Disembedding the Italian economy? Four trajectories of structural reform

Southern Europe’s debtor nations need far-reaching structural reforms if they are to prosper within the strictures of the single currency, runs the constant refrain of the Euro crisis. 1 Yet Italy, the target of many such recent complaints, had already transformed its economy fundamentally over the past two decades, among other reasons in order that Italy could participate successfully in the Economic and Monetary Union (EMU). The need to comply with the Maastricht convergence criteria drove major budgetary reforms in the mid- to late 1990s, as well as banking reform, privatization, decentralization, judicial reform, deregulation, and changes to the labor market and the welfare system. Europe provided a “vincolo esterno” or external constraint (Dyson and Featherstone 1996) that pushed Italy into accepting structural reforms which would otherwise have been resisted. Italy was “rescued by Europe” (Ferrera and Gualmini 2004).