Good Italy, Bad Italy

Emmott, a former editor of The Economist who has written extensively about Italy and Japan, wrote this during the eurozone crisis as an assessment of why Italy underperformed and what could change it.

His organising device separates two Italies. Bad Italy consists of the arrangements that block improvement: political corruption and the connection between politics and business, organised crime's control of parts of the south and its penetration of the legitimate economy, a judicial system so slow that contracts are effectively unenforceable, protected professions and closed markets, a labour market divided between protected permanent employees and precarious younger workers, an education system that does not produce what the economy needs, tax evasion on a very large scale, and a gerontocratic structure in business, politics and universities that excludes people under fifty from responsibility.

Good Italy consists of what works: the export manufacturers in the industrial districts of the north and centre, competing internationally on quality and design in machinery, components, food and fashion; the entrepreneurs building new businesses; the anti-mafia campaigners and prosecutors; the civil society organisations; and the researchers and professionals, many of whom leave.

His argument is that Italy's problem is not a lack of capability but the political and institutional arrangements that prevent capability from being deployed, and that the Berlusconi period entrenched rather than addressed them.

Emmott writes as a sympathetic outsider with long familiarity. The book was published in 2012, during the Monti technocratic government, and its hopes for reform were largely disappointed. The structural analysis of what blocks Italian productivity growth has held up, and Italian output per head has continued to stagnate since.