The Italian Economy Introduced
The Italian economy is one of the largest in the world however despite this Italy is also considered to be somewhat of a poor country. In the years after the Second World War Italy was very poor and backward agricultural country. There was a serious effort on the part of the government to change this and the country went through a rapid period of industrialization. This resulted in very strong economic growth and Italy was soon one of the largest economies in Europe. Through the nineties economic growth remained very strong however in a lot of ways this was a mirage.
The problem is that a great deal of the growth that Italy experienced was due to spending on the part of the government. The government ran up quite a large debt in doing so. This was something that wasn't' actually allowed under European Union rules as there was a cap on how much debt a country could have. This required the government to seriously curtail its spending which led to a dramatic slowdown in the economy. Over the last decade or so Italy's growth has lagged far behind most of the other countries in Europe.
The Italian economy is a typical post industrial economy in which the service sector is the major player. However Italy does have a larger manufacturing sector than most other post industrial economies. Italy is also a little bit strange in that it doesn't have a lot of large corporations like other countries with similar sized economies do. Instead Italy is largely made up of many small to medium sized companies. This has hurt their ability to export their products since they don't have the economies of scale that the larger companies in other countries have.
Despite the success that the Italian economy has had over the last few decades there are some serious issues facing the country. The main problem is a lack of infrastructure, they are well behind the rest of Europe when it comes to the infrastructure that is required to keep the economy strong. The country also lags well behind the rest of Europe when it comes to the amount of money that they invest in research and development. This will likely lead to the country falling further and further behind. There is also a lack of resources in Italy which have made them heavily dependent on foreign imports to meet their energy needs.
Another serious issue Italy is facing is that there is a huge difference between the economy in the north of the country and the economy in the south. Northern Italy has a very strong economy and is the equal of any nation in Europe however the economy in the south is very poor. This inequality has led to a number of internal problems, particularly crime and unstable governments that have hurt the countries economic growth. This is a problem that looks unlikely to be resolved anytime soon and will continue to be a drag on the Italian economy.