COUNTRY COMPARISONS     

           

 

An Empirical View
and Comparison
of France and Italy


by Dennis Gushue
 

 

 

 

 

France, officially called the French Republic is one of Western Europe’s oldest nations.  It is the third largest region in Western Europe measuring 547, 030 total square km, or roughly twice the size of Colorado.  The French Republic occupies ten oversea territories, reminiscent of the former colonial French empire.  France is located in Western Europe bordering Belgium and Luxembourg to the northeast; Germany, Italy and Switzerland to the east; and Spain to the southwest.  Its western front lies along the English Channel.  The French enjoy many landscapes varying from northern coastal lowlands to hilly uplands in the south.  There are valleys in the east as well as the Alps.  Nearly all of France’s land borders are mountainous creating very efficient natural boundaries.  The exceptional landscape, the application of modern technology, and subsidized farming has led to make France the leading agricultural producer in Western Europe.  Three-quarters of France’s 59,329,691 people live in cities, ten million of who live in Paris, France’s largest and capital city1.  It is interesting to also note that France has one of the highest literacy rates (people above the age of 15 who can read and write) in the world, at 99%1.  France’s annual rate of population growth is 0.35%, which is low compared to the rest of the world1.  It is said that a low population growth rate is analogous to a highly developed, civilized society.  During the 1800s France had the highest population in Western Europe.  The birth rate, compared to the rest of Europe, began to decrease during the latter half of the 19th century and continued throughout the 20th.  By the 1950’s France’s population had grown slowly, falling behind Italy’s, only to barely surpass it again in the 1990’s1.

The French Revolution (1789 – 1799) altered the structure of the French public.  After the Revolution, the monarchy was overthrown and the privileges the nobility and clergy possessed were eradicated while the legal equality of citizens was established.  Napoleon Bonaparte then took power and expanded the French empire (he even gained the title of king of Italy) until his defeat in 1815, when his enemies restored the French monarchy.  France did not have a democratic rule again until the early 20th century.  Even in the 20th century there was a rigid social structure where mobility within the classes was very difficult.  It was not until after World War II that the French social culture changed. Trying to modernize the economy was a main concern of postwar France1. In 1945 the French government hastened economic expansion when it nationalized many businesses in the energy, finance and manufacturing industries.    Europe became more economically integrated which, along with France’s new economic development plans, made sustained growth possible for France well into the end of the 20th century.  When the postwar economic expansion was well under way in France a large part of the population enjoyed the benefits.  The middle class expanded greatly, reducing inequality making previous social distinctions harder to see1.  However, France still faces the problem of a seemingly permanent underclass. [1]

 France is a presidential republic with a centralized national government[2].  The current system of government, known as the Fifth Republic, was adopted in 1958.  The French people will be electing a new president on May 5, 2002, which will be explained in more detail later.  The new system expanded the powers of the president while lessening parliamentary powers.  France is currently a major European power as well as a world power under the Fifth Republic system.

  An important event in any country is the elections of its public officials, especially a president.  Since France’s elections will be held early in May it merits some discussion here. France elects its presidents by a direct vote that is held in two rounds.  In the first round, held late in April, sixteen candidates are in the running[3].  If no candidate wins more than half of the votes, the two leading candidates face a runoff on May 5th.  This process takes place every five years after a reform in 2001 shortened the term from seven years.  The presidential powers include being the head of state, commander-in-chief, appointing the prime minister, the right to dissolve the National Assembly as well as being responsible for foreign and defense policies[4].  The strength of the president and the ambiguous stature of the prime minister seen in France is seen nowhere else in European politics.  Most countries, like Italy, elect a prime minister who handles the running of the country and a non-political head of state.  Although this might lead to a conflict in interests many Frenchmen see it as an advantage. 

  Many see the coming presidential elections as the most important since Charles deGualle’s Fifth Republic inauguration in 1958[5].  Due to the amendment changing the term to five years, the presidential and the National Assembly elections will be held months apart.  Politicians hope this will lead the people to electing those with similar political views and not those of opposing colors like today’s France.  The current top two candidates are France’s current president, Jacques Chirac, who is a conservative republican and Lionel Jospin, a socialist.  With dramatic changes coming up in Frances future it is impossible to tell where the country is heading.

