The Two-Faced Economy

ROME: Italy's economy has two faces. On one side, sectors of the economy demonstrate extraordinary productivity, and have won big shares of international markets. For example, the mechanical industries in the Veneto and in Emilia led by Carararo, and Ducati, as well as the optical industry in the Northeast with Luxottica in the lead. These are firms known across the globe, and which are often the objects of acquisitive interest from foreign competitors or great international investors, such as Piaggio and Stefanel.

On the other hand, Italy's economy as a whole is stagnant: in the last ten years Italy has been growing more slowly than the median in Europe, which is already seeing much lower growth rates than the United States. In the last eight years per capita GDP has increased, on average, by 3.2% per year in America, 2% in Europe, and only 1.2% in Italy.

How are these two economic facts to be reconciled and what does this divided economy tell us about Europe, east and west, as well as other economies where the percentage of people in work may be stagnant or falling? The answer is at the same time simple and rich in consequences for economic policy.