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Wealthy by Accident? Firm Structure, Institutions, and Economic Performance in 150 (+4) Years of Italian History: Introduction to the Special Forum

Published online by Cambridge University Press:  20 May 2015

PAOLO DI MARTINO
Affiliation:
Paolo Di Martino is Senior Lecturer in International Business History at the Birmingham Business School, University of Birmingham, UK. Contact information: University House, Edgbaston Road, B15 2TT, Birmingham, UK. E-mail: p.dimartino@bham.ac.uk.
MICHELANGELO VASTA
Affiliation:
Michelangelo Vasta is Professor of Economic History in the Department of Economics and Statistics, at the University of Siena. Contact information: Piazza San Francesco 7, I-53100 Siena, Italy. E-mail: vasta@unisi.it.

Abstract

In the century and half since its 1861 unification, Italy has left the periphery of the world economy and reached a level of wealth close to that of industrialized core Western countries. Since the 1990s, however, the process of globalization has exposed the weakness of the Italian productive system, and the country’s economic performance has been one of the worst in the world. This pattern raises questions about the very nature of the Italian economy, its historical development, and its relative success in the long run, demonstrating the need for a structural reassessment of these themes. The aim of this special forum is to provide such analysis, offering a systematic and innovative view based on the interaction between institutions (conceived as the rules of the game of economic agents), firm structure, and economic performance. The main hypothesis discussed in all four articles is that Italian capitalism has been negatively affected by inefficient institutions that had a strong impact on firms’ size and governance, managerial practices, and attitude to innovate. As a result, the Italian economic performance has been frustrated, rather than promoted, by the institutional environment, and in large part shaped by fortunate contingencies.

After the editors’ introduction, the special forum starts with a reconstruction of the macroeconomic scenario (“Italy’s Modern Economic Growth, 1861–2011”), using the state-of-the-art data and focusing not only on the process of growth, but also on the problems of living standard, inequality, and regional disparities. The second article (“Institutions, Politics, and the Corporate Economy”) focuses on the exceptionality of the Italian industrial structure characterized by the large dominance of small firms. The authors explain how the institutional setting has played a crucial role in determining the contrasting performance of big business on the one hand, and of small firms on the other. The third article in the forum (“The Ghost in the Attic? The Italian National Innovation System in Historical Perspective, 1861–2011”), which provides a broad reconstruction of long-term trends in science and technology, analyzes the Italian innovative capabilities in the long run. The authors explain how the institutional setup has determined the Italian attitude toward technological innovation in the different historical phases, and suggest that the Italian national innovation system, from the unification until today, has been characterized by a peculiar shadowy or ghostly nature. The last article (“Happy 150th Anniversary, Italy? Institutions and Economic Performance Since 1861”), which also synthesizes the very message of the forum, focuses on the mechanisms on which institutions work. The authors argue that Italian economic development has been characterized in the long run by poor formal institutions, which led to a suboptimal pattern of growth characterized by scarce investment in education, low salaries, imitative technologies, and exploitative management of firms by owners who were mainly stockholders rather than stakeholders.

Type
Forum
Copyright
Copyright © The Author 2015. Published by Cambridge University Press on behalf of the Business History Conference. All rights reserved. 

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References

Bibliography of Works Cited

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Cohen, Jon, and Giovanni, Federico. The Development of Italian Economy, 1820–1960. Cambridge: Cambridge University Press, 2001.CrossRefGoogle Scholar
Consob. Dall’Unità ai giorni nostri: 150 anni di borsa in Italia. Rome: Consob, 2011.Google Scholar
Greif, Avner. Institutions and the Path to the Modern Economy. Lessons from Medieval Trade. Cambridge: Cambridge University Press, 2006.CrossRefGoogle Scholar
Istat. L’Italia in 150 anni. Sommario di statistiche storiche 1861–2010. Rome: Istat, 2011.Google Scholar
North, Douglass C. Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press, 1990.CrossRefGoogle Scholar
North, Douglass C. Understanding the Process of Economic Change , Princeton, NJ: Princeton University Press, 2005.CrossRefGoogle Scholar
North, Douglas C., Joseph Wallis, John, and Weingast, Barry. Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History , Cambridge: Cambridge University Press, 2009.CrossRefGoogle Scholar
Toniolo, Gianni (ed.). The Oxford Handbook of the Italian Economy Since Unification. Oxford: Oxford University Press, 2013.CrossRefGoogle Scholar
Zamagni, Vera. The Economic History of Italy 1860–1990: Recovery After Decline , Oxford: Oxford University Press, 1993.CrossRefGoogle Scholar
Abramovitz, , , Moses. “Catching Up, Forging Ahead and Falling Behind.” Journal of Economic History 46, no. 2 (1986): 385406.CrossRefGoogle Scholar
Acemoglu, Daron, Johnson, Simon, and Robinson, James A.. “Institutions as the Fundamental Cause of Long-Run Growth.” In Handbook of Economic Growth, vol. IA, edited by Aghion, Philippe and Durlauf, Steven N., 386472. Amsterdam: Elsevier, 2005.Google Scholar
Cipolla, Carlo. “The Decline of Italy: The Case of a Fully Matured Economy.” The Economic History Review 5 (1952): 178187.Google Scholar
Colli, Andrea, and Rinaldi, Alberto. “Institutions, Politics, and the Corporate Economy.” Enterprise and Society 16, no. 2 (2015): 249269.CrossRefGoogle Scholar
Di Martino, Paolo, and Vasta, Michelangelo. “Happy 150th Anniversary, Italy? Institutions and Economic Performance Since 1861.” Enterprise and Society 16, no. 2 (2015): 291312.Google Scholar
Felice, Emanuele, and Vecchi, Giovanni. “Italy’s Modern Economic Growth, 1861–2011.” Enterprise and Society 16, no. 2 (2015): 225248.CrossRefGoogle Scholar
Hall, Peter A., and Soskice, David. “An Introduction to Varieties of Capitalism.” In Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, edited by Hall, Peter A. and Soskice, David, 170. Oxford: Oxford University Press, 2001.CrossRefGoogle Scholar
La Porta, Rafael, Lopez-de-Silanes, Florencio, and Shleifer, Andrei. “The Economic Consequences of Legal Origins.” Journal of Economic Literature 46 (2008): 285332.CrossRefGoogle Scholar
Malanima, Paolo, and Zamagni, Vera. “150 years of the Italian economy, 1861–2010.” Journal of Modern Italian Studies 15, no. 1 (2010): 120.CrossRefGoogle Scholar
Nuvolari, Alessandro, and Vasta, Michelangelo. “The Ghost in the Attic? The Italian National Innovation System in Historical Perspective, 1861–2011.” Enterprise and Society 16, no. 2 (2015): 270290.Google Scholar
Schmidt, Vivien A. “European Political Economy: Labor Out, State Back In, Firm to the Fore.” West European Politics 31 no. 1–2 (2008): 302320.CrossRefGoogle Scholar
Special issue on “Ricchi per sempre? Storici dell’economia ed economisti per i 150 anni dell’Unità d’Italia.” Rivista di Storia Economica 28, no. 1 (2012).Google Scholar
Toniolo, Gianni, “An Overview of Italy’s Economic Growth.” In The Oxford Handbook of the Italian Economy since Unification, edited by Toniolo, Gianni, 336. Oxford: Oxford University Press, 2013.CrossRefGoogle Scholar
Zysman, John. “How Institutions Create Historically Rooted Trajectories of Growth.” Industrial and Corporate Change 3 (1994): 243283.CrossRefGoogle Scholar