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Why is Italy doing so badly?

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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.

Suggested Citation

  • Gianluigi Pelloni, Marco Savioli, 2015. "Why is Italy doing so badly?," LCERPA Working Papers 0089, Laurier Centre for Economic Research and Policy Analysis, revised 03 Apr 2015.
    • Handle: RePEc:wlu:lcerpa:0089
    Note: LCERPA Working Paper No. 2015-7.
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    More about this item

    Keywords

    sustained growth; comparative advantage; collective action; Italy;
    All these keywords.

    JEL classification:

    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • O00 - Economic Development, Innovation, Technological Change, and Growth - - General - - - General
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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