Formal Institutions
Political System
Italy is a European nation found along the Mediterranean coastline, with Rome as its capital city. Kings initially ruled the Italian up to the Second World War. Nevertheless, in 1946, Italians decided to overthrow the empire, and the nation became an independent state. The initial State continued until 1992, when scandals devastated Italy’s main political parties. Due to those major improvements in the parties, the era is known as the Second Republic, even though there were no constitutional changes (Capussela, 2018). Sergio Matterella is the current president of Italy, even though it is a ceremonial duty.
Legal System
Italy is a republic with a constitution composed of 139 reports demonstrating society’s elementary ground from 1948. The reports are into three main groups: essential philosophies, human rights and responsibilities, and republican organization (Capussela, 2018). The national assembly and regional members elect Italy’s presidents by secret ballot. Parliament elects Presidents for seven-year terms to prevent re-election by the same parliament.
There are three government systems in Italy, including legislative, judicial, and executive. As the head of the council, the prime ministers oversee and executive authority to the Council of Ministers who carry outlaws and other political decisions (Capussela, 2018). Acts are typically presented to the parliament, but in cases of urgency, bills can get approval through decrees or if the national assembly offers the council the responsibility to act.
Economic System
The Italian economy consists of established industries in the North owned by private companies and a less established, heavily subsidized agrarian in the South afflicted by poverty and poor infrastructure. The manufacturing of slightly elevated consumer products by midsized and small commercials, most of which are kinship, is a major booster of the Italian economy. In addition, Italy possesses a substantial subterranean economy, constituting approximately 17 percent of the GDP (Capussela, 2018). Farming, service industries, and infrastructure are possibly the most dominant regions to find these events.
Italy falls in third place economically in Europe, but its extremely high public bills and structural growth constraints have made it sensitive to financial sector scrutiny. Since 2007, Italy’s community bills have continuously risen, surpassing 131 percent of the GDP in 2017 (Capussela, 2018). However, shareholders’ fear about Italy and the broader eurozone disaster subsided in 2013, reducing Italy’s administration bills borrowing rates.
Informal Institution
Components of the Culture
According to research, Italian is the State’s official language, and almost 93 percent of people speak Italian as their native language (Morretta et al., 2020). Italy’s languages include Sardinian and Piedmontese. Roman Catholicism is Italy’s most commonly practiced religion (Morretta et al., 2020). It is unsurprising, provided that Vatican City is found at the center of Rome and is the place of Roman Catholicism and home of the Pope.
Several architectural styles emerged in Italy but not limited to Renaissance, Baroque and Classical Roman (Morretta et al., 2020). The Colosseum and the Leaning Tower of Pisa are examples of the global’s most known structures in Italy. Most individuals view Italian cooking as an art, which has impacted food culture globally. For instance, pasta, wine, and cheese are predominant in Italian cooking. Pasta is found in various forms, including popular varieties such as spaghetti, lasagna, and linguine.
Context of Culture
Italy is a high-context society, and the majority of Italian cultural interaction relies heavily on physical indicators. A significant part of the content in high-context principles is hidden in the bodily setting of the person (Morretta et al., 2020). For example, the speaker believes that no explanation is necessary because the person to whom they are speaking should comprehend what they are trying to express.
Hofstede’s Cultural Dimensions
The concept is used to identify cultural variations between nations. Some of the Hofstede cultural aspects in Italy include individualism and power distance (Burton et al., 2021). The individualism aspect addresses people’s opinions of various groups in their environment. When a person is individualistic, they perceive themselves and their close family as vital. In contrast, collective individuals are concerned with the welfare of a larger group, including their corporation, and prioritize their own needs.
Italians thrive in individualism because they prioritize their close family over their friends and would rather do business with individuals they recognize and rely on when there is a need. The in-group then makes decisions, and meetings are mostly intended to tell the rest of the group about the results. On the other hand, power distance refers to the degree to which those at the bottom of the hierarchy embrace and even anticipate authority to be dispersed unfairly (Burton et al., 2021). This aspect demonstrates that Italians demand a certain amount of power distance. On the other hand, they like making fun of authority, and breaching rules appear to be an Italian pastime.
Resources and Capabilities
Natural and Geographic Resources
Italy has many natural resources, including crude oil deposits, pyrites, fluorspar, potash, pumice, coal, asbestos, and mercury, to mention a few (Cimini et al., 2020). The country’s mineral resources, such as petroleum and other rare earth elements, impact the Italian economy. Italy is a country found in a boot-shaped peninsula that extends outwards into the Adriatic Sea and Tyrrhenian and other water supply sources in the Southern part of Europe.
The county’s geographical position has a significant impact on its heritage. The sea surrounds Italy, and its core is subdivided into sections by mountains. The Alps, which extend across the State’s summit, are dotted with long, thin icy lakes, and the Apennines Mountains extend from the South to the Western end of the Alps down the peninsula (Cimini et al., 2020). The wooded slopes West of the Apennines resides several of Italy’s ancient cities, especially Rome.
Technological Advancement
Italy has dominated the European Union and financial markets, certainly bringing severe economic issues. However, Italy is the second-largest producer among the twenty-eight European Union member nations, close after Germany (Cimini et al., 2020). Italy is at the vanguard of the Fourth Industrial Insurgency facets, particularly in the information insurgency. Italy falls in the top 10 in the world regarding robotic intensity or the number of factory robots per worker, significantly outnumbering countries such as France, the United Kingdom, and Spain, with 132, 71, and 160 robots.
