There are many institutes of various kinds supplying medium- and long-term credit. These special credit institutions have as their primary aim the increase of the flow and the reduction of the cost of development finance, either to preferential areas or to priority sectors (for example, agriculture or research) or to small and medium-size business. In addition to this network of special credit institutions, there is a subsystem of credit under which the government shoulders part of the interest burden.
The bond market in Italy is well-developed. Mainly as a result of the special structure of government-sponsored institutions for development finance and subsidized interest rates, the growth of the capital market and stock exchanges was far less important than in other Western industrialized countries. The development of the stock exchange in Italy was initially hampered by the archaic structure and rules of the markets and by tax problems connected with the registration of shares. More recently, however, the market was modernized; the Borsa Italiana, which manages the stock exchange, became operational in 1998. Trade
Italy has a great trading tradition. Jutting out deeply into the Mediterranean Sea, the country occupies a position of strategic importance, enhancing its trading potential not only with eastern Europe but also with North Africa and the Middle East. Italy has historically maintained active relations with eastern European countries, Libya, and the Palestinian peoples. These links have been preserved even at times of great political tension, such as during the Cold War and the Persian Gulf War of 1991. Membership in the EC from 1957 increased Italy’s potential for trade still further, giving rise to rapid economic growth. However, from that time, the economy was subject to an ever-widening trade deficit. Between 1985 and 1989 the only trading partner with which Italy did not run a deficit was the United States. Italy began showing a positive balance again in the mid-1990s. Trade with other EU members accounts for more than half of Italy’s transactions. Other major trading partners include the United States, Russia, China, and members of the Organization of the Petroleum Exporting Countries (OPEC).
Italy: Major import sourcesEncyclopædia Britannica, Inc.
Italy’s trading strength was traditionally built on textiles, food products, and manufactured goods. During the second half of the 20th century, however, products from Italy’s burgeoning metal and engineering sector, including automobiles, rose to account for a majority share of the total exports, which it still retains; they are followed by the textiles, clothing, and leather goods sector. The most avid customers of Italian exports are Germany, France, the United States, the United Kingdom, and Spain.
Italy: Major export destinationsEncyclopædia Britannica, Inc.
Italy’s main imports are metal and engineering products, principally from Germany, France, the United States, and the United Kingdom. Chemicals, vehicle, and mineral imports are also important commodities. Italy is a major importer of energy, with much of its oil supply coming from North Africa and the Middle East.
Membership in the EEC was the most beneficial economic factor in Italian trade during the post-World War II period. The later accession of Greece, Spain, and Portugal to the EEC created stiff competition for Mediterranean agricultural products, especially fruit, wine, and cooking oil. At the beginning of the 21st century, however, the expanded EU and the weakness of the new euro currency allowed for export growth in Italy. As the euro reached and ultimately surpassed parity with the U.S. dollar, this advantage was lost, and for the first decade of the 21st century Italy maintained a negative trade balance. Services and tourism Business services
The service sector is one of the most important in Italy in terms of the number of people employed. If the definition extends to cover tourism, the hotel industry, restaurants, the service trades, transport and communications, domestic workers, financial services, and public administration, well over half of the workforce operates in the sector. A fully accurate measure is impossible, however, because of the existence of a burgeoning black market.
Verona, ItalyTourists photographing a statue of Juliet from William Shakespeare's Romeo and Juliet in Verona, Italy.© astudio/Shutterstock.com
A plentiful supply of labour has nourished the service sector, especially in the large urban areas, since the 1950s. This labour came initially from rural areas of northern Italy such as Veneto; later the Italian peasantry from the Mezzogiorno migrated north; and more recently immigrants from less-developed countries—many of whom work for low wages, without job security, and under substandard work conditions—have filled low-grade urban service jobs. High-level service jobs include those involved with information technologies, which are used by one-third of Italian business. Factors that have contributed to the growth of the service sector include the rise in the standard of living in Italy and Europe in general, leading to an increase in mobility, financial transactions, business, demand for leisure activities, and tourism. Tourism
Italy is renowned as a tourist destination; it attracted more than 40 million foreign visitors annually in the early 21st century. Conversely, less than one-fifth of Italians take their holidays abroad. The tourist industry in Italy experienced a decline from 1987 onward, including a slump during the Persian Gulf War and world recession, but it rebounded in the 1990s, posting gains in the number of overseas and domestic tourists. In addition, the Jubilee celebrations promoted by the Roman Catholic Church in 2000 to mark the advent of its third millennium attracted millions of tourists to Rome and its enclave, Vatican City, the seat of the church. Pope Francis declared 2016 to be an Extraordinary Jubilee of Mercy, an event that drew still more pilgrims to the Vatican.
FlorenceSkyline of Florence.© Douglas Ng/Fotolia
The tourist industry has flourished under both national and international patronage. The most popular locations, apart from the great cultural centres of Rome, Florence, Venice, and Naples, are the coastal resorts and islands or the Alpine hills and lakes of the north; the Ligurian and Amalfi rivieras; the northern Adriatic coast; the small islands in the Tyrrhenian Sea (Elba, Capri, and Ischia); the Emerald Coast of Sardinia; Sicily; Gran Paradiso National Park and the Dolomites; and Abruzzo National Park.
Labour and taxation
Women constitute about two-fifths of the labour force, though they are more likely to take on fixed-term and part-time employment than men. The activity rate of male employment is consistent throughout Italy, but females have a much lower rate of participation in the south.
Because of the scala mobile, which adjusted wages to inflation, Italian workers benefited from high job security for decades after World War II. Beginning in the 1980s, though, as the government moved to get inflation under control, the scala mobile came under attack and was eventually terminated in 1992. A labour reform act in 2015 made it easier for large companies to fire workers and offered tax incentives for employers who hired workers on a permanent contract basis.