Overview
In the post-war period, Italy was transformed from an agricultural based economy which had been severely affected by the consequences of World War II, into one of the world's most industrialized nations, and a leading country in world trade and exports. According to the Human Development Index, the country enjoys a very high standard of living, and, according to The Economist, has the world's 8th highest quality of life.
From the last Eurostat data, Italian per capita GDP at purchasing power parity remains approximately equal to the EU average, while the unemployment rate (8.5%) stands as one of the EU's lowest. Italy owns the world's 3rd largest gold reserve. The country is also well known for its influential and innovative business economic sector, an industrious and competitive agricultural sector (Italy is the world's largest wine producer), and for its creative and high-quality automobile, industrial, appliance and fashion design.
Despite these important achievements, the country's economy today suffers from many and relevant problems. After a strong GDP growth in 1945-1990, the last two decades's average annual growth rates lagged well below the EU average; moreover, Italy was hit particularly hard by the late-2000s recession. The stagnation in economic growth, and the political efforts to revive it with massive government spending from the 1980s onwards, eventually produced a severe rise in public debt. In addition, Italian living standards have a considerable north-south divide: the average GDP per capita in Northern and Central Italy exceeds by far the EU average, whilst some regions and provinces in Southern Italy are dramatically below. Between 2000 and 2006, Italy received €27.4 billion from the European Development Fund for investments in depressed areas of the South.
More specifically, Italian economy is weakened by the lack of infrastructure development, market reforms and research investment, and also high public deficit. In the Index of Economic Freedom 2011, the country ranked only 87th in the world, in particular due to the high rate of corruption, an excessive state interventionism, and a strong labor law. In addition, the most recent data show that Italy's spending in R&D in 2011 was equal to 1.1% of GDP (12th in the world by expenditures), below the European average of 1.7% and the Lisbon Strategy target of devoting 3% of GDP to research and development activities.
Italy has a smaller number of global multinational corporations than other economies of comparable size, but there is a large number of small and medium-sized enterprises, as in the Northern "industrial triangle" (Milan-Turin-Genoa), where there is an area of intense industrial and machinery production, notably in their several industrial districts, which are the backbone of the Italian industry. This has produced a manufacturing sector often focused on the export of niche market and luxury products, that if on one side is less capable to compete on the quantity, on the other side is more capable of facing the competition from emerging economies based on lower labour costs, with higher quality products.
The country was the world's 7th largest exporter in 2009. Italy's major exports and companies by sector are motor vehicles (Fiat, Aprilia, Ducati, Piaggio, Iveco); tyre manufacturing (Pirelli); chemicals and petrochemicals (Eni); energy and electrical engineering (Enel, Edison); home appliances (Candy, Indesit); aerospace and defense technologies (Finmeccanica, Alenia Aeronautica, AgustaWestland, Oto Melara); firearms (Beretta, Benelli); fashion (Armani, Valentino, Versace, Dolce & Gabbana, Roberto Cavalli, Benetton, Prada, Luxottica); food processing (Ferrero, Barilla Group, Martini & Rossi, Campari, Parmalat); sport and luxury vehicles (Ferrari, Maserati, Lamborghini, Pagani); yachts (Ferretti, Azimut). Italy's closest trade ties are with the other countries of the European Union, with whom it conducts about 59% of its total trade. Its largest EU trade partners, in order of market share, are Germany (12.9%), France (11.4%), and Spain (7.4%).
Read more about this topic: Economy Of Italy