Italy and Macroeconomy

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History of Italy

Italy was one of the most popular European destination where many travelers decided to go due to its history. The history is important to understand so one can see how the country evolved over the years. According to the website History, before Italy was independent, it was divided into different parts. Each part of Italy were considered as their own state and had their own government (History).

Italy finally seeked independence in 1861. In 1946 and years before, Italy used to have a monarchy government. A monarchy government is a form of government where a royal a family is in charge, which is usually a king or queen. The king or queen stays in power until their death. The next person to be in charge is the next oldest of the family. Likewise, these families were tremendously wealthy. However, in 1946 citizens of Italy voted for a democratic republic government, which is still governed to this day.

Today, Italy is located in the south side of Europe, which is in a form of a boot. Kim Zimmermann stated that as of 2017 over 60 million people live in the continent. In fact, Italy has some diversity. Although the majority of the people are Italians, there are other ethnicities such as Albanians, Germans, and other Europeans descendants. Another thing that Italy is well known is its architecture, which consists of classic Roman, Renaissance, Baroque, and Neoclassical. For instance, the Roman architecture originated from the Greeks.

The Renaissance architecture dates back to the 14 century using Greeks and Romans materials. The Baroque architecture dates back to the 16 century and the Neoclassical dates back to the middle of the 18 century. The economic system of Italy is an industrialized economy that happens divided by the north being better off than the south financially. The north side of this country is where everything industrialized, higher employment rates, and people are at a better economic state. However, the south side is where most of the agriculture is at. Many people are not in a good economic state and a lot of people are unemployed

Today In the 21st century, most people are accustomed to everything being fast. Many years ago in Italy, men were expected to work, while women had to stay home to look after the children, house work, and cook. Moreover, things have and will continue to change. In some cases, both parents are now working to meet financial needs and they feel like that there is not enough time to cook due to work, for this reason they are now turning to fast-food according to the Guardian. The fast-food industry is growing day by day in Italy, and slowly getting rid of the cooking tradition.

The economic conditions Italy is in debt, but it is considered as one of the biggest economy that is still continuing to grow. For instance, Italy has been relying on services and manufacturing goods in order goods to get out of debt. Some of the most useful services are retail, wholesale, and transportation. The manufacturing industry relies on good controlled by enterprises. Nevertheless, one of the biggest problem in the continent is the high unemployment rate.

The political system utilized in Italy is a parliamentary republic. For instance, the prime minister is considered as the president who has very little power in Italy. According to the article “Parliamentary Republic”, Italy has three branches of governments which is the executive, legislative, and juridical. The executive power lies within the prime minister and those who work in the counsel. The legislative involves the parliament which is considered as the congress of the country; it is broken down into the senate and chamber.

The Judiciary consists of the magistrates which are considered as judges in the United States. Surprisingly, the citizens who live in Italy do not have the power to choose who they want as prime minister. They are only allowed to choose what type of parliament they want. On the other hand, the voting system in Italy is different compared to the United States.

An example being, citizens that are aged 18 and up can only vote for the lower house. Furthermore, one must be at least 25 to vote for the senate. As of 2017 a new law called Rosatellum, was passed where Italians are allowed to vote once for two different parties according to the Marco Bertacche. The idea of the bill is for both parties to be elected, work together, and have less people from the Five Star party. The Five Star Party focuses on the environment, transportation, free drinkable water, and internet access. However, some do not like the party due to its scandals.

Italy’s Produce Main Export

Every country relies on a main source or export in order to receive a profit. One of Italy’s main export is vehicles, despite its issues financially and other global factors. To illustrate, Italy’s car sale has dropped due to the economy, tax rates, price of gas, and lower amount production in models according to Reuters. Although the automotive industry came up with a solution, there is little that can be done to solve the issue.The industry came to a conclusion by creating a PPC model, which is the graph below. The graph below shows the quantity demanded of the cars and the supplies needed to produce them, which is from point A to B.

The first demand curve shows the price of the product and the quantity of the supply when the vehicles were at a higher price. If the marginal opportunity price increases, the harder it will be for consumers to purchase a vehicle. Since consumers are not spending on the firm’s goods, the firm has no choice but to produce a lower amount of cars in order to produce more cars. If the prices of the vehicles are lowered to the consumers needs, the consumers will be willing to spend more. As a result, the groups in the industry have decided that it is best to lower the sale for consumers, which helped them and can be seen in the second curve.