The French economy today is one of the strongest in the world.  France combines modern capitalism with heavy government intervention.  The government enjoys a considerable influence over key segments of the French economy.  They retain a majority of ownership in many firms in sectors such as railways, electricity, aircraft and telecommunications.  All of the following information was obtained from the French Multiyear Public Finance Programme 2001-2003:  It is the world’s fourth economic power in terms of GDP and exported goods. French manufacturing is highly diversified and provides nearly all of the country’s export income.  France is the number two producer of iron ore in Europe, which is very important to the industrial sector, as France is the fourth largest industrial producer in the world.  France ranks second in services and agriculture and is the leading producer and exporter of farm products in Europe (64% of its trade is with the European Union (EU) partners).   There have been many technological advancements as well as improvements in farming techniques to allow for a smaller population of farmers to handle France’s high agricultural expected productivity.  France also dedicates 36% of its land area to agriculture, which is more than any other European nation. 

Currently France’s GDP is up two percentage points at $1.373 trillion[6].  France and the rest of the EU have agreed to restrain their use of fiscal policies to keep their budget deficits below three percent of GDP, under the terms of the Economic and Monetary Union (EMU) 8.  GDP by sector is as follows: 3.3% agriculture, 26.1% industry, and 70.6% services6.  Rapid growth in the French service sector has urbanized the French landscape considerably.  Percentage gains in imports, exports and household spending are 0.8, 1.7 and 1.2 respectively6.  A low increase in imports is obvious since France produces most necessary goods domestically.    Recently household spending has increased by 1.2%, which is above analyst’s expectations of 0.1%.  The unexpected increase shows the French economy is confident and should continue getting stronger[7].  The one consideration is the persistently high unemployment that has persisted in France for the last decade.  During the 1990’s unemployment averaged 11.5% but after the prosperous times in the late 1990’s unemployment fell to its current average of 9.0%6.  The leading presidential candidates, Chirac and Jospin, are hoping on a strong period of growth so they can fulfill their campaign promises of a tax cut of billions of euros. Taxes are a very important source of government revenue in France.  In 1991 a special indirect tax on income called the value-added tax (VAT) was instituted.  France was the first country to use the VAT which is the primary indirect tax used throughout Europe1. 

France has a very strong and extensive financial system.  The French government has always played an important part in the regulation of these systems.  Gradually, private banks became nationalized and the government was loosening its hold on the banking sector.  The central bank, Banque de France, became an autonomous entity in1993 when the EU was formed and that was a requirement for membership1.  The EU later established the European Central Bank (ECB), in Germany, which became responsible for all of the European Union’s monetary policies.  Therefore, monetary policy is no longer decided on a national level but on a EU level. 

Italy is located in Europe.  Its northern borders are shared with France, Switzerland and Austria.  The Alps extend in a wide arc along Italy’s north, with its highest point on Mont Blanc, which is shared with France (the peak is located in France) and Switzerland.  Since Italy is a peninsula the rest of the country is surrounded by bodies of water, such as the Adriatic on the east, Mediterranean on the south and the Tyrrhenian Sea on the west.   Aside from mainland Italy there are many Mediterranean islands that make up the Italian Republic, the largest of which are Elba, Sardinia and Sicily.   Interestingly, within mainland Italy there are two independent countries, San Marino and Vatican City.  Vatican City is enclosed by Italy’s largest and capital city, Rome.  Italy is smaller than France at 301, 323 sq km (or roughly the size of Arizona).  Italy’s geography is also much less diverse than France’s.  Only about one third of the Italian landscape is plains, the rest being mountainous, hilly regions or low, marshy land.  The indentations along the western coastline serve for excellent port towns[8].  Fishing off the coasts of these port towns provides the country with its greatest commercial activity.   Italy is frequently troubled by natural shocks such as volcanic eruptions from any one of its active volcanoes and minor earthquakes.  Unlike France, Italy is poor in natural resources since most land is unsuitable for agriculture.  However, the strategic location of the country gives Italy control over the southern sea and air approaches to Western Europe8. 

The Italian population is heavily divided amongst themselves.  Since the population of the country is primarily native-born people they identify themselves closely with a particular area of Italy.  Towns easily became extremely isolated due to the natural mountainous boundaries the Alps and Apennines provided.  Could this division possibly be a reason for the emergence of one of Italy’s biggest problems, the mafia?  Generally the population is divided into the more urbanized north and the rural south.  Northern Italy is more prosperous and contains about two thirds of the nations population[9].  Over the last half of the 20th century the population has continually been migrating towards urban areas.  As of 1999 the population was 67% urban.  Currently Italy has a population of 57,679,825, which is extremely close to that of France, exhibiting the problem of overcrowding in Italy, especially in cities.

