christian Democratic Party dissolved; the Italian People's Party and the Christian Democratic Center emerged. Other major parties, such as the Socialists, saw support plummet. A new populist and free-market oriented movement, Forza Italia, gained wide support among moderate voters. The National Alliance broke from the neofascist Italian Social Movement. A trend toward two large coalitions--one on the center-left and the other on the center-right--emerged from the April 1995 regional elections. For the 1996 national elections, the center-left parties created the Olive Tree coalition while the center right united again under the Freedom Pole. The May 2001 elections ushered into power a refashioned center-right coalition dominated by Berlusconi's party, Forza Italia. The April 2006 elections returned the center-left to power under the eight-party Union coalition, a successor to the Olive Tree. In October 2007, the Democrats of the Left and the Daisy parties officially merged to form the Democratic Party. Veltroni was chosen as party leader and was the center-left's candidate in the April 2008 elections. Silvio Berlusconi launched an alliance between his Forza Italia party and Gianfranco Fini's National Alliance. The parties ran together under the People of Liberty symbol in April 2008. The election greatly simplified parliament, dramatically reducing the numbers of parties, and for the first time since World War II, leaving communist parties out of parliament. People of Liberty (37.4%) won the largest share of the vote and took power in coalition with a strengthened Northern League (8.3%) and the tiny Movement for Autonomy (1.1%). The Democratic Party scored 33.2% and ran in alliance with Italy of Values (4.4%), while the Union of the Center (5.6%) ran alone. In March 2009, Forza Italia and National Alliance changed the People of Liberty identification from an alliance to a party. The mass center-right party, led by Berlusconi, is Italy's largest party and one of the largest in Europe.
Principal Government Officials President--Giorgio Napolitano Prime Minister--Silvio Berlusconi Foreign Minister--Franco Frattini Minister of Defense--Ignazio La Russa Minister of Finance--Giulio Tremonti Minister of Justice--Angelino Alfano Minister of the Interior--Roberto Maroni Ambassador to the United States--Giulio Terzi di Sant'Agata Italy maintains an embassy in the United States at 3000 Whitehaven Street, NW, Washington, DC 20008 (tel. 202-612-4400). Government Type: Republic since June 2, 1946. Constitution: January 1, 1948. Branches: Executive--president (chief of state), Council of Ministers (cabinet), headed by the president of the council (prime minister). Legislative--bicameral parliament: 630-member Chamber of Deputies, 315-member Senate (plus a varying number of "life" Senators). Judicial--independent constitutional court and lower magistracy. Subdivisions: 94 provinces, 20 regions. Political parties: Forza Italia, Democratic Party of the Left, National Alliance, Northern League, United Christian Democrats, Democrats, Italian People's Party, Christian Democratic Center, Socialist, Communist Renewal, Social Democratic, Republican, Liberal, Greens, Italian Renewal. Suffrage: Universal over 18.