A country’s comparative advantage can play a huge role in exporting goods as a financial gain. In Italy the main specialized industry in automotive is the Fiat-Chrysler Automobiles.For example, a website known as Export stated that the Fiat-Chrysler Automobiles produce most of Italians cars and vehicles that are designed to carry multiple people. Some of the models include Punto model and Alfa Romero, which are made within Italy. Italy’s main comparative advantage is the production of Ferraris and Maserati models. To emphasize, Italy can easily manufacture these cars due to their supplies and resources. not many other nations are able to produce as much of these types of cars. All of the other countries have a disadvantage on these types of vehicles due to the price of production and limited knowledge to manufacture them. However, the United States has very little partnership with the Italian’s Ferrari industry to produce its technology and performance.

The production of Ferraris and Maserati has a long set of history as to what it is today. When Ferraris and Maseratis were first introduced, they were not known for their luxury, but was known for their speed in racing. For instance, according to Diana Budds, the founder of Ferraris was Enzo Ferrari, who focused primarily on the motor for racing. After his passing, Luca di Montezemolo turned Ferrari’s work into a luxury car. One of the specialized groups who are in charge of designing the Ferrari is the Pininfarina. A factory called the Maranello Factory produces Ferraris, which is located in Maranello, Italy. Designboom mentioned that at least ten Ferraris are made a day. On the other hand, Maserati models were founded by the Maserati brothers.

The Maserati cars are designed by the Pininfarina as well along with Giugiaro, Zagato, and Ramaciotti as stated by the Maserati website . They are also known for their speed and luxury today in society. The design of the Maserati models are designed like the cars from the 60s to 90s. The Maseratis models are manufactured at a factory called the Maserati Company, which is located in Bologna, Italy. Both the Ferrari and Maserati vehicles undergo the architectural group who determines where every piece should be located at. The draftsman are the ones who draw out the shape and design of each car. Likewise, the factory is divided into different sections and each part of the factory is in charge of one specific part of the vehicle

Italy’s Tech of American Traded Goods

Italy has impacted prices and production in numerous ways. To emphasize, the Monetary Policy in Italy allows the Fed to take control of the money supply and interests rates. The graph below shows that the interest rate is often below, but close two percent within the medium term according to the Banca D’Italia. Italy keeps the interest rates low, so consumers can be encouraged to spend more money. On the other hand, if Italy continues to keep the interest rate low, it will cause an inflation.

Italy has earned millions of dollars than they normally in exporting technology because they worked with others including the United States as MIT Technology Review Insights stated. Italy needs to work with others due to the lack of knowledge that they have. For example, when Italy was trying to created their first advanced lamborghini, they did not know what materials would work best and the US had to work with them. A plan created in 2016 called Industrial National Plan 4.0, promises to continue the production with technology. The plan states that the government of Italy will create more centers at universities in order to create more technological devices and train others.

For many years, minimum wage has been a controversial debate whether or not it should increase. Those who are in favor believe it will them with their cost of living while other disagree. In Italy citizens are paid in euros along with other European nations, which is decided by the unions. The euro of both dollar bills and coins vary from size and color. Melisse Hinkle mentioned that there are eight coins that range from 1 to 50 and five different dollar bills that range from 5 to 500. Although Italy does not have an actual minimum wage, most parts of Italy jobs salary are seven euros per hour.

However, in Rome most of the jobs are higher than minimum wage according to Check in Price. Most Italians in Rome earn 1,400 euros per month (Check in Price). It may sound like a reasonable salary per month, but the cost of living in Rome is tremendously high. If a individual decides to live in Rome with seven euros per hour, they will have have a hard time keeping up with the cost of living. Likewise, it is extremely important to know Italian in order to obtain a job in the country.

Today in society many countries have some type of labor issues. Some of these issues vary from wages to the work environment. Italy has a huge dilemma with short term jobs. In 2018 a new law was passed by the upper house and Chamber of Deputies to secure jobs according to Gavin Jones, it was documented that there was 394,000 jobs for a short period of time. However, once the law was passed 83,000 companies decided to put an end to the short term jobs (Jones.) In other words there are now 311, 000 companies that still have jobs for a short period of time.

