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  • The Oxford Handbook of the Italian Economy since Unification ed. by Gianni Toniolo
  • Francesca Fauri
Gianni Toniolo, ed. The Oxford Handbook of the Italian Economy since Unification. New York, NY: Oxford University Press, 2013. 816 pp. ISBN 978-0-19-993669-4, $150 (cloth).

The book is the product of a Bank of Italy–financed international research project to commemorate the sesquicentennial of Italy’s political unification (1861). The aim of the project and of the book is to enhance the understanding of the country’s long-term economic growth, using a considerable amount of fresh quantitative data. Many renowned Italian and foreign scholars have contributed to this effort, comprising twenty-one articles and divided into five parts.

The first part provides an overview of Italy’s economic progress in the long term, in the first and second ages of globalization, before and [End Page 675] after World War II. Despite innovative elements in Italy’s economic policy since unification, lack of political leadership, policy reform, and widespread administrative inefficiencies slowed down growth after the Golden Age. Furthermore, the continuing underdevelopment of the Mezzogiorno was a serious growth deterrent, first underlined as a pathological feature in the 1950s by Vera Lutz, who started a lively debate on the way out of the persistent dualism and difficult industrial relations of Italy.

The second part of the book addresses the sources of growth and welfare, new data sets on Italy’s national accounts, the country’s growth, and productivity performance throughout history. An important element of Italy’s long-term growth has been its propensity toward mass migration, which in the past contributed to rising living standards and a reduction of the North–South economic gap. Italian labor productivity growth was modest before World War II but grew rapidly during the Golden Age and, by 1973, had caught up with the United Kingdom’s economy as a whole. With the advent of the 1970s’ oil crisis, Italy’s success rapidly reversed and labor productivity slowed down. The Golden Age was accompanied by the growth of vocational education, which suited the needs of local industrial development of the time. However, as Giuseppe Bertola and Paolo Sestito point out in their chapter, in recent years, Italy has been losing out on human capital formation, from both a quantitative and a qualitative point of view. As regards civic capital formation, things do not look much better. Voter turnout reaffirms the North–South divide, the South showing persistently lower average participation in political election. The lack of civic culture seems to reinforce Putman’s idea that the difference in civic traditions reflects the difference in exposure to democracy that dates back to the experiences of the free cities in the North.

The third part is dedicated to Italy’s international competitiveness. The long-run perspective on comparative advantage shows an important shift in specialization during the economic miracle from traditional textiles and low-technology goods toward engineering products, while in the 1980s, Italy has returned to low-technology “made in Italy” products. The future is difficult to predict, but adjustments to comparative advantage require massive investments in human capital, which simply are lacking. A study on the real exchange rate (the price of goods and services relative to other countries) show that Italy benefited significantly from an undervalued currency during the years of the economic miracle, as well as in the 1970s and 1980s, when Italy grew more rapidly than its European competitors.

Italy has never emerged as an original contributor to the technology frontier; historically, innovation has taken place through technology [End Page 676] transfer. In the post–World War II period, in particular, Italian industry was able to develop a virtuous cycle of imitation, adaptation, and localized innovation. Within the last two decades, on the other hand, Italy’s industrial apparatus has lost its ability to integrate with foreign sources of technological knowledge, slowing down its process of creative adoption. However, there are still many medium and medium–large companies in a variety of sectors (automotive, air transport, shipbuilding, oil and gas, specialty chemicals, engineering, etc.), which base their competitive advantage on rapid technological adaptation and other important innovative qualities.

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