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History of Italy

The commercial prosperity of northern and central Italian cities, beginning in the 11th century, and the influence of the Renaissance mitigated somewhat the effects of these medieval political rivalries. Although Italy declined after the 16th century, the Renaissance had strengthened the idea of a single Italian nationality. By the early 19th century, a nationalist movement developed and led to the reunification of Italy--except for Rome--in the 1860s. In 1861, Victor Emmanuel II of the House of Savoy was proclaimed King of Italy. Rome was incorporated in 1870. From 1870 until 1922, Italy was a constitutional monarchy with a parliament elected under limited suffrage. 20th-Century History During World War I, Italy renounced its standing alliance with Germany and Austria-Hungary and, in 1915, entered the war on the side of the Allies. Under the postwar settlement, Italy received some former Austrian territory along the northeast frontier. In 1922, Benito Mussolini came to power and, over the next few years, eliminated political parties, curtailed personal liberties, and installed a fascist dictatorship termed the Corporate State. The king, with little or no effective power, remained titular head of state. Italy allied with Germany and declared war on the United Kingdom and France in 1940. In 1941, Italy--with the other Axis powers, Germany and Japan--declared war on the United States and the Soviet Union. Following the Allied invasion of Sicily in 1943, the King dismissed Mussolini and appointed Marshal Pietro Badoglio as Premier. The Badoglio government declared war on Germany, which quickly occupied most of the country and freed Mussolini, who led a brief-lived regime in the north. An anti-fascist popular resistance movement grew during the last 2 years of the war, harassing German forces before they were driven out in April 1945. A 1946 plebiscite ended the monarchy, and a constituent assembly was elected to draw up plans for the republic. Under the 1947 peace treaty, minor adjustments were made in Italy's frontier with France, the eastern border area was transferred to Yugoslavia, and the area around the city of Trieste was designated a free territory. In 1954, the free territory, which had remained under the administration of U.S.-U.K. forces (Zone A, including the city of Trieste) and Yugoslav forces (Zone B), was divided between Italy and Yugoslavia, principally along the zonal boundary. This arrangement was made permanent by the Italian-Yugoslav Treaty of Osimo, ratified in 1977 (currently being discussed by Italy, Slovenia, and Croatia). Under the 1947 peace treaty, Italy also relinquished its overseas territories and certain Mediterranean islands. The Roman Catholic Church's status in Italy has been determined, since its temporal powers ended in 1870, by a series of accords with the Italian Government. Under the Lateran Pacts of 1929, which were confirmed by the present constitution, the state of Vatican City is recognized by Italy as an independent, sovereign entity. While preserving that recognition, in 1984, Italy and the Vatican updated several provisions of the 1929 accords. Included was the end of Roman Catholicism as Italy's formal state religion. Italy's Cultural Contributions Europe's Renaissance period began in Italy during the 14th and 15th centuries. Literary achievements--such as the poetry of Petrarch, Tasso, and Ariosto and the prose of Boccaccio, Machiavelli, and Castiglione--exerted a tremendous and lasting influence on the subsequent development of Western civilization, as did the painting, sculpture, and architecture contributed by giants such as da Vinci, Raphael, Botticelli, Fra Angelico, and Michelangelo. The musical influence of Italian composers Monteverdi, Palestrina, and Vivaldi proved epochal; in the 19th century, Italian romantic opera flourished under composers Gioacchino Rossini, Giuseppe Verdi, and Giacomo Puccini. Contemporary Italian artists, writers, filmmakers, architects, composers, and designers contribute significantly to Western culture.

People of Italy

Italy is largely homogeneous linguistically and religiously but is diverse culturally, economically, and politically. Italy has the fifth-highest population density in Europe--about 200 persons per square kilometer (about 500 per sq. mi.). Minority groups are small, the largest being the German-speaking people of Bolzano Province and the Slovenes around Trieste. There are also small communities of Albanian, Greek, Ladino, and French origin. Immigration has increased in recent years, however, while the Italian population is declining overall due to low birth rates. Although Roman Catholicism is the majority religion--85% of native-born citizens are nominally Catholic--all religious faiths are provided equal freedom before the law by the constitution. Greeks settled in the southern tip of the Italian Peninsula in the eighth and seventh centuries B.C.; Etruscans, Romans, and others inhabited the central and northern mainland. The peninsula subsequently was unified under the Roman Republic. The neighboring islands came under Roman control by the third century B.C.; by the first century A.D., the Roman Empire effectively dominated the Mediterranean world. After the collapse of the Roman Empire in the West in the fifth century A.D., the peninsula and islands were subjected to a series of invasions, and political unity was lost. Italy became an oft-changing succession of small states, principalities, and kingdoms, which fought among themselves and were subject to ambitions of foreign powers. Popes of Rome ruled central Italy; rivalries between the popes and the Holy Nationality: Noun and adjective --Italian(s). Population (January 2011 est.): 60.6 million. Annual population growth rate (2010 est.): 0.04%, mostly due to immigration. Ethnic groups: Primarily Italian, but there are small groups of German-, French-, Slovene-, and Albanian-Italians. Religion: Roman Catholic (majority). Language: Italian (official). Education: Years compulsory --16. Literacy --98%. Health: Infant mortality rate --3.7/1,000 live births. Life expectancy --79.1 years for men; 84.3 years for women. Work force (25.01 million, 2010): Services --67%; industry and commerce --29%; agriculture --4%. Unemployment rate is 8.5%.