Italy is Europe’s Second Manufacturing Power
From making machine tools to die cast presses, Italy's small and often family-owned firms make the country an underrated industrial power. Rapid aging and expensive energy threaten this economy.
Italy is perhaps the world’s forgotten and most frequently ignored major economy. By nominal GDP, the eighth-largest economy in the world is Italy—larger than Brazil, Russia, or South Korea.1 Italy’s nominal GDP per capita of $39,000 is significantly higher than that of Japan or Spain.2 Adjusted for purchasing power, its per capita GDP is on par with that of France or the United Kingdom.3 Moreover, despite the country’s reputation as a tourism hub, Italy’s economy is actually one based on export-oriented industry and manufacturing. At an estimated $353 billion, Italy has the second-largest manufacturing economy in Europe after only Germany, and significantly larger than France’s ($297 billion) or the UK’s ($280 billion).4 Yet, at the same time, Italy is the single most stagnant economy on the continent and one of the most stagnant in the world: adjusted for purchasing power, no economy in Europe has grown less per capita since 1990 than Italy, at only about 20%.5 This makes Italy a crucial case study in the causes of economic stagnation in the developed world.