Why is Italy doing so badly after doing so well?

Gianluigi Pelloni and Marco Savioli

Professional Reports from Rimini Centre for Economic Analysis

Abstract: We present the current Italian economic crisis as a phase of a major systemic decline. We argue that "Italy's system" has forced the country to abandon a "dynamic" view of comparative advantage, crucial for sustained economic growth, in favour of a "static" view of specialization. Creative destruction has been hampered and the indispensable sectoral restructuring has not taken place, leading to stagnation. The roots of this decline lay in collective action issues and an implicit contract between elites and civil society. We suggest that solving these issues is indispensable in order to support a "dynamic" view of comparative advantage and so the re-start of the Italian economy and society.

Keywords: sustained growth; comparative advantage; collective action; Italy (search for similar items in EconPapers)
JEL-codes: D70 N14 O00 O52 (search for similar items in EconPapers)
Date: 2014-11
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