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This article looks at the political economy of structural reforms & growth in the European Union. As the EU's; economy approaches the world technology frontier, structural reforms that increase competition in intermediate goods sectors are necessary to boost innovation & productivity growth -- the main objective of the Lisbon Agenda. Such reforms, however, raise the opposition of incumbents and, therefore, are politically difficult to implement. When there are important policy spillover effects, national governments are more easily captured by vested interests, as they fail to internalize the benefits of reforms on the rest of the Union. This suggests that the weak political governance of the Lisbon Agenda, which is centered on the peer pressure of national governments, & the ensuing inability to complete the single market in non-manufacturing sectors, explains the Lisbon failure. Adapted from the source document.

The present decline of the Italian manufacturing is not unprecedented throughout the history of the Italian economy. among the events of former times, one of the most serious cases occurred in the seventeenth century & has been admirably depicted by C. M. Cipolla. One may notice how these adverse historical events do show some alarming similarities with what is happening in the present times. The current situation is from then on discussed at some length in the remainder of the paper, especially as to its causes & effects concerning the status of the public finance. Finally it is point out that the ways commonly suggested to put Italy out from present decline are not easy nor short. As a consequence, a wide set of well behaved public policies are called for to try to improve the welfare of the people, eve in a no-&/or slowly growing economy. Tables, Figures. Adapted from the source document.

The development of industrialization in Italy appears to be strictly intertwined not only with the modernization of society, but with the growing role of institutions. This trend can be explained by the fact that, just after the kingdom of Italy was built in 1861, industry was limited to very few parts of the country. In the dominant free-trade context, the manufacturing basis was very narrow. Things changed in the Eighties of the 19th century, when the state began to strongly support the growth of industry. This pattern -- founded on a combination of state aid and entrepreneurial initiative -- had to last for about one hundred years, the period during which Italy established itself as one of the important industrial countries of the world. At the end of the 20th century, Italy had to change its distinctive economic pattern following the general lines of the European integration and so modifying its institutional framework, which turned to be financially very heavy. The crisis of the Italian mixed economy had the effect of transforming its industrial structure. Adapted from the source document.

Long-term trends suggest that Italy's current economic crisis is not the result of an unfavourable business cycle or of the global economic and financial crisis. Instead, Italy's crisis accompanied by persistent slow economic growth is above all the result of decade-long structural shortcomings and impediments. Many factors explain why and how Italy experienced sluggish economic growth and increasingly uncompetitive productivity over decades. The causes of Italy's economic crisis are deeply rooted in the past and strictly interconnected. These causes will be discussed and analysed in a historical perspective. While embracing free economic market principles firmly integrated Italy in an international setting leading to fast export-led economic growth in the 1950s and 1960s, the focus on export-led economic growth became a problem and impediment in the decades after that. Export-led growth favoured the consolidation of a productive system centred around small and medium-sized manufacturing firms, many of which are concentrated in Italy's north. Such firms needed low labour costs, cheap natural resources and energy to survive in an increasingly competitive international setting. Social cohesion and strong domestic consumption, in a setting of relatively low wages, was supported and indeed guaranteed by generous public expenditures. After the oil crisis of the 1970s up until the beginning of the 1990s, Italy was able to remain internationally competitive through the regular devaluation of the Italian lira. Today, due to Italy's Euro membership, this kind of adjustment is no longer possible. At the end of the 1980s, the converging path towards other European countries stopped. The burden of a rising public debt, the distorted composition of public expenditure, the decline of the country's manufacturing sector and insufficient investments into research and development had a negative and lasting impact on the country's competitiveness. But also failures coming from the institutional and political setting, the lack of a good ruling class, the inefficiency of the public administration and family ties, added to what is referred to as Italy "lost opportunities". A ruling class above all oriented at short-term profits instead of a long-term commitments and gains, was unable and unwilling to adopt the needed structural reforms. In order to restore Italian economic growth not only new and effective monetary and fiscal policies, but also and above all changes to Italy's administrative and industrial policies in order to reduce the various kinds of dualism are needed: dualism between the country's north and south, between industries using and not using advanced technology, between regular and temporary workers, between big and medium-small firms, between relatively protected old and not protected young workers. Reducing the above-mentioned dualism is imperative to promote investments in research, infrastructure and human capital and to reduce the dependence on energy imports, the youth unemployment rate and the increasingly growing inner-Italian inequalities and poverty. Adapted from the source document.