Hva var det McCain sa: – Fundamentals are strong? Italia-utgave.

I dag var Daniel Gros gjest hos Bloomberg Radio. Grunnen til det er at han har skrevet en av de mest makrobaserte artiklene om Italia. Gros går tilbake til 2000, og forsøker å forklare hva som skjedde når Italia begynte å stagnere.

Her er ‘the fundamentals’:

What is holding Italy back? | vox – Research-based policy analysis and commentary from leading economists: «Italy’s economy has clearly underperformed since it entered the euro – both relative to its peers and relative to the previous decade. Italy’s growth rate averaged just over 1% during the boom years preceding the crisis. During the crisis, its GDP plunged 5%; instead of rebounding, its economy is now growing at only about 1%.
At this rate, Italy’s public debt, at 120% of GDP, becomes an existential threat to the entire Eurozone (Eichengreen 2011).
Understanding and curing Italy’s growth problems is thus vital for the survival of the euro.

It’s complicated

My central point is that understanding Italy’s deteriorating growth performance requires going beyond the well-known weaknesses that have held back Italy for ages. The fact that Italy has always been an economic policy disaster area does nothing to help us understand why its growth slowed around 1999/2000. We need to find things that changed around that time. This is not easy.
The three most important measurable growth factors actually improved in both absolute and relative terms:

  • Investment in physical and human capital; the former is high and the latter is improving rapidly.
  • Structural indicators in terms of product and labour market regulation (all improving absolutely and relative to Germany according to OECD indicators).
  • Investment in R&D (improving).

The only factors that have deteriorated absolutely and relative to the core of the Eurozone are indicators of governance – such as corruption and rule of law.
Reversing this political decline will take years of a national commitment – of which there is little sign yet.

It’s not a lack of capital

The relative underperformance of Italy cannot be due to a shortage of either physical or human capital.
Over the last decade, Italy has invested close to 20% of its GDP in most years, a higher percentage than Germany (and the same is the case for investment in plant and equipment, see Figure 1). But despite this effort, GDP is now barely higher than ten years ago.

This implies that the efficiency of this investment has been abysmal. Between 1999 and 2009 the economy-wide (net) capital stock of Italy increased by 19%; but real GDP increased only by 5%. By contrast, Germany’s capital stock increased by less (about 13%), but its GDP increased by much more (almost 9%). More investment is thus unlikely to provide a solution to the growth problem.»

Jeg skulle gjerne postet hele artikkelen her, men da ville ikke grafene og tabellene kommet med. Så les hele her, og husk at det er underliggende problemer som driver hele denne mørke spiralen i obligasjonsmarkedet.

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