Citizens of Italy should not be afraid of losing their job at any given moment. The victims who are fired from their job for no valid reason, he or she will be given an higher amount of compensation check than normally. Italy purposely continued with these short terms jobs in order to help grow the economy. Moreover, most of these companies offered little to none benefits to their employers. Although the decree did help lower the amount of short term jobs, it did not fully put an end to all of these types of jobs. In order to get rid of short term jobs, the upper house and Chamber of Duties will have to enforce stricter laws.

Another labor issue that Italy has is that companies can longer go oversea. When business owners see their firm thriving, they tend to think it would be a good idea for them to spread their business onto other places and so on. In Italy companies that decide to disobey will suffer the consequences due to the harsh law that was passed, which also ensured to put an end to temporary jobs. To illustrate, if a firm decides to that wish to go oversea, they will have to pay a penalty. Those who went over sea years ago, will not save themselves. The firms who happened to went oversea years ago, will now have to pay a penalty.

The longer the years they have been over sea, the more they will have to pay. The firms that are affected are those who used the financial money given by the state in order to spread their business abroad (Jones). The firms who are guilty of doing so are required to pay more than they were granted. As a result, it will bring jobs to the people who live in the country.

Italy is in a huge amount of debt and it may get worse. An example being, the Europe Union is not following the economic budget in order to get out of debt according to James McBride. The Europe Union is not following the procedure due to welfare and the reduction of taxes. Likewise, this shows that the Europe Union is responsible for making the 2008 economic crash two times worse in Italy (McBride). Italy’s economic growth happens to be lower compared to the other European nations as well as for jobs. Rome believes that if they are given more money, it will help boost the economy, employment, growth, and productivity (McBride).If Rome and other places are given more money, it will be a huge risk. If people do not invest in the Italian stock market, it can cause the banks to weaken and over time lose value. The economy will eventually crash as a result.

Corruption is one of the biggest issues that many countries are facing today and some are more than others. Italy is one of the places that is going through corruption. For instance, as of 2017 Italy was ranked 60 to be ones of the most corrupt places according to the local. However, it was documented that Italy’s corruptive global competitiveness was higher compared to last year. Although Italy did move up one spot, it is still in the top three of corruption in the European Union (Local). The two other countries ahead of them are Greece and Bulgaria. The Five Star Movement party has been involved in several scandals from corruption to harming its citizens of the country. Despite the corruption taking place around the world, no one is doing anything to prevent these types of issues from recurring.

Italy’s GDP, Unemployment and Literacy Rate

Italy’s gross domestic product changes every year slightly. A gross domestic product is the amount of worth of goods and services produced in a specific country yearly. The Country Economy mentioned that, in 2017 Italy’s gdp was 1,900,000 million dollars in United States economic currency. However, the gdp in 2013 was 2,131,159 million and 2,073,971 million in 2012. As for 2011 it was 2,278,376 million and 2,129,020 million in 2010.

Lastly, in 2009 it was said to be 2,190,700 million. The data shows that the annual agrete mainly goes from 1 percent or below. On the other hand, there are those cases where it is higher than 1 percent due to the economy or supply and demand resource. To illustrate, when a product of a supply increases, the price of the product will decrease. The demand of the product may rise and vice versa. As a result, it may be either good or bad for both consumers and producers.

Since Italy is in debt, it should be no surprise that the unemployment rate is high.. According to Kevin Costelloe, the unemployment rate is was 10.7 percent in the month of May, but it is now 10.9. The minister of Italy Giuseppe Conte, promised that he would try to do his best to fix the economy. He claims to fix the economy by domestic demand, which is the sales and goods of the country. The unemployment among the young is 31.9 percent. Due to the rise of unemployment rate, the rate of poverty has increased.

Nonetheless, the unemployment used to be higher, which shows Italy’s economy may improve over time. The unemployment rate is high due to the economic crashes that the continent has suffered. The chart below compares Italy to other countries unemployment rate. As one can see, Italy is the second lowest overall compared to Portugal. The euro currency shows that it has helped compared to the years previously.

Cite this paper

Italy and Macroeconomy. (2021, Dec 26). Retrieved from https://samploon.com/italy-and-macroeconomy/

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