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Impasse is demoralizing Italy, economist warns
Date: 2011/1/21 Click: 1754
Italy was stuck in a worrying impasse and needed urgent sound action to start a real recovery, a renowned economist told Xinhua in an interview Tuesday.

Italian Investment Fund president Marco Vitale said the approval last week of Fiat's new productivity plan would demonstrate how badly needed change was to break an impasse that had been tolerated for years.

The real problem with Fiat, he said, was that the iconic Italian firm had lost its creativity and competitiveness in the past years due to poor management.

Fiat CEO Sergio Marchionne's victory over trade unionists who opposed the modifying of work contracts at Fiat's oldest plant showed the Italian group had got rid of a conglomerate structure that did not properly value it, he said.

"However, experts and journalists who are seeing the yes victory as an historic turning point in the Italian productive system are wrong, as most Italian companies have already successfully overcome these kinds of management difficulties," Vitale said.

Most of Italy's medium-size companies, which sustain the Italian economy and exportations, were much more mature and developed than Fiat in terms of labor relations and innovation, he said.

Looking at the official data of 2010, he said, it was clear the Italian manufacturing industry, which represents "Made in Italy" all around the world, was performing excellently.

Vitale said that, during the past year, 80 out of 140 Italian industrial districts had increased their exports by more than 20 percent, performing well both in traditional and emerging markets.

"In 2010, Italy was the fifth industrial country in the world in terms of overall manufacturing GDP and second after Germany in terms of per capita manufacturing share of GDP," he said.

"This proves the strong ability of the Italian manufacturing industry to recover from the global economic crisis by first standing, and then restructuring and innovating," he said.

It was also clear, Vitale said, that the country's problems did not center on the industrial level but on big monopolistic services as well as the parasitic weight of public structures and an obsolete bureaucracy. < The economist listed a series of "plagues" that made a growing number of Italians lose faith in political institutions as well as confidence in the future, from organized crime and widespread corruption to a non-functioning justice system, unfair tax system and trapped labor market.

The latest sex scandal that hit Premier Silvio Berlusconi, accused of having paid large sums of money for the services of an underage prostitute and having illegally used his influence to try to get her out of trouble, was further "demoralizing" the country.

"If a high level of ethics is missing, responsibility is missing at all levels as well and, as a consequence, the economic system cannot give good results," Vitale said.

"Demoralization is the true evil of our society. The ongoing post-crisis period is the right time to seek concrete solutions to our problems, otherwise Italy will not survive," he said.
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