How Italy became a submerging economy

Economic decline takes many shapes. In the northern Italian town of Ivrea, it looks like the abandoned, overgrown tennis courts where the employees of electronics giant Olivetti SpA once played. In the 1980s, Ivrea was a European version of Silicon Valley. Of the 50,000 people employed by Olivetti, half worked in the town, enjoying generous salaries and plush corporate recreation facilities. Today Ivrea's biggest employers are the state health service and two call centers. Together they employ 3,100 people. Olivetti still exists, but these days it is a small office machinery company. Its former factories, jewels of 20th-century industrial architecture, have been refashioned as museums. Most of Ivrea's 30-year-olds have little work and live off their parents’ pensions. ‘They were exciting times. But gradually at first and then suddenly, everything fell apart,’ says 59-year-old Massimo Benedetto, who has worked at Olivetti for 30 years, most recently in customer support, and is about to retire. Ivrea offers a window into a nationwide economic reversal that has few real parallels in the developed world. Italy’s economy has barely grown since 1994 and has shrunk since 2000. That is worse than any other country in Europe or any of the 34 rich and developing nations in the Organisation of Economic Co-operation and Development. Economists look at a mix of factors to explain the long-term rise of the world's emerging economies: population and employment trends; private and public investments; the productivity of workers; and the strength of a state’s legal, administrative and institutional environment. On each one of these counts, Italy has regressed since the 1980s. More than 120,000 Italian manufacturers have closed shop and 1.2 million industrial jobs have disappeared since the start of the century, according to business association Confindustria. In the last 20 years even Japan, with its so-called ‘lost decades’ of stagnation, has grown almost twice as fast as Italy, according to Reuters.