Economy in Italy

From economic power to a country of problems

Even in the early Middle Ages, Italy experienced an economic boom. Powerful city-states like Genoa and Venice achieved a dominant position in the Mediterranean area and practiced a prospering maritime trade. However, with the decline of the great economic powers in Italy, and the domestic discord, the country lost the contact to its European competitors and increasingly lagged behind. Today, Italy is an industrialized country that still suffers from the consequences of a highly controlled economy. The economic imbalance between northern and southern Italy and the traditionally high level of shadow economy leave the country suffering.

Economic power in the Middle Ages

Already in ancient times, Italy was an economic centre in Europe. With the fall of the Roman Empire, an economic downturn began, which was stopped during the Middle Ages at least in northern Italy. Two powerful city-states - Genoa and Venice - gained supremacy in the Mediterranean area and established a flourishing maritime trade. But prosperity and wealth disappeared with the weakening influence of the two trading powers, and finally diminished with the wars and conflicts concerning the establishment of Italy as a nation. During the Colonial Time, the newly formed Italy lost the connection to the great European powers and was thus pushed to the edge not only by its internal political conflicts. The economic dominance finally became history.

Veneto Typical Italian landscape

Economy in Italy: Industry and Agriculture

As in most countries of Western Europe, agriculture is in a continuous decline in Italy. Italy is a country poor of resources and with only a few notable natural resources. In terms of agriculture, in the South mainly wheat, tobacco, olives, stone fruit, sugar beets and tomatoes are cultivated, while Northern Italy can look back on a strong tradition of pig and cattle breeding. The cultivation of wine, however, is widely spread throughout Italy and wine is a major export good of the country.

Industry and economy in Italy are strongly influenced by government involvement. A circumstance that only slowly starts to break up, when waves of privatisation roll over the country. While in the south, most workers work in small businesses, in the richer north of Italy many large corporations exist and employ a great number of workers.

Economy in Italy today

Almost 70% of the Italian GDP are achieved in the service sector. Tourism plays a very important role for the economy in Italy and contributes nearly 10% to this sector. In recent years, some 40 million tourists visited the country every year. The most important destinations besides the beaches in Northern Italy are Venice, South Tyrol and Rome. Nevertheless, the country, like many other European destinations, is still struggling with a decline in overnight stays after the tourist boom of the last decade.

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