Discussion Paper Details

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Title: Italy's Economic Performance 1945-92

Author(s): Nicola Rossi and Gianni Toniolo

Publication Date: December 1993

Keyword(s): Italian Economic Growth, Measures of Productivity, Post-War Italy and Productivity Growth

Programme Area(s): Human Resources

Abstract: Italy's economic performance between 1945 and 1992 is assessed in a general theoretical framework for productivity growth measurement which enables us to relax the binding assumptions of standard Solow-type neoclassical models. The paper shows that `true productivity' was of minor importance, being outweighted by economies of scale as a source of growth. Productivity gains are large in the `miracle years'; from the late 1960s onwards, productivity levels taper off and cost decreases can be entirely attributed to a combination of scale economies and short-run adjustment costs. In such a framework, we analyse Italy's post-war economic performance arguing that our results confirm the widely-held opinion that the inefficiency of the service sector, lack of competition in the sheltered sectors, powerful vested interests, outdated ideologies and corruption itself account for most of the productivity slow down that is observed after the mid-1960s.

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Bibliographic Reference

Rossi, N and Toniolo, G. 1993. 'Italy's Economic Performance 1945-92'. London, Centre for Economic Policy Research.