Tourism accounts for a third of Italy's gross domestic product.
According to the World Bank, Italy is one of the world's high-income economies, with a 2008 Gross Domestic Product, or GDP, of more than $2.3 trillion. However, Italy's economy faces a number of challenges, including its regional diversity, the structure of its manufacturing sector, its reliance on tourism and its large and increasing national debt.
Regional Diversity
Regional diversity is one of the main factors influencing the Italian economy. Industry and manufacturing is concentrated in the north, while the economy of the south is much more reliant on agriculture and tourism. According to the Italian Ministry of Foreign Affairs, as of 2010, the north and northwest regions together contribute 54.1 percent of the country's GDP, while the central region--which includes Rome--and the south contribute 21 percent and 24.8 percent respectively. Consequently, unemployment in the south tends to be much higher than in the north, with more people dependent on welfare payments.
Manufacturing
Much of Italy's manufacturing sector is based around clusters of small and medium-sized firms in the same geographical area that perform specific phases of production within the same industry. Around 95 percent of the country's business enterprises fall into this category, employing around 50 percent of the workforce. This factor, in part, is what has driven the success of the "Made in Italy" export brand, which includes clothes, accessories and furniture. However, this sector has not proved resilient in times of recession and, according to Diego Coletto of the University of Milan, small companies were hit hard by the 2009 economic crisis. He cited problems with access to credit, fewer resources for reorganization and the difficulties experienced by larger client companies as the main reasons behind the problems faced by small manufacturers.
Reliance on Tourism
UNESCO estimates that more than half of the historic/patrimony sites in the world are found in Italy. These sites, along with the country's famous landscape and food, help to make tourism a vital part of the Italian economy. The Italian government calculates that tourism supports around 1 million jobs, contributing around a third of the entire country's GDP. This, however, can leave the country vulnerable in times of economic downturn, when fewer tourists can afford to take vacations in Italy, or if some other factor, such as the 2010 volcanic ash cloud, which closed European airspace for several days, comes into play.
National Debt
As of 2010, national debt is a serious issue for the Italian economy. In June 2010, the Bank of Italy announced that the national debt stood at more than 1.8 trillion euro--more than 110 percent of the country's GDP--causing an increasing fiscal deficit as the cost of servicing the massive debt rises. To combat the effects of the debt, the Italian government implemented a number of austerity packages, which included measures such as cutting ministerial budgets, freezing public-sector wages and fighting tax evasion.
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