Italy and the world economy: cyclical movements

The economic development of post-Unification Italy cannot be understood by examining Italy alone. Italy was already then part of a wider world characterized by the ready movement of goods, ideas, men and money; it developed as and to the extent that the mobile resources of that transnational economy chose to locate on Italian soil.

From 1861 to 1913 Italy's total product grew, even in per-capita terms, relatively steadily. It did not always grow from year to year: agriculture was the dominant sector, especially in the early years, and total product fell if bad weather or outbreaks of disease caused poor harvests. But these downturns were short-lived, and over the medium term agricultural production grew without significant interruption.

The longer cycle was in the industrial sector; it grew stronger over time, and became much the major source of aggregate production movements. Within that sector, the cycle was specific to the industries that produced durable goods – construction, engineering – and those that supplied their raw materials. The dominant economic cycle in post-Unification Italy was an investment cycle.

The upswings of that investment cycle were the quinquennia from Unification to 1865 and again from 1869 to 1874, under the Right; the decade from 1879 to 1887, dominated politically by Depretis; and the even longer period, from 1896 to the War, dominated by Giolitti.