2014 Index of Economic Freedom

Italy

overall score60.9
world rank86
Rule of Law

Property Rights50.0

Freedom From Corruption38.5

Limited Government

Government Spending25.6

Fiscal Freedom55.5

Regulatory Efficiency

Business Freedom75.5

Labor Freedom52.5

Monetary Freedom78.9

Open Markets

Trade Freedom87.8

Investment Freedom85.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 60.8 million
  • GDP (PPP):
    • $1.8 trillion
    • -2.4% growth
    • -1.4% 5-year compound annual growth
    • $30,136 per capita
  • Unemployment:
    • 10.6%
  • Inflation (CPI):
    • 3.3%
  • FDI Inflow:
    • $9.6 billion
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Background

Italy held general elections in February 2013 to elect a new parliament. No clear winner emerged in the voting, but center-left Democratic Party leader Enrico Letta was eventually chosen prime minister. He leads a coalition government consisting of the Democratic Party, the center-right People of Freedom Party led by former Prime Minister Silvio Berlusconi, and the centrist Civic Choice Party. The election showcased a strong protest vote against austerity measures put in place under former technocratic Prime Minister Mario Monti. Persistent problems for the government include organized crime, a large informal sector, unemployment, and the long-standing imbalance between the prosperous, industrialized North and the less-developed, agricultural South.

Rule of LawView Methodology

Property Rights 50.0 Create a Graph using this measurement

Freedom From Corruption 38.5 Create a Graph using this measurement

Corruption and a culture of lawlessness and tax evasion remain central issues. In 2012, a court sentenced former Prime Minister Silvio Berlusconi to prison for tax fraud. He is appealing the sentence. The legal system is vulnerable to political interference. Property rights and contracts are secure, but court procedures are extremely slow. Many companies choose to settle out of court. Protection of intellectual property is below EU norms.

Limited GovernmentView Methodology

The top individual income tax rate is 43 percent, and the top corporate tax rate is 27.5 percent. Other taxes include a value-added tax (VAT) and an inheritance tax. The overall tax burden is 43 percent of GDP. Public expenditures amount to about 50 percent of the domestic economy. Italy has struggled to meet budget goals to rein in its burdensome public debt, which has grown to 127 percent of GDP.

Regulatory EfficiencyView Methodology

Completing licensing requirements takes over 200 days and costs more than the level of average annual income. Serious labor market rigidities constrain job growth, and the informal labor market accounts for a large proportion of employment. Monetary stability has been relatively well maintained, and the government has reduced subsidies for renewable energy sources.

Open MarketsView Methodology

EU members have a low 1.1 percent average tariff rate and, in general, few non-tariff barriers to trade. Investment in some sectors of Italy’s economy may be screened by the government. The financial sector provides a relatively wide range of services but remains subject to political interference. The banking sector has been 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

Regional Ranking

rank country overall change
1Switzerland81.60.6
2Ireland76.20.5
3Denmark76.10.0
4Estonia75.90.6
5United Kingdom74.90.1
6The Netherlands74.20.7
7Luxembourg74.20.0
8Germany73.40.6
9Finland73.4-0.6
10Sweden73.10.2
11Lithuania730.9
12Georgia72.60.4
13Iceland72.40.3
14Austria72.40.6
15Czech Republic72.21.3
16Norway70.90.4
17Belgium69.90.7
18Armenia68.9-0.5
19Latvia68.72.2
20Macedonia68.60.4
21Cyprus67.6-1.4
22Spain67.2-0.8
23Poland671.0
24Hungary 67-0.3
25Albania66.91.7
26Slovakia66.4-2.3
27Malta66.4-1.1
28Bulgaria65.70.7
29Romania65.50.4
30Turkey64.92.0
31Montenegro63.61.0
32Portugal63.50.4
33France63.5-0.6
34Slovenia62.71.0
35Italy60.90.3
36Croatia60.4-0.9
37Serbia 59.40.8
38Bosnia and Herzegovina58.41.1
39Moldova57.31.8
40Greece55.70.3
41Russia51.90.8
42Belarus50.12.1
43Ukraine49.33.0
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