Italy has had a tremendous impact on the rest of Europe.  In our comparison with France it is interesting to note that the Romans unified France for the first time.  Under the reign of Julius Caesar the Roman influence extended throughout most of Europe.  It is the Romans that most Italians consider themselves to be descendants of rather than being a “new” people, even though Italy was politically unified less than 150 years ago8.  Roman educators and philosophers, such as Cicero and Seneca, shaped the education systems, impacting many different Europeans for centuries to come.  Italian universities were considered the most advanced in all Europe during the Middle Ages8.  During the Renaissance Italians taught Europe about the liberal arts. Italy has produced some of the worlds most admired sculptures, paintings, architecture, literature and music (especially opera).  Men such as Giotto, Michelangelo, Leonardo da Vinci, Antonio Vivaldi, Gioacchino Rossini and many others made Italy one of the most artistic countries in the world, possibly matched only by France. A trait that is still possessed in both modern day countries.  An educated populace has been and remains an extremely important characteristic of many European countries8.  In 1923 the minister of public instruction under Mussolini, placed education under complete governmental control.  Perhaps influenced from the revised version of the French constitution in which all the permanent residents are guaranteed an education.    The goal of the Italian educational system has been to “establish a well trained minority rather than a widely educated majority.”  Italy’s literacy rate lies just below France’s at 98%, which is still high compared to the rest of the world9. 

Italy’s rule has been divided just like the people throughout its history.  After Roman rule dissolved the country adopted a feudal system of government that was never as successful as France or Germany’s. A further French-Italian tie is the shared reign of Napoleon after he invaded and conquered Italy.  In 1805 he was crowned king of Italy in Milan.  By 1810 Rome was incorporated into the empire it had helped shape.  The revolutions that lead to and included the French Revolution had repercussions in Italy as well.  Napoleon’s defeat left a divided Italy in the hands of domestic and foreign rule.  After many years of further revolts and international warring the kingdom of Italy was proclaimed in March of 1861.  Due to the Franco-Prussian War, Italians were still not able to claim control of Rome and Venice.  It was not until 1871 that Italy was unified with the ancient city of Rome as its capital and Italians were allowed to enter the city again8.

Early in the 20th century Italy enjoyed political, social and economic modernization.  During the period of 1901-1914 Italy’s rate of industrial growth was 87% with workers wages growing at a rate of 25% (for the period) 8.  World War I brought all the progress Italy was making to a stop and in its wake left a country torn by social and political pressures resulting in inflation and economic turmoil.  Italy went through a period of uncertainty where fascists fought socialists and communists, losing the stability it had been showing.   This set the stage for the Fascist leader Benito Mussolini to take control of an unsure nation.  Mussolini’s effect was intense as he suspended the constitution, established absolute censorship of the press, suppressed any party who opposed his and forbid parliament to initiate legislation.  Finally after the repercussions of World War II and Mussolini’s death, Italy became a democratic republic in 1946.  A new constitution became effective in 1948 where the reestablishment of the Fascist Party is prohibited and titles of nobility are abolished.  It is this democracy that is currently in power today in Italy.  It is necessary to understand the tumultuous politics that Italy has endured since ancient Roman times when considering their economy and place in the world today. 

A noteworthy topic in the socio-economic study of Italy is the influence of the mafia on the culture.  The mafia started during feudal times in the Corleone region of Sicily8.  Today, the mafia operates nationally as well as internationally using terrorist acts, bribery and violence to gain access to whatever they need.  In some Italian towns the mafia has used these methods to hold political office, gaining legal access to weapons.  During Mussolini’s rule the mafia was virtually non-existent, however, they appeared again in 1945 after World War II8.  In the years proceeding WWII up to the 1980’s the mafia became a very strong power in Sicily as well as the whole of Italy. During the 1980’s the Italian government started an “anti-mafia” campaign that lead to many mafia-related arrests but also led to the assassinations of many public officials[10].  The mafia had corrupted everything from farming to businesses.   Eight (former) prime ministers and 5,000 businessmen and politicians are still being charged with various forms of corruption10.  One official was found to have pocketed almost $130m[11].  Corruption became such a normal thing in Italy that the residents, especially businessmen, learned to live with it.  It is believed that the mafia controls about 20% of all Italian businesses and is involved in many more.  Expert’s say that the mafia earns approximately $133 billion annually, or 15% of the total GNP11.

