Italy is one of the world’s largest economies. The country’s industrial expansion came as a post- World War II reconstruction, aided by financial support from the United States, and transformed Italy from an agricultural society into a modern industrial state.
In the first half of the 1970s, Italy was hit by an economic crisis with inflation, wage disputes in industry and political turmoil. In the 1980s, the country was able to reduce the rate of inflation and the large deficits in the foreign economy.
At the end of the 1980s, Italy moved up to fifth place in the G7 group, but was in seventh place in 2017. In terms of gross domestic product, Italy was the world’s eighth largest economy in 2017, and the fourth largest in Europe after Germany, the United Kingdom and France.
In 1990 unemployment was nine percent, in 2000 ten percent, in 2010 8.5 percent and in March 2018 11 percent. Youth unemployment is high (31 percent in the 15-24 year age group in March 2018), and significantly higher in southern Italy than in northern Italy.
Italy largely relies on its economy on exports, and the emergence of significant new players in the world market, such as China, is increasing competition for Italy.
Italy has been a driving force for European economic and political integration. The country joined the EU’s Economic and Monetary Union in 1999.
The state has had significant control over the economy, including through large state-owned industrial companies in key sectors such as iron and steel, shipbuilding, mechanical engineering and petrochemicals. After 2000, the authorities have privatized a number of state companies. Italy has an extensive “black economy” completely out of government’s control and control.
The distribution of income in Italy is uneven compared to other EU countries, with large differences between both different income groups and different regions. The differences are relatively large between Northern Italy and Southern Italy, since industrialization traditionally took place to a greater extent in the north than in the south.
Italy is, after France and Germany, the third largest producer of agricultural products in the EU.
Agriculture, including forestry and fishing, accounts for 2.3 percent of gross domestic product and 3.8 percent of employment as of 2017. As late as 1951, around 42 percent of the working population was employed in agriculture, while in 1970 the proportion was down to 19 percent. This drastic reduction in rural population has happened in parallel with Italy’s industrial expansion. The agricultural industry still represents a significant part of the country’s exports, but industrial goods have become far more important. However, there has been no decline in agricultural production, on the contrary, an increasing use of artificial fertilizers and other technical advances has yielded ever-increasing crops.
Almost half of the land area is classified as agricultural land, but a large part of this is heavily driven mountain slopes, often terraced, where mechanization of operations is difficult. Large, continuous flat areas are found especially on Posletta in northern Italy, along the coasts and in the lower part of Central Italy’s valley. The soil is fertile in most places, although centuries of deforestation and subsequent soil erosion are a major problem, especially in the mountainous regions. About 1 / 4 of all arable land need irrigation.
Wheat (winter wheat) is just about everywhere the most important grain. Wheat in the form of pasta and corn in the form of polenta are among the most important basic foods, and both wheat and corn must be imported. At Posletta, intensive rice cultivation is run. Other important grains are barley and oats. Sugar beets are mostly grown in Emilia-Romagna and Veneto, and sugar production covers most of the country’s consumption.
Italy grows large quantities of vegetables and fruits, partly for export. Oranges, kiwi, lemons and mandarins are grown especially in Sicily. Much of the fat consumption is covered by olives, which are grown in large quantities throughout most of the country, but especially in Puglia, Calabria and Sicily.
In addition to these typical Mediterranean growths, large quantities of apples, pears, peaches, cherries and plums are grown, which are largely exported. Other important products are tomatoes, beans and peas, which have created the basis for a significant canning industry. Important areas of cultivation are the plains of the Gaeta, Naples and Salerno bays. Italy accounted for about 14 percent of the world’s tomato production in 2017. In addition, a lot of potatoes are also grown.
Cattle breeding is particularly concentrated in Northern Italy, including Posletta, where there is a significant cattle holding based on the cultivation of dairy forage crops. The area is known for gorgonzola and parmesan cheeses. Nevertheless, Italy must introduce large quantities of livestock products to meet domestic needs. This applies to both meat, butter and cheese. In the Alps too, agriculture is run as cattle breeding with high and fodder production. In certain alpestrøk is still run some kind of dairy farming (transhumance), where livestock are run up on the mountain pastures in the summer.
Italian wine is produced over large parts of the country, partly in mixed culture with other crops such as grains, olives or fruit trees. Italy is the world’s largest wine producer, ahead of France. According to figures from 2016, over 50 million hectoliters of wine were produced in the country; 27 million hectoliters of red wine and 23 million hectoliters of white wine. There is wine production in all the Italian regions, most in Veneto, Emilia-Romagna, Puglia and Sicily.
