2016 Index of Economic Freedom

Italy

overall score61.2
world rank86
Rule of Law

Property Rights50.0

Freedom From Corruption43.0

Limited Government

Government Spending22.1

Fiscal Freedom55.8

Regulatory Efficiency

Business Freedom70.3

Labor Freedom53.0

Monetary Freedom84.5

Open Markets

Trade Freedom88.0

Investment Freedom85.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 60.0 million
  • GDP (PPP):
    • $2.1 trillion
    • -0.4% growth
    • -0.5% 5-year compound annual growth
    • $35,486 per capita
  • Unemployment:
    • 12.5%
  • Inflation (CPI):
    • 0.2%
  • FDI Inflow:
    • $11.5 billion
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Italy has undertaken a range of reforms over the past year. The Jobs Act, approved in December 2014, revises protections for new hires and has instituted use of an open-ended contract with gradually increasing protections. A new banking law that obliges the largest cooperative banks to become joint-stock companies was passed in 2015.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 61.2 (down 0.5 point)
  • Economic Freedom Status: Moderately Free
  • Global Ranking: 86th
  • Regional Ranking: 36th in Europe
  • Notable Successes: Trade Freedom and Monetary Freedom
  • Concerns: Corruption, Management of Public Spending, and Labor Freedom
  • Overall Score Change Since 2012: +2.4

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Background

In February 2014, former Florence Mayor Matteo Renzi won 80 percent of the vote and became Italy’s youngest-ever prime minister, succeeding Democratic Party leader Enrico Letta. He leads a coalition government consisting of the center-left Democratic Party, the center-right People of Freedom Party led by former Prime Minister Silvio Berlusconi, and the centrist Civic Choice Party. Renzi has pledged to reform entitlements, taxes, and labor laws. The government has passed electoral reforms meant to ensure cleaner outcomes, a major Democratic Party campaign issue. Italy has an immense public debt, entrenched organized crime, a large informal sector, and high unemployment, particularly among the young. Huge disparities between the industrialized North and less developed South persist, including in education, economic growth, employment, infrastructure, and rule of law.

Rule of LawView Methodology

Property Rights 50.0 Create a Graph using this measurement

Freedom From Corruption 43.0 Create a Graph using this measurement

A series of high-level, politically destabilizing corruption scandals culminated in a December 2014 investigation of numerous Rome municipal officials implicated in a public contracts corruption case, known as “Mafia Capitale” owing to the involvement of local organized crime. The legal system is vulnerable to political interference. Property rights and contracts are secure, but court procedures are extremely slow.

Limited GovernmentView Methodology

The top personal income tax rate is 43 percent, and the top corporate rate is 27.5 percent. Other taxes include small regional and municipal income taxes, a value-added tax, and an inheritance tax. The overall tax burden equals 42.6 percent of GDP. Government spending amounts to about 51 percent of GDP. The deficit remains high but has been reduced by recent spending cuts. Public debt exceeds 130 percent of GDP.

Regulatory EfficiencyView Methodology

Regulatory complexity causes delays and increases the cost of entrepreneurial activity. Licensing requirements are time-consuming and costly. Serious labor market rigidities constrain job growth, and the informal labor market accounts for a large proportion of employment. As of 2015, Prime Minister Renzi had not fulfilled his pledge to liberalize the economy or reduce subsidies to railways and other state-owned enterprises.

Open MarketsView Methodology

EU members have a 1 percent average tariff rate. Trade agreements are currently being negotiated with countries that include the United States and Japan. The government’s Strategic Investment Fund invests in so-called strategic companies. The financial system is subject to political interference, and banks have been seriously strained by the European sovereign debt crisis.

Country's Score Over Time

Bar Graph of Italy Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Italy to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Switzerland810.5
2Ireland77.30.7
3Estonia77.20.4
4United Kingdom76.40.6
5Denmark75.3-1.0
6Lithuania75.20.5
7The Netherlands74.60.9
8Germany74.40.6
9Luxembourg73.90.7
10Iceland73.31.3
11Czech Republic73.20.7
12Georgia72.6-0.4
13Finland72.6-0.8
14Sweden72-0.7
15Austria71.70.5
16Norway70.8-1.0
17Latvia70.40.7
18Poland69.30.7
19Cyprus68.70.8
20Spain68.50.9
21Belgium68.4-0.4
22Macedonia67.50.4
23Armenia67-0.1
24Malta66.70.2
25Slovakia66.6-0.6
26Hungary 66-0.8
27Albania65.90.2
28Bulgaria65.9-0.9
29Romania65.6-1.0
30Portugal65.1-0.2
31Montenegro64.90.2
32France62.3-0.2
33Serbia 62.12.1
34Turkey62.1-1.1
35Kosovo61.4N/A
36Italy61.2-0.5
37Slovenia60.60.3
38Croatia59.1-2.4
39Bosnia and Herzegovina58.6-0.4
40Moldova57.4-0.1
41Greece53.2-0.8
42Russia50.6-1.5
43Belarus48.8-1.0
44Ukraine46.8-0.1
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