Jon Cohen and Giovanni Federico, The Growth of the Italian Economy 1820-1960. Cambridge: Cambridge University Press, 2001. viii + 133 pp. $13 (paperback), ISBN: 0-521-66692-9.

Reviewed for EH.NET by Brian A'Hearn, Department of Economics, Franklin & Marshall College.

Italian economic history is a tremendous success story. Who would have bet in 1861 that a backward, peripheral, resource-impoverished new nation would be transformed in a few generations into one of the world's largest, wealthiest industrial economies? Yet this success story is little known, at least in the English-speaking world. Likely reasons for this are not far to seek: Italian historical statistics are not great; Italy's economic miracle was less impressive than those of Japan or Germany; Italian scholarship derives from a different academic culture than the Anglo-Saxon tradition; and innovation and efficiency do not jibe with widespread stereotypes about Italy. Yet the field of Italian economic history is anything but torpid. In this volume Cohen and Federico demonstrate that it is very much alive and full of promise.

In keeping with the goals of the New Studies in Economic and Social History series, this is a work more of historiography than history. It is organized thematically, with chapters on measurement, models of growth, agriculture, industry and services, macroeconomic policy and performance, and the economic miracle from 1945 to 1960. Each chapter quickly summarizes the main historical interpretations at the root of current research programs and controversies, then reviews recent progress, right up to the very latest contributions. There are numerous publications from the year 2000 in the bibliography, and over half its 300-plus entries date from 1990 or later. About two thirds of the bibliography, itself of course one of the book's main contributions, are Italian language publications. Thus, the book makes accessible to non-Italians a large and evolving body of literature.

Four major themes are emphasized by the authors in their conclusions. First, the older view that Italian growth proceeded in fits and starts before 1950 is based on shaky statistical foundations. Recent work suggests a smoother growth path and earlier structural change in terms of output shares, though it confirms the limits of convergence toward richer neighbors along with a likely divergence within Italy during this period. Second, earlier perceptions of dismal performance in agriculture have largely been overturned: aggregate output statistics were simply wrong; innovations not adopted were not appropriate to the Italian resource environment; institutions and attitudes were not completely averse to investment or technical change; and low labor productivity resulted simply from a very low land/labor ratio. Third, revision is required for several staple hypotheses about Italian industry: scale economies were not likely binding constraints; capital scarcity may yet have been, as German-style mixed banks did not play the decisive role attributed to them by Gerschenkron; large firms were less dominant than previously thought, and small firms less backward; and the effects of tariff protection and state promotion of a military-industrial complex remain difficult to assess, but have probably been exaggerated by both proponents and critics. Finally, methodological advances are improving the debate on macroeconomic policy and performance. External constraints are no longer seen to have operated via the trade balance, but through changes in capital flows and adherence to a fixed exchange rate regime. For the post World War II period, the net effects of the state's complex intervention in the economy remain uncertain, but a majority view is emerging of a growth process driven by high rates of investment, in turn sustained by a stable policy environment, slow wage growth, and international openness.

Strengths of the book are its brevity, the lively, incisive writing, and the authors' willingness to take a stand. (They like cliometrics. They do not like ideological preconceptions or vague theorizing.) All of this makes the book an easy and enjoyable read. Of course, there are also costs to the concise format, thematic organization, and focus on historiography. There is a notable scarcity of basic information on events and institutions, and it is episodically disclosed. This probably limits the book's usefulness as an introduction to Italian economic history. But this was never the authors' intent. For the reader with basic background knowledge of Italy, the book is an invaluable guide to the current state of the art. It is even better for readers seeking a research topic. The authors explicitly point out numerous areas where further research is needed, is feasible, and promises important results. (I marked at least fifteen, counting the sticky notes protruding from my copy of the book.) These recommendations, together with the masterful literature review and bibliography, make the book a virtual do it yourself kit for producing a research agenda in Italian economic history. I only wish I could have encountered this book ten years earlier.

Brian A'Hearn teaches economics at Franklin and Marshall College. Recent publications include "More International Evidence on the Historical Properties of Business Cycles," Journal of Monetary Economics 47, pp. 321-346 (April 2001), with Ulrich Woitek; and "Could Southern Italians Cooperate? Banche Popolari in the Mezzogiorno," Journal of Economic History 60, pp. 67-93 (March 2000). Current research interests include the role of the banking system in Italian regional divergence, living standards in northern Italy before the unification, and the role of human capital in Italian economic growth.