Development of Infrastructure
Italy is concentrating on massive infrastructure projects to boost its economy. The Italian directorate declared withdrawal limitations on 130 construction projects regarded crucial for reopening the country’s economy and modernizing its infrastructure network on the same day that the European Union reduced its 2020 GDP prediction for Italy to fall by 11.2 percent (Cimini et al., 2020). Italy’s major projects include; A proposed motorway between Rome and Latina, the expressway construction joining central Italy and Liguria, and the Ionica state route with links to the Port of Civitavecchia, which is just a few cases.
International Trade
Imports
Italy usually imports engineering and metal items, particularly from France, the United States of America, the United Kingdom, and Germany (Bontempi et al., 2021). Imports of vehicles, minerals, and chemicals are also significant products to the Italian economy. Italy imports energy and crude oil, especially from the Middle East and North Africa.
Exports
Metals, fine machinery, and metal products constitute Italy’s two largest exports. Italy is also a well-known exporter of apparel and footwear and scooters, automobiles, notably luxury motor cars and motorbikes. Pharmaceuticals, other chemicals, and various culinary goods are exported from Italy (Bontempi et al., 2021). Italy distributes approximately 56 percent of its goods to other European Union nations, primarily Spain, Germany, and France (Bontempi et al., 2021). However, the United States of America and Switzerland are also important trade associates of Italy.
Trade Advantage
Italy is among the five States which enjoy a trade export surplus in the European nations. Italian firms are determined to retain their export edge. They invested majorly in new production technologies such as robots, factory automation, and additive production, which boost output and lower prices (Bontempi et al., 2021). Invitalia and State agency offers broad benefits to both Italian and foreign corporations through funding initiatives of all kinds in vital sectors such as factories, environmental protection, and tourism.
Economic Trade Conditions
Italy had a Gross domestic product of approximately $1.85 trillion in 2020 and a per capita Gross domestic product of about $31,630 (Bontempi et al., 2021). Italy falls in eighth place economically in the current world ranking. Due to the Corona infection and the Italian administration’s containment actions, Italy’s GDP will reduce by approximately 8.9 percent in 2020 (Bontempi et al., 2021). Nevertheless, the Organization for Economic Co-operation and Development anticipated that Italy’s GDP would grow either in 2021 or 2022, with about 4.5 percent in 2021 and about 4.4 percent in 2022.
International Trade Policy
Being a part of the European Union, Italy follows EU legislation that applies throughout the EU. Import obstacles based on tariffs come from both national and EU rules (Bontempi et al., 2021). Even though some limits exist to particular categories of goods, the European Union’s international trade policy is largely flexible, for example, agricultural goods. However, Italy is a member of the European Union and the World Trade Organization. Hence, it uses the Technical Barriers to Trade team to deliberate on some critical trade issues and research the choices and executions of the regulations.
Instruments of Trade policy
Italy is a European Union associate; therefore, products easily move between associate states just after establishing the internal market (Bontempi et al., 2021). Even though the unrestricted distribution of goods subsists within Customs Union, the Common Custom Policy exists for products brought from other states, enabling uniform customs taxes to be applied irrespective of the origin member state.
Foreign Direct Investment
FDI Flow and Stock
Foreign Direct Investment flows in Italy withstood an overall negative trend, increasing by 2 percent, maintaining a trend that began in 1998. Between 1990 and 2001, its outward FDI stock increased sixfold, making it a net outward investor. Italy’s FDI stock spreads geographically inbound and outbound in the Netherlands, Switzerland, and France (Bayar & Ozturk, 2018). In 2020, Italy’s inward FDI stock was valued at approximately 469.29 billion dollars compared to 443.53 billion dollars in the past year (Bayar & Ozturk, 2018). The Foreign Direct Investment to GDP ratio is low, implying more investment
Multinational Enterprises
Numerous multinational corporations on Italian soil contribute significantly to the State’s employment rate. Over 80 percent of the 1.3 million Italians hired worked in the top ten corporations, with United States firms alone employing roughly 300.000 people (Bayar & Ozturk, 2018). However, the French retailer Auchan, which recruits over 12.000 individuals in its stores and supermarkets, is the largest multinational firm in Italy in terms of employed labor.
Foreign Exchange
Currency and Exchange
Italians mainly use Euro as a form of exchange for products and services. One Euro is denominated into cents, and when purchasing money in Italy, one has to search for the EUR currency code, denoted by the notation (Febrero et al., 2018). The European System of Central Banks devises a model for determining the Euro’s foreign currency exchange rates in Italy. The rates are based on a day-to-day concertation mechanism among the world’s most powerful central banks.
Price Difference and Balance of Payments
Italy’s consumer spending financial account was about EUR2791.00 million in November 2021. According to past data, it attained an all-time high of 9404.00 Million euros in April 2021 and a slight decline of negative 1062.00 Million euros in March 2021 (Febrero et al., 2018). Economic Survey gives the exact current value, a previous data chart, and related metrics for Italy – Current account surplus, financial information – latest updated from the EUROSTAT on February 2022.