The Determinants of Italian Slowdown: What do the Data Say?

Francesco Venturini, Polytechnic University of Marche

Abstract

By considering growth accounts this paper discusses where the recent story of Italian labour productivity has diverged from the EU pattern. Similarly to the major continental countries, Italy has taken only limited advantage of the growth potential of ICT because of a generally unfavourable environment for innovation. Nevertheless, the decline in total factor productivity is found to play a more important role in the deceleration of GDP per hour worked of the late 1990s. Moreover, by scrutinizing industry performance, this paper shows the increasing weakness of traditional sectors, that is, where the Italian economy enjoys the major comparative advantages in international trade. Evidence is also provided on the acceleration of Italian de-specialization in ICT producing manufacturing as well as on the deterioration of TFP in several service industries.