Key Challenges

Cultural strengths,
but economic gaps
Italy suffered severely from a long period of economic and financial crises. However, Italy’s recent economic recovery could build on strong family bonds, high household savings rates, the resilience of small- to medium-sized businesses, several strong manufacturing and export-oriented sectors, and the quality of some public institutions (e.g., the Presidency of the Republic and the central bank). At the same, the economic and financial crises have exposed serious weaknesses across the public and private sectors, which must be addressed in order to strengthen the economic recovery, make the economic recovery more sustainable and tackle several serious social problems (e.g., poverty).
Governance reform remains critical
State institutions continue to need significant reform. After the failure of the constitutional referendum of 2016, the need to improve crucial mechanisms of governance remains.
Greater steering,
coordination powers
for PMO
Special attention should be given to improving the organization of the Prime Minister’s Office (PMO). The PMO should become a more effective tool for steering and coordinating cabinet decision-making. This is particularly important for a coalition government of two parties whose policy priorities are not easily compatible. If the prime minister cannot count on an efficient and highly qualified PMO, the prime minister’s ability to steer a coherent governmental path is seriously endangered. The continuing accumulation of heterogeneous functions in this office should be discouraged and non-strategic functions should be transferred from the PMO to other government bodies, so that the PMO can focus on important policymaking issues. More opportunities for independent experts and open consultations to improve the quality of policymaking should be encouraged. Greater emphasis should be given to strategic and innovative policymaking approaches.
Parliamentary fragmentation a problem
The parliament must improve its procedural rules to discourage fragmentation of parliamentary groups and make decision-making more efficient. Parliamentary committees should more carefully scrutinize government activities and legislative proposals.
Local-central equilibrium yet to be found
The relationship between central and local governments has yet to find a satisfactory equilibrium. Central government must respect the spheres of regional and municipal government autonomy, and ensure local governments have sufficient resources to manage their specific functions. At the same time, central government must require a higher degree of fiscal responsibility from local governments. Local government dependency often goes hand-in-hand with irresponsible behavior. The legislative role of regions, in the past excessively extended, must be focused more on truly regional issues.
Rebuilding trust in
political parties
Further democratization and fresh leadership, complemented by tighter regulation of party organizations, is required to rebuild public trust in the established political parties. New legal rules should be adopted to promote internal democracy within political parties. In addition, a transition in political culture away from excessive personalization and escalating rhetoric toward pragmatism is needed.
Restructuring the
civil service
Public administration requires a fundamental restructuring and a cultural transformation to enable it to provide more timely and professional support to citizens and economic enterprises. In this perspective, a substantial reform of recruitment procedures, particularly for senior civil servants, should play a crucial role. Careful performance evaluation processes for all levels of public administration and greater accountability for senior civil servants should be a priority. The judiciary should be actively encouraged to accept reforms that increase its professional quality and ability to ensure timely justice. A less politicized judiciary should be enforced.
Economic policy must
look toward growth
Economic policymaking needs to promote a more dynamic and growth-oriented economy. This will require further economic liberalization, and the curtailing of monopolistic and oligopolistic power. In addition, business regulation should be simplified to enable traditional and startup businesses to co-exist. Economic policy must also focus on reducing the excessive gap between the more dynamic regions and sectors, which have reached high levels of productivity and occupation, and the more backward ones where a lack of innovation, high levels of unemployment and illegal job conditions prevail. This will require a significant improvement in physical and financial infrastructure in those areas, but also an extraordinary effort to enhance the quality of education facilities (with special attention to technical and professional schools). Resources to encourage young people to establish new innovative businesses should be increased. Government, business associations and trade unions should share responsibility for achieving these goals, which will require an economic culture of cooperation and pragmatism.
A carefully designed fiscal expansion, oriented to ease pressure on production and employment, must be balanced against fiscal sustainability.
Managing immigration to boost workforce
As immigrants form an increasingly large proportion of the workforce, the management of immigration, and the effective integration and protection of immigrants’ rights must receive greater attention. Proposed legislation addressing the issue of access to citizenship for immigrants should define a realistic path toward citizenship to facilitate integration.
Conservation demands cooperation
Better cooperation between public authorities and private organizations is necessary for the improved management of natural resources and cultural heritage. Natural resources and cultural heritage are important to improving people’s quality of life, economic growth, tourism, sustainable agriculture and foreign investment.
Education system needs resources despite austerity
The education system should be a higher priority, despite the austerity agenda. Greater flexibility and openness in the education system is necessary for the system to respond to changing societal needs. After years of severe budget cuts, universities and research centers need to be given the resources to recruit young people and qualified foreigners. A higher skilled workforce complemented by a knowledge-based, innovative economy would increase economic competitiveness.
Education system needs resources despite austerity
Italy should participate more actively in EU and international spaces. Building closer and more cooperative relationships with neighboring countries, identifying common agendas rather than focusing on narrow national interests would allow Italy to more effectively exploit its geopolitical potential.

Party Polarization

Multiple cleavages
in party system
Polarization of the party system has increased as a result of a greater divide between anti-establishment parties (e.g., the Five Star Movement) and mainstream parties. For the first time in Italy, power is held by a coalition of genuine anti-system parties. This coalition might affect fundamental constitutional values. Another increasingly important divide is that between pro-European and euroskeptic parties. The new Conte government highlights the existence of a significant divide between left-wing and right-wing populist parties. While the left-wing Five Star Movement and right-wing Northern League have combined forces to support the Conte government, their different policy priorities (e.g., on taxation, judicial reform and welfare provisions) are increasingly problematic for the current government. (Score: 5)
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