Italy's Mezzogiorno region covering the southern half of the Italian peninsula combined with the islands of Sardinia and Sicily, is the Achilles heel of the Euro Area and it has some of the worst economic metrics in the European Union, including the lowest birth rate since 1862 when Italy had a total population of 22m (this number comes from Istat, the national statistics office. 26m is also cited elsewhere) compared with 59m today.
In the period 2000-2014, World Bank data based on constant international dollars adjusted for price differences (purchasing power parity) show that per capita GDP (gross domestic product) fell by 2.2% in Greece and 8.3% in Italy as whole.
Mezzogiorno is the Italian term for “midday” or “noon,” and southern Italy got its name because of the intensity of sunshine there at midday during summer. The area broadly coincides with the footprint of the Kingdom of Naples and following a partial unification in 1861, the Kingdom of Italy began with a public debt ratio of 37% and the average ratio was 91% in the period to the eve of the First World War. Second World War hyperinflation cut the debt ratio to 25% of GDP in 1947 — the all-time record low since 1861 and the Italy's gross public debt ratio was at 133% of GDP in June this year - the second highest in the European Union, trailing only Greece.
The period 1950-1973 is regarded as a Golden Age for growth in Western Europe as countries recovered after the war years with labour in plentiful supply. Italy grew at an annual average of 5% — the same rate as West Germany. Angus Maddison, Monitoring the World Economy (1995, OECD, Table 3-1).
IMF data show that in the 1980s, average annual real GDP growth was 2.1%; it dropped to 1.4% in the 1990s, 0.6% in the first decade of this century and has averaged -0.5% since 2010.
Last Friday Istat reported growth of only 0.2% in the second quarter and a rise of 0.5% year-on-year.
The following are facts mainly from Eurostat and the Association for the Industrial Development of Southern Italy (Svimez), an economics think-tank.
Prof Paola Subacchi of Chatham House, the London think-tank, has said that "the north-south divide [ ] existed well before Italy’s unification and the introduction of the lira. Before 1861 the Kingdom of Naples was a rather depressed region where low-productivity agriculture was the main economic activity. Lombardy, on the other hand, had a more intensive agriculture — by two-thirds more productive than that of the south — and a well developed manufacturing sector. In the early 19th century about half of Lombardy’s population was illiterate compared with almost 90% in the south."
According to InStoria magazine, a publication of Sapienza University of Rome, "In 1954, 49% of the adult population of the Mezzogiorno was illiterate and 85% of all southern Italian families were classified as poverty-stricken. "
Italy ranks poorly for inward investment and the Mezzogiorno, with its reputation for corruption and organised crime, attracts little.
Prof Friedrich Schneider of the Department of Economics, Johannes Kepler University, Austria, who is a leading expert on the shadow/ black economy, estimates that the Italian shadow economy accounts for 20.6% of GDP; Spain is at 18.2% and Greece is at 22.4% — the Irish shadow economy is estimated at 11.3%.
The Mezzogiorno's traditional industries have been hit by both the crisis and Chinese competition.
Good tourism numbers this season had prompted Matteo Renzi, Italian prime minister, to hail the good news for the south but a report (including slides in Italian) from Svimez issued on July 30, rattled him.
In an open letter to Renzi published on August 8 in La Repubblica, Roberto Saviano, the journalist and writer who is under police protection because of his criticism of the mafia, urged the prime minister to “take action” and “admit that nothing has been done” to stop what Svimez termed the “desertification” of the south.
"Despite it's long overdue and de-industrialisation has destroyed the economy of the south, you must act. But first, admit that so far, nothing has been done to help the south," he wrote.
Saviano added that the region should have the freedom to grow its own way. Renzi responded: "Quit whining about the south."
The prime minister later said he would produce a "master plan."
A columnist in the Milan newspaper, Il Sole 24 ore newspaper, complained about a "culture of complaint" in the Mezzogiorno (English).
We have written in the past about the delusional aspiration of the architects of the euro that poor countries could become as rich as the wealthiest. Nevertheless, the economic chasm within the Euro Area's third biggest economy cannot be dismissed as an irritation and if Renzi has lost the will to bring change to the sclerotic economy, it's bad news for both Italy and Europe.
The top 3 countries acoount for two-thirds of Euro Area GDP: in 2014 Germany accounted for 28.7% of GDP; France 20.7% and Italy 15.8%.
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