From miracle to decline: Italy’s long-term development trajectory between core and periphery

This text analyses the evolution of the Italian economy in the post-war period. It shows how the factors that allowed the Italian ‘economic miracle’ of the 1960s revealed their inherent weakness and inability to withstand external constraints as the latter became more binding. Since the 1990s, the Italian economy has been in decline, moving from the centre to the periphery of the European Union. The text highlights the crucial role of Germany. Both the asymmetric complementarities linking the two countries and Germany’s influence on the construction of European institutions are fundamental to understanding the structural evolution of the Italian economy, in good times as well as in bad. Italy’s vulnerability epitomizes the self-defeating nature of Europe’s export-led growth model, as the internal core-periphery divergence deepens, while Europe continues to lose ground against competitors. Finally, we discuss how the current global turmoil may reshape Europe and Italy’s trajectory.