In 2021 Italy was the 8th economy in the world in terms of GDP, the 7th in total exports, the 10th in total imports, the 27th economy in terms of GDP per capita, and the 19th most complex economy according to the Economic Complexity Index (ECI).
This data seen in a text, as above, can be confusing, and could not help understanding what is the true strength of the Italian economy , for this reason in this article we are going to see and unpack all these data to clearly understand everything.
According to the Global Innovation Index, Italy is 28th, following not only the US and Japan but also Spain and even Malta: as always we have to carefully consider statistics like this as the economy is not an exact science.
On our Nation profile it is written that Italy passes the average of most high earning countries, in three categories: Infrastructures, knowledge and technological output, it is even said that Italian performance is superior to the European average, in the following categories: Infrastructures, market complexity, knowledge and technological output and research, but the worst Italian performance is about Institutions.
But, in spite of our Institutional problems (known by those who work in this field) our economic-productive tissue stands.
When we talk about Italy, we talk about a First-World economy, this means that our economy is a productive one where we have a complex production system of complex manufacture: machineries, automobiles, airspace, pharmacology, every type of services (etc..) which give prosperity to all social spheres.
In the provided graph are shown the data about Italian exports, from which our Nation earns a substantial income.
OEC says: “The most recent exports are led by Packaged Medicaments ($26.8B), Cars ($16.5B), Refined Petroleum ($15.2B), Motor vehicles; parts and accessories (8701 to 8705) ($14.9B), and Vaccines, blood, antisera, toxins and cultures ($10.1B)”
The most exported items are products with a high added value, this ensures a high income; nevertheless observing the graph it is evident that ours is a complex economy.
To make clear the difference between a complex economy and a non complex economy, it is useful to have a look at this graph: here it is shown the Saudi Arabian economy, which is a Second-World which means that they mainly base their economy on extracting resources from soil (extractive economy) as a result there is not a high complexity.
However, we have to remember that despite the fact that Italy has one of the strongest economies of the world (it has one of the highest GDP of the world and also its economy is one of the top 10 strongest economies).
In our Country it can be noticed a big gap between big businesses and small businesses: the difference is that the small businesses cannot invest as much money in R&D (research and development) as the big businesses do, and the cause of this is principally one: the very low budget of the small businesses.
This is a very big issue due to the fact that, as Pierluigi Serlenga says in an interview, “if R&D is so important in countries (like UK, France and Germany where the businesses are mostly big and already developed), then it is more for Nations like ours, Spain or Turkey, where the businesses are smaller and where there are less engineering resources, so these Countries need to increase the ability to innovate to improve the competitiveness of the business in the international market” but in Italy most of the population is old, so the businesses as well as being small and having a small budget, they do not have a lot of workers who are young and with a lot of energy.
The biggest and most developed Italian businesses work in the automobilistic, aerospace, machinery and energy sectors, like Pirelli & c.; Iveco; Ferrari; Leonardo and some others: these few businesses have a huge profit and are so developed because they have relied on a mechanism that is built on two strengths, prime contractors and network economy (prime contractors are big businesses that have to do a job and call some other businesses to help them and, because they have the control of these small businesses, they can decide at what price they are going to do that job and how much they are going to pay these small businesses.
The network economy is the economy in which the price of the good you are buying depends on the number of other individuals that are buying the same good).
In conclusion, Italy’s economy has a complex and diverse production system, including industries such as machinery, automobiles, aerospace, and pharmaceuticals. While the country ranks high globally in terms of GDP and exports, there are evident challenges, particularly in institutional aspects.
Antognarelli Marco & Rossi Roberto 3^G
