OECD Economic Surveys: Italy 2007: Edition 2007

Table of contents
Basic statistics of Italy
Executive summary
Assessment and recommendations
Chapter 1. Italy’s key challenges
	Encouraging improvement in Italy’s macroeconomic performance
		A cyclical recovery is underway
			Table 1.1. Short-term outlook
			Figure 1.1. Economic trends
			Table 1.2. Inflation differentials
		Employment growth has been robust
			Figure 1.2. Job creations
		The fiscal position has improved
	But longer term economic prospects remain challenging
		Table 1.3. Decomposing Italy’s per capita GDP growth, 1970-2005
		Difficulty in coping with globalisation
			Figure 1.3. Competitiveness indicators
			Figure 1.4. Relative export prices
			Figure 1.5. Restructuring is under way with evidence of rising variability in profitability
		Low TFP growth is the core problem
			Figure 1.6. Decomposition of potential growth: an international comparison
			Table 1.4. Labour productivity and its determinants
			Table 1.5. Growth accounting by sector
			Figure 1.7. A low-skill bias in Italy
		Low participation in an ageing society
			Table 1.6. Labour market performance: international comparisons
			Table 1.7. Workers with a temporary contract
			Figure 1.8. Some North-South comparisons
			Figure 1.9. Public sector employment share and per capita income
		The reform process
			Table 1.8. DPEF 2007-11 objectives
			Box 1.1. Political economy of Italian reforms
	The survey deals with three of these important policy challenges
		Deepening the forces of competition
			Figure 1.10. Cross-country differences in product market regulation may have contributed to divergent productivity growth
			Table 1.9. Frequency of price changes by product type
		Bringing public finances back on a sustainable path
			Figure 1.11. Spending and revenue growth rates
		Making federalism work
	Notes
	Bibliography
	Annex 1.A1. Taking stock of structural reforms
	Annex 1.A2. How to make Italian firms grow ?
		Table 1.A2.1. Employment protection legislation in OECD countries
		Figure 1.A2.1. Italy needs more financial deepening
Chapter 2. Enhancing competition and productivity in services
	Figure 2.1. Product market regulation in OECD countries
	Table 2.1. Contribution to the growth of labour productivity per employee
	Recent measures to liberalise the economy
		Box 2.1. The “Bersani decree”: an impressive liberalisation package
		Box 2.2. The “Bersani January 2007 decree”, a second wave of liberalisation
		Reducing public ownership
			Figure 2.2. Indicator of state control in 2003
			Box 2.3. Recent reforms on the energy market
				Figure 2.3. Electricity prices are high in Italy
		Enforcing law and empowering regulators
		Strengthening consumers’ clout
	Wholesale and retail trade
		Low productivity gains, poor job creation
			Table 2.2. Key structural features of the retail distribution sector
			Figure 2.4. Productivity and employment performance in retail and wholesale trade
			Box 2.4. Italy is lagging in e-business and e-commerce
				Table 2.3. Italy scores low on the e-business survey
			Box 2.5. Evaluation of the 1998-2002 liberalisation experiences of the retail trade sector
		Fostering innovation and productivity through price competition
			Figure 2.5. Store opening hours
	Professional services
		High rents and high prices caused by protectionist regulations
			Figure 2.6. Regulation in selected service sectors
			Box 2.6. Notaries, lawyers and pharmacists in Italy
		Remaining stringent restrictions should be relaxed
	Financial services
		Figure 2.7. Net interest margins
		Progress towards greater efficiency and market contestability
			Box 2.7. Measuring competition in banking systems in OECD countries
				Table 2.4. Competition in banking tends to be low in Italy
			Figure 2.8. Concentration in the banking sector and size of the economy
		Evidence that competition pressures are mounting
	Conclusion
		Box 2.8. Recommendations to enhance product market competition
	Notes
	Bibliography
Chapter 3. Achieving fiscal sustainability
	Short-term fiscal developments
		A surprisingly strong fiscal outcome in 2006
			Table 3.1. General government revenues and expenditure
			Table 3.2. General government projections (2006-09)
			Figure 3.1. Fiscal stance
			Figure 3.2. Elasticity of current revenue to nominal GDP
		Further consolidation planned in 2007
			Box 3.1. Tax raising measures in the 2007 Budget
	Reducing public debt
		Figure 3.3. Two tales of fiscal consolidation, Italy and Belgium
		Figure 3.4. Long term yield differentials
		Figure 3.5. Long-term debt projection
		Should an expenditure rule be reinstated?
			Figure 3.6. Average annual increase in nominal primary expenditure
			Box 3.2. Managing the public workforce
	Implementing pension reforms
		Table 3.3. Projected changes in public spending on health care, long-term care and pensions
		Figure 3.7. Effects of the revision of acturial coefficients on pension expenditure
	Concluding remarks
		Box 3.3. Policy recommendations to restore fiscal sustainability
	Notes
	Bibliography
Chapter 4. Making federalism work
	The evolution of fiscal federal relations in Italy
		Box 4.1. The federalist process in Italy
		Figure 4.1. Indicators of decentralisation: an international comparison
		Figure 4.2. Spending and tax shares by level of government
		Table 4.1. Subnational government competencies
		Figure 4.3. Central government spending by function
		Figure 4.4. Vertical fiscal balance by level of government
		Figure 4.5. Debt by government level
		Table 4.2. Spending dynamics
	Spending issues
		Efficiency in social services
			Table 4.3. Health deficits
			Box 4.2. The 2007-09 Health Pact with the regions
		Competition in local economic services
			Box 4.3. Regional policies to improve local public service productivity
		Costs of devolution
			Table 4.4. Gross transfer of spending under future decentralisation
			Figure 4.6. Size of the cities
	Funding principles
		Fiscal autonomy to reinforce accountability
			Box 4.4. Regional and local revenue sources
				Table 4.5. Tax autonomy of subnational governments
			Figure 4.7. Coverage ratio by region
			Figure 4.8. Recurrent taxes on immovable property in OECD countries
		Intergovernmental transfers to balance equity and efficiency
			Table 4.6. Main transfers
		Reform proposals
			Box 4.5. The 56/2000 decree
	Fiscal rules for budget discipline
		Internal Stability Pact
		Enhancing credibility
			Box 4.6. Recommendations for fiscal federalist reforms
	Notes
	Bibliography
	Annex A.A1. Internal Stability Pact
		Table 4.A1.1. Respect of the Internal Stability Pact in 2000-04
		Table 4.A1.2. Yearly evolution of the Internal Stability Pact