Wine production in ITALY
|Year||Millions of hectoliters|
The forest covers just over 1/5 of the land area, but the importance of forestry is less than the area would indicate. For 2000, the forest has been hard at work in overgrazing and over-harvesting, and erosion has turned large areas into scrub vegetation (macchia). Extensive spruce and pine forests are found in the Alps, especially in Trentino-Alto Adige. Otherwise, cork oak and pine have local significance in the coastal areas, and in the drier regions, eucalyptus is planted.
Apart from the inner part of the Adriatic, the waters around Italy are poor in fisheries and fisheries cannot cover domestic consumption. Italian fishing is operated by small boats from a number of ports, and supplies the local markets. Among the most important fishing ports are Chioggia, Livorno and Naples, as well as Palermo and Trapani in Sicily.
Italy is relatively poor in mineral resources, especially fuels, and mining has never been of any significance. There are small amounts of iron ore in Elba and lead and zinc in Sardinia, in Friuli, the Karnian Alps and Tuscany. Italy also has deposits of sulfur kite and sulfur. The sulfur is found primarily in Sicily, but also in Romagna, Marche and Campania. Quarrying of building stone has great economic importance, especially marble from Carrara in Tuscany. All the mercury mines in Tuscany are closed.
Italy depends on importing energy from other countries. Most of the consumption of petroleum is imported from abroad. The natural gas consumed in Italy is mainly imported from Russia, Algeria and Libya.
Around 86 percent of electrical energy consumption is produced in Italy, while the rest is imported from neighboring countries France, Switzerland, Austria and Slovenia. The production of electrical energy comes partly from the waterfall energy, solar energy, wind energy and bioenergy. Most of the hydropower comes from the Alps, but a smaller part also comes from the central Appennines and Calabria.
Just under 80 percent of total energy consumption comes from non-renewable energy sources and 20 percent from renewable sources. Per capita, both total energy consumption and electric power consumption is relatively low by Western European scale.
Nuclear power was produced in Italy in the period 1963-1990. There were four nuclear power plants in the country that were closed after a referendum in 1987. In a new referendum in 2011, a large majority of the population (94 percent of the people who voted) expressed that it was not desirable to construct new nuclear power plants in the country.
The industry was previously hampered by the lack of domestic energy sources and raw materials, a limited domestic market and a lack of export opportunities. However, after the Second World War, a considerable industry has grown, especially in Northern Italy. Compared to the pre-World War II level, industrial production has increased more than in any other EU country.
This industrial expansion, the so-called “Italian miracle”, is due to many factors: US financial aid, cheap and plentiful labor (from southern Italy), technical and organizational skill and import of energy raw materials. The country’s membership of the EU and the improved international economic climate have also been important growth factors. Southern Italy is still industrially backward, but significant funds have been spent since 1950 to develop the basic industry, particularly steelworks and oil refineries, as cornerstones in industrial development areas.
The industry’s contribution to gross domestic product (GDP) corresponds to about 19 percent in 2016 and the share of labor in the sector is about 26 percent. Because Italy has relatively little natural resources, it has primarily developed an industry that refines imported goods.
Despite the lack of mineral resources, the steel industry has grown strongly and has been the backbone of industrial development. Large quantities of scrap iron are imported into the steel mills, which include plants in Taranto in southern Italy (one of the world’s most modern steel mills) and Genoa, and older works in Milan, Turin, Piombino, Terni and Bagnoli outside Naples.
The automotive industry has traditionally been important in Italy, but in recent years production has been significantly reduced. Originally it was concentrated to Piedmont and Lombardy. Especially in Turin was a large percentage of the population employed in the automotive industry, and primarily in Fiat – group. Today, much of the business has moved abroad, and Italy is no longer among the largest car manufacturers in the world. In 2000, 1,738,000 cars were produced, while the figure for 2017 was 1,140,000. The car brands produced in the country are primarily Fiat, Alfa Romeo, Lancia, Maserati, Ferrari, Lamborghini and Jeep. The largest car factory is located at Melfi in Basilicata, where Fiat Chrysler Automobiles (FCA) produces Fiat and Jeep models. The car factory in Val di Sangro in Abruzzo produces vans for Fiat, Citroën and Peugeot. In addition, there are large car factories for the production of Fiat and Alfa Romeo models in Pomigliano d’Arco outside Naples and at Cassino in Lazio. In the old car capital of Turin, some Alfa Romeo and Maserati models are produced today.
Northern Italy has a large production of refrigerators, cookers, washing machines and electrical equipment. Olivetti, one of the world’s largest office machine manufacturers, is located in Ivrea northeast of Turin. Shipbuilding has been affected by the crisis in the international shipbuilding industry since the 1970s, and today plays a relatively minor role. Genoa, Trieste and Castellamare outside Naples are the most important shipbuilding centers, but there are also shipyards in Savona, La Spezia, Livorno, Ancona, Bari and Palermo.
