Country Report On Italy Essay Example
Italy is one of the most important countries of Europe in terms of economy. The country contributes to both agricultural as well as industrial activities. The geographical location of Italy’s industrial production expands beyond the narrow confines of the Industrial triangle, which constitutes Milan, Turin and Genoa towards Bologna in the south and Val Padana in the east . The industrial sector of Italy boasts some of the advanced elements in the production of electrical energy, steel cars and artificial fibers. One of the major reasons for the economic success of Italy in the industrial sector is the presence of large industrial firms and their links to the Italian private banking system. Entrepreneurial and small companies have also aided in the success of Italy as a highly-industrialized country . Italy is the workshop for Europe producing light industrial goods for the rapidly expanding consumer market of the continent.
With the decline in the importance of the agricultural sector, the industries of Italy have spread to the smaller cities, which have adequate infrastructure in terms of raw materials and industrial workforce. The coastal areas have a higher industrial base as they are nearer to the ports. However, globalization has transformed the economic structure of Italy. Privatization of state-owned enterprises including banks and small businesses has led to the delay of public administration reforms. In the past decade, the country has witnessed stagnation in the global economic sphere. Italy produces some of the world’s famous brands, such as Valentino, Alfa Romeo, Fiat, Lamborghini, Armani, Maserati and many others. The country is famous for its superior and high quality goods .
The recession during 2008 has reduced the global trade of Italy with a huge decrease in the volume of its exports. The exports have decreased significantly from $546.9 billion to $369 billion by 2010 . In spite of the recession, Italy was able to remain strong in terms of economy and it ranks 8th for export volumes globally. The major commodities exported by Italy are textiles and clothing, motor vehicles, engineering products, food, minerals, chemicals, production machinery and many others. Italy produces huge volume of energy and exports electricity, oil and natural gas globally . The major export partners of the country are France, Germany, the United States and the United Kingdom. In terms of imports, Italy’s imports saw a declining trend post 2008 recession and the import volumes dropped to $358.7 billion by 2010. The major commodities imported by Italy are food and beverages, tobacco, transport equipment, nonferrous metals and many others. The major import partners of Italy are France, China, Germany, Russia, Libya and the Netherlands.
Italy has one of the most developed economies of the world and possesses a high standard of living. The per capita GDP of the country is at $35,925.88 in 2013, which is higher than the average GDP per capita of the European Union. The country has a higher rate of public literacy, which makes it one of the efficient labor forces of the world. Tourism also boosts the economy of Italy. According to the report generated by the World Bank, Italy is optimum for businesses, trade and investments for its high standards. The Italian economy surpasses the economies of the United Kingdom, Greece and Germany. The GDP of Italy is $1848 billion, while the public debt stands at 132.6 percent of GDP. The trade balance of the country dropped down to $55.44 billion in 2010.
The government of Italy is active in implementing structural reforms in favor of employment opportunities. The government also launches various entitlement programs that cost a huge amount. While the health spending of Italy is 9.1 percent of GDP, education spending is 93 with the base year 2005 and in USD per student . After the 2008 recession, Italy experienced a sudden halt in the private inflows of capital due to the unstable level of government. Being a part of the European Union, Italy failed to rebalance the accounts by regulating the exchange rate, due to which the current account deficit dropped from 3.4 percent in 2010 to zero in 2012 . The adjustment reflects the drop in imports while there is no change in the volume of exports. While the high-quality products, such as textiles, furniture, machinery and industrial designs cont contribute to the exports, the imports majorly include the energy and manufacturing sectors.
The gross fixed capital formation primarily constitutes land improvements, plant and machinery, commercial and residential buildings, schools and hospitals, and many others. The gross fixed capital formation of Italy is 18 percent of GDP . The indicators show Italy’s trend towards deterioration is not inevitable. There are various reasons for this phenomenon. Firstly, the corporations of Italy have a huge capacity to supply goods as the country ranks second in the continent next to Germany. Secondly, the Italian banks are more elastic to the global economic crisis when compared to the other banks since there were no huge ventures in the real estate market during previous recession. Thirdly, Italy offers excellent world class opportunities for entrepreneurs in niche products, in spite of the government’s negligence to realize that the Italian economy benefits largely from the manufacturing sector.
Italy badly requires the government to launch new projects related to infrastructure, make vital changes in public administration, improve the labor market and innovate the production of goods. The economic decline that took place in the past recession is a major lesson for the Italian government as well as the people . It is important to bridge the gap between Italy and the world countries before it becomes great. Italy’s culture is also partly responsible for its economic issues. As the country failed to unite both socially and politically, it also failed to work together in achieving common economic goals. The economic indicators for the past few years indicate a shaky economy, which might not be able to survive the challenges of the century. The most important feature of the Italian economy is that the income process displays a very low variance of the permanent indicators, with respect to the transitory ones. The economic crisis has induced an unprecedented fall in the output, which resulted in structural changes, business cycle fluctuations and output volatility . The restrictive credit circumstances and the fiscal tightening of Italy act as the major parameters for the continuation of recession throughout 2013.
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Gross fixed capital formation (% of GDP). (n.d.). Retrieved 02 16, 2015, from The World Bank: http://data.worldbank.org/indicator/NE.GDI.FTOT.ZS
Italy Economic Outlook. (2015, 02 03). Retrieved 02 16, 2015, from Focus Economics: http://www.focus-economics.com/countries/italy
Totaro, L., & Migliaccio, A. (2015, 02 13). Italy's Economy Fails to Rebound. Retrieved 02 16, 2015, from Bloomberg Business: http://www.bloomberg.com/news/articles/2015-02-13/italy-fails-to-rebound-from-recession-challenging-premier-renzi