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by Carlotta S iniscalco (‘ 10) Carlotta Siniscalco is a senior at Wharton, concentrating in Finance and Entrepreneurship. She is from Milan, Italy.

European Union:

Italy is part of the PIGS, that its Public Debt to GDP ratio is the highest in the European Union..

Are Italians really P.I.G.S.? I f you have ever lived in or visited Italy, you

The answer is simple: the official data

will have noticed that people there enjoy a

provides a very accurate picture of only the

quite high standard of life. In fact, Italians

official economy. It does not account for the

of every social class invest a considerable

GDP generated by “hidden” (illegal or non-

fraction of their disposable income on clothing

reported) economic activities.

and gourmet food; they also spend their six

While it is true that GDPs never include

available weeks of vacation in a location other

profits from illegal activities, Italian “hidden”

than their home; they own the most cars per

activities represent a larger percentage of

capita of than any other EU country (scooters

GDP than any other European country. Official

not included); and they have consistently

data cannot be adjusted for this discrepancy

enjoyed one of the lowest unemployment rates

and therefore simply ignores it. The result is a

in the European Union.

picture of the Italian economy that does not

With

these

apparently

idyllic

living

fully coincide with reality.

conditions, it is not surprising to learn that

What are these clandestine activities and

Italy is one of the most popular countries

how do they constitute a bigger percentage of

for Americans to retire to and one of the

GDP than other EU countries?

top destinations on the American travelers

It is common knowledge that Italians

“wish lists”. As an Italian-born citizen who has

are naturally inclined to get around rules. It

also lived in other countries, both inside and

is part of their arte di arrangiarsi, the art of

outside of the EU, I am in complete agreement. Life in Italy is good.

Comparison: Italy and the EU

Italy is part of the PIGS, that its Public Debt to GDP ratio is the highest in the European

2008

2009

2008

2009

Union and that a fourth of the Italian adult

Unemployment Rate

6.20%

6.80%

8.50%

7.40%

population apparently has no income.

GDP Growth

-1.00% -4.70%

0.80%

-4.10%

Debt / GDP

105.8%

n.a.

61.5%

n.a.

At-risk of Poverty Rate*

19.00%

n.a.

16.00%

n.a.

How can this be possible? Where is the trick? Are the numbers lying? Is it really the case that 1 in 4 Italians has no disposable income? How could I have failed to notice how serious Italy’s economic situation really was?

38

S PRIN G 2 0 1 0

* At-risk of poverty rate after social transfers

International Business Review - Spring 2010  

The Spring 2010 edition of the IBR.

International Business Review - Spring 2010  

The Spring 2010 edition of the IBR.

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