The chemical industry has expanded rapidly. The largest companies in the sector are Enichem and Montedison. Local raw materials such as sulfur, sulfur kale, potassium, salt, borax and flux spatula form the basis for the production of products such as acids, lye, glass, artificial fertilizers, paints and dynamite. Production is concentrated in the major port cities, in particular Savona, Genoa, Livorno, Venice and Naples, as well as the Milan-Torino axis.
Its location relatively close to the oil fields in North Africa and the Middle East has enabled the construction of oil refineries and the petrochemical industry, especially in southern Italy. The largest refineries are located at Augusta and Messina in Sicily, outside Cagliari in Sardinia, and at Genoa, Venice and Milan. The petrochemical industry includes large plants, including Ravenna (with Europe’s largest synthetic rubber factory), Mantova, Ferrara and above all Milan.
Textile and fashion
The textile and footwear industry, formerly the country’s most important industrial branch, has been famous for quality and good design since the Middle Ages. Italy is today among the leaders in the fashion world, and Milan is competing with Paris to be the “fashion capital of the world”.
The production of clothing and textiles is largely concentrated in the north. Lombardy (Legnano, Busto Arsizio and Varese) is a leader in the production of cotton fabrics and rayon, while Biella and Bergamo Province are known for their wool fabrics. Knitwear is manufactured in Vicenza and other cities in Veneto, while Como is the leading producer of natural silk.
The food industry is also significant. Domestic production is primarily sold on the internal market, while exports are relatively low. This industry, like the other industries, is best developed in the cities of Northern Italy, but is otherwise widely distributed throughout the country. Among other things, a variety of wheat products are produced, including numerous pasta varieties. Also canned fruits and vegetables are produced in considerable quantities. Italy, after Spain and Greece, is the world’s third largest producer of olive oil according to figures from 2018.
According to Countryaah, Italy has become one of the world’s leading trading nations since World War II. Machinery, transport equipment and textile products are among the country’s leading export goods. Imports include crude oil, machinery and transport equipment, chemical raw materials, ores and metals and foods.
About half of Italy’s trade takes place with its partners in the European Union (EU). Germany, France, the United Kingdom, Spain and the Netherlands are the most important trading partners.
Foreign trade as a percentage by country In 2017
Tourism as a business has long been an important part of the Italian economy. In recent years, the number of visitors has increased, and in 2017 more than 60 million foreign tourists came to the country.
In 2016, revenues from the tourism sector totaled over 70 billion euros, which is equivalent to 4.2 percent of the country’s gross domestic product. Including subcontractors and businesses that are indirectly involved in tourism, revenues amount to EUR 172 billion, which represents over ten percent of the gross domestic product. Around 2.7 million people are employed in the tourism sector.
Transport and Communications
The transport network is well developed, especially in Northern and Central Italy, which has the densest rail and road network.
The railway network has a length of about 20,000 kilometers. About half are electrified. The main line links Milan, Bologna, Florence, Rome and Naples. Other important lines are the Milan-Venice route, the Genoa coastline and Reggio di Calabria, the Messina-Palermo route and the Atlantic Ocean line between Bologna and Lecce, and the railways connecting Milan and Turin to the port city of Genoa. In addition, the Naples-Bari and Messina- Catania routes are important railway lines.
Several high-speed lines have been built in large parts of Italy over the past decades. Between Milan and Salerno, a distance of 700 kilometers, several of the largest cities in the country (Milan, Bologna, Florence, Rome and Naples) are connected. There are also such lines elsewhere, such as between Turin and Milan, while a new line between Milan and Venice is under construction. The latest high-speed rail lines are built for speeds of 300 kilometers per hour. The country has a total of 1437 kilometers of high-speed rail (2018).
There are metro in Milan, Rome, Naples, Turin, Genoa, Brescia and Catania. The most extensive metro network exists in Milan.
Road transport accounts for most of the transport work in Italy. The country has a well-developed network of main roads.
The world’s first motorway route, from Milan to Varese, was opened in 1924.
There are a total of 6629 kilometers of motorway (autostrada) (2018). Particularly famous is the Autostrada del Sole, which leads from Milan to Reggio di Calabria with connection to Sicily.
The national airline Alitalia was formed in 1957 by the association of Linee Aeree Italiane (LAI) and Alitalia. The company had major financial problems in the 2000s, and was privatized in 2008. As of 2015, Etihad Airways has had a 49 percent ownership interest.
There are 36 airports with regular traffic, including 25 international airports. Most important are Rome (Fiumicino) and Milan (Malpensa and Linate).
The Italian rivers mean little to shipping, but coastal traffic is significant. The main port cities are Genoa, Taranto, Trieste, Venice, Naples and La Spezia.