The Euro Area’s Achilles Heel: Reassessing Italy’s Long Decline in the Context of European Integration and Globalisation

By: Guarascio, Dario.

Contributor(s): Heimberger, Philipp | Zezza, Francesco.

Material type: materialTypeLabel

BookSeries: wiiw Research Reports: 470Publisher: Wien : Wiener Institut für Internationale Wirtschaftsvergleiche (wiiw), 2023Description: 41 S., 4 Tables and 7 Figures, 30cm.Subject(s): Italy | decline | euro area | crisisCountries covered: European Union | Italywiiw Research Areas: Macroeconomic Analysis and PolicyClassification: E65 | P16 | F45 | F62 Online resources: Click here to access online Summary: This paper analyses how Italy’s decades-long decline turned the country into the euro area’s Achilles heel, the most vulnerable spot in the common currency. We use a structuralist framework to synthesise different (competing) supply-side and demand-side explanations, accounting for long-term processes and sectoral interdependencies. We argue that structural domestic factors that were already present in the decades after World War II (‘original sins’) – low-cost competition and labour fragmentation, many small firms linked to low innovation, and a deep territorial divide – interacted with the policy constraints brought about by globalisation and European integration to exacerbate Italy’s decline vis-à-vis its euro area peers.

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Item type	Current library	Call number	Status	Date due	Barcode
Paper	WIIW Library	5.600/470 (Browse shelf(Opens below))	Available		1000010006622

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This paper analyses how Italy’s decades-long decline turned the country into the euro area’s Achilles heel, the most vulnerable spot in the common currency. We use a structuralist framework to synthesise different (competing) supply-side and demand-side explanations, accounting for long-term processes and sectoral interdependencies. We argue that structural domestic factors that were already present in the decades after World War II (‘original sins’) – low-cost competition and labour fragmentation, many small firms linked to low innovation, and a deep territorial divide – interacted with the policy constraints brought about by globalisation and European integration to exacerbate Italy’s decline vis-à-vis its euro area peers.

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