Wealthy by Accident? Firm Structure, Institutions, and Economic Performance in 150 (+4) Years of Italian History: Introduction to the Special Forum

In the century and half since its 1861 unification, Italy has left the periphery of the world economy and reached a level of wealth close to that of industrialized core Western countries. Since the 1990s, however, the process of globalization has exposed the weakness of the Italian productive system, and the country’s economic performance has been one of the worst in the world. This pattern raises questions about the very nature of the Italian economy, its historical development, and its relative success in the long run, demonstrating the need for a structural reassessment of these themes. The aim of this special forum is to provide such analysis, offering a systematic and innovative view based on the interaction between institutions (conceived as the rules of the game of economic agents), firm structure, and economic performance. The main hypothesis discussed in all four articles is that Italian capitalism has been negatively affected by inefficient institutions that had a strong impact on firms’ size and governance, managerial practices, and attitude to innovate. As a result, the Italian economic performance has been frustrated, rather than promoted, by the institutional environment, and in large part shaped by fortunate contingencies. After the editors’ introduction, the special forum starts with a reconstruction of the macroeconomic scenario (“Italy’s Modern Economic Growth, 1861–2011†), using the state-of-the-art data and focusing not only on the process of growth, but also on the problems of living standard, inequality, and regional disparities. The second article (“Institutions, Politics, and the Corporate Economy†) focuses on the exceptionality of the Italian industrial structure characterized by the large dominance of small firms. The authors explain how the institutional setting has played a crucial role in determining the contrasting performance of big business on the one hand, and of small firms on the other. The third article in the forum (“The Ghost in the Attic? The Italian National Innovation System in Historical Perspective, 1861–2011†), which provides a broad reconstruction of long-term trends in science and technology, analyzes the Italian innovative capabilities in the long run. The authors explain how the institutional setup has determined the Italian attitude toward technological innovation in the different historical phases, and suggest that the Italian national innovation system, from the unification until today, has been characterized by a peculiar shadowy or ghostly nature. The last article (“Happy 150th Anniversary, Italy? Institutions and Economic Performance Since 1861†), which also synthesizes the very message of the forum, focuses on the mechanisms on which institutions work. The authors argue that Italian economic development has been characterized in the long run by poor formal institutions, which led to a suboptimal pattern of growth characterized by scarce investment in education, low salaries, imitative technologies, and exploitative management of firms by owners who were mainly stockholders rather than stakeholders.