In the past three years, Italy has experienced a roller coaster economy. Currently, the country’s GDP (or PIL) is on the rise after 4 straight quarters of decline. Notwithstanding, it grew less than expected in the third quarter, due to inefficient factory output and wretched consumer morale. The rise, according to National statistics agency, Istat, said GDP grew a provisional 0.3% in three months from July to September- a tenth of a point lower than economists’ forecasts. The cause of this can be mostly blamed on exogenous events that affected crucial facets of the economy. The central problem within Italy and its respective economy is the lack of efficiency: dealing with institutions such as schools and companies. Italy’s population also feels the affects of the problem because they acquire a feeling of insecurity and therefore do not invest. The Italian government needs to spend the money they have on creating more efficient methods of instilling skills in children in schools and finding ways to include more companies in the market in order to stimulate more cash flow.
Although youths incur more education than adults in general, they experience a difficult school-to-work transition and relatively high unemployment rates. Higher unemployment rates are one of the worst things for an economy because the country is not working at its full potential. This calls for better-targeted active labor market policies and also to give priority to better human capital development. However, Italy’s spending on education is relatively high but educational attainment at the secondary level is substantially below average. As students reach the obligatory schooling age of eighteen they should be motivated through quality teaching and technical and vocational training services. This training is necessary because Italy stands out with its low level of worker training. With efficient workers, comes an efficient economy. In fact, the Italian government has allowed company tax credits for worker training expenses in an attempt to fill this gap.
Another facet of the economy that needs to become more efficient is the competition of companies. Many large companies are run by government and competitiveness is blocked by barriers to entry such as, high service prices and lack of contestability of markets despite progress over the last decade. The government has set a financing law that will allow splitting network ownership and relying on competitive procedures to grant operating licenses. This will create a more competitive market with more competitive prices. The government should also look to exploit the South for all its abundant unused natural, cultural and human resources to feed the growth of new activities. When half the country is not being used for production there is a huge inefficiency in the economy. Another way to induce competition in the economy is to allow companies with minor accounting irregularities to be placed on the market. The important matter in this situation is that you do not diminish accounting principles simply in order to strengthen the economy.
Another of Italy’s major problems is that the population has lost confidence in major companies and has gained fear after the terrorist attacks of September 11th. One example of this is when Fiat needed to lay off about 8000 workers and people became wary of investing in the Italian market. September 11th also instilled fear in many consumers because they felt the need to hold on to their earnings. These types of fears add to the decline of the economy and sometimes take a long time to get out from. Finally, another thought on the Italian economy is that it might be facing hard times because the Euro has risen to be stronger than the dollar and this causes Italy to have a hard time exporting goods abroad because the currency is stronger.
In conclusion, I feel that the Italian economy is on the right track to grow in the future. The main problem that the government and economy faces is that there need to be more efficient laws and regulations that will lead the nation to work at its fullest potential. There are many untapped resources in the country of Italy that can be taken advantage of. I feel that if the government creates laws where everything needs to be accounted for and workers trained to be efficient then the country will earn the respect of the population and there can be massive changes.