The economic development of Italy in the 20th century
The Giolittiana Era (named as this because of an italian polititian) was characterized by strong economic growth, which saw significant growth rates in the industrial sector, resulting in an increase in the income of many Italians. However, the equally high rates of emigration abroad (around 8 million Italians left the country in ten years) confirmed the imbalances between the north and the south and between the cities and the countryside.
Benito Mussolini was a socialist dictator. He was named Prime Minister after World War I.
After the war there were many argitations in Italy and Socialists and Communists were winning control of many city governments'.
Mussolini kept the control of what was called the Italian Social Republic. Its nature was essentially socialistic.
Italy is relatively poor in natural resources such as coal and its agricultural land is not very productive. The war destroyed its transportation and housing.
Crisis of 1929. Consequences:
Increase of unemployment rate.
Suicides and deaths.
Closing of businesses and factories.
As a result, Europe, including Italy, is not able to cope with the debts they had with the United States and provokes a great world crisis, which in also provokes new ideological currents.
On top of the unavoidable problems, we can find:
- Higher inflation. Some inflation was unavoidable when the Fascist Regime removed the wage and price controls.
- More currency. As a result of the higher inflation, the Banca of Italy had no other choice than start creating more paper money. The amount of currency in circulation increased an 18% between 1938 and 1945. The price controls prevented this from being manifested in higher prices.
Italy was forced to impose the same type of currency as Western Germany. Because of this, the monetary authorities decided to restrict bank lending by imposing a 25% reserve ratio on the banks. This had the effect of absorbing the excess liquidity of the banking system.
The Italian Government inherited from the Fascist regime extensive holdings in industry. It owned 80% of the shipbuilding industry, 60% of the pig iron industry and 40% of the industry for building railway rolling stock.
L'Instituto per la RicostruzioneIt had been initially set up to protect the interest of depositors in failing banks, but in the late 1940's it focused on communications, electricity, shipping, shipbuilding, steel and engineering. IRI began to function as a means of keeping failing businesses from laying off workers.
After the death of Mussolini the Italian economy was destroyed: per capita income in 1944 was at its lowest point since the beginning of the 20th century .
IMPORTANT DECADES:
1950. The Marshall Plan helped to revive the Italian economy, it was called the European Recovery Program, ERP. It was an initiative of the United States to help Western Europe, in which the Americans gave economic aid worth about 13 billion dollars at the time for the reconstruction of those countries in Europe devastated after the Second World War.
1960-1980. The Years of Lead. It is a term used for a period of social and political turmoil in Italy that lasted from the late 1960s until the early 1980s, marked by a wave of both left-wing and right-wing incidents of political terrorism.
The death of the policeman Antonio Annarumma who was killed in November 1969; the Piazza fontana bombing in December of that year, which killed 17 and was likely perpetrated by right-wings in Milan; and the subsequent death of Giuseppe Pinelli. It was a very dark time in the history of Italy.
1973. Oil crisis. It began in October 1973 when the members of the Organization of Arab Petroleum Exporting Countries proclaimed an oil embargo.
The price of oil had risen from US$3 per barrel to nearly $12 globally; US prices were significantly higher. The embargo caused an oil crisis, or "shock", with many short- and long-term effects on global politics and the global economy. It was later called the "first oil shock", followed by the 1979 oil crisis, termed the "second oil shock."
1980. However, as a result of some spending policies, the Italian national debt skyrocketed during the Craxi era, soon passing 100% of the country's GDP.
1990. Italy faced significant challenges, as voters – disenchanted with political paralysis, massive public debt and the extensive corruption system.
In the late 2000s, Italy was severely hit by the Great Recession.