The Italian government is currently trying to combat the mafia’s influence in the country.  Though its presence is not as strong as it used to be, the goal is complete erasure.  Italian President Carlo Ciampi has explained that the fight against organized crime remains a top priority10.  In 2001 UN officials met in Palermo to sign the United Nation’s first treaty on organized crime.     

Italy is essentially a private enterprise economy.  Unlike its French counterpart, the Italian government had a controlling interest in many important economic sectors but began to sell off their positions to private owners by the end of the 20th century8.  Generally, Italy is less industrialized than France.  Italy has developed a highly industrialized north while its southern region lags behind.  The mafia is continually interfering with government programs to industrialize the south[12].  As previously stated the mafia takes a share of almost every entity that does business in southern Italy.  Many southern Italians have also left there home to go to the north in search of employment. 

Italy’s GDP was up 2.1% at $1.273 trillion as of the latest quarter in 2001[13].  By sector GDP breaks down into: 2.5% agriculture, 30.4% industry and 67.1% services.  An estimated 38% of Italy’s land area is used for agriculture, similar to that of France (by percentage) 13.  However, the actual size is far less and the climate is worse for farming than France’s.  Italy is one of the leading nations in the production of grapes, olives, olive oil and of course is one of the world’s best wine producers.  Italy has been gradually diversifying, moving from traditional food and textiles to engineering, steel and chemical products hoping to stimulate economic growth8.    Limited mineral resources also hurt the Italian economy by forcing the import of many necessities.  Italy does have large methane (natural gas) deposits but these are hardly enough to satisfy its needs.  Italy only produces less than one third of the energy it needs to run.  However, possibly due to the influence of the EU and its other participating nations Italy is taking steps to speed up economic growth.  Recent indicators show us that imports are up 2.1%, household spending is up 1.4% and most importantly exports are up 8.8% (which is down 1.3% from last quarter) 13.  The high level of exports could be a sign of a changing Italian economy.  Inflation is also up   2.5% but that is not necessarily an ominous sign since French reports show similar findings.

  It will benefit Italy to have joined the EU.  Since Italy is a member and uses the euro as its monetary unit, it must abide by the ECB and its monetary policies.  Everything from setting interest rates to regulation of the money supply will now be handled, just like France, on an international (EU) level.  The increased capital movement between Italy and other EU nations could be just what Italy needs to help eliminate corruption and stimulate economic growth.  Another major problem facing Italy is its government debt.  Currently Italy’s debt is 7% of GDP13.  As mentioned above a goal of the EU is to have its participating countries debt at 3% of GDP, which Italy does not.  Unemployment has also been extremely high by European standards within the last decade.  It has come down in the past three years from 12% to 10.4%9.  Hopefully, partially integrating economies via the EU will help Italy with its debt problems.

  Italy is a major player in commercial trade.  Due to its strategic location it is able to control all air and sea passages from the southeast into Europe.  Italy also enjoys one of the world’s largest commercial shipping fleets8.   Tourism also helps offset the trade imbalance Italy has been experiencing.  Analysts also warn to “beware” of the deceptive strength of the Italian economy due to the underground activities, mainly the mafia, that are rampant throughout the nation10.

By looking at France and Italy’s economic indicators and understanding their respective policies, systems and histories one can assume that France is the superior country.  The French are a world power in services and agriculture, industrial production exported goods and GDP.  Their weaknesses lie in their unemployment, economically, and opposing government elects, politically.  The changes presently being made to create jobs by stimulating growth as well as the reform in electoral process to hold elections under the same political climate are showing positive signs.  If the elections go well then France will be heading for a period of economic growth.  The unification of Europe under the EU should aid countries like Italy by exposing them to the true functioning of a world power like France.  Italy has several areas where improvement is needed.  Could Italy’s geography be its downfall?  It is a country divided within itself by countless mountains and hills.  The mafia originated from different towns that were separated geographically started to fight.  The mafia has forced a great deal of southern Italians north and delayed progress in the entire region.  It seems that the southern region of Italy is bringing down the overall progress of Italian economic progress.  One could argue that it is farm country, however, the land and weather is so unfavorable that it would not make a difference in GDP.  Italy needs to take strong advice from its fellow EU members and perhaps when the union itself takes a stand against corruption Italy will see a great economic boom. 

 


[1] “France,” Microsoft Encarta Online Encyclopedia 2001

[2] “France Government 2001,” www.photius.com

[3] “Election watch: France,” www.cnn.com

[4] “French Election Process,” www.cnn.com

[5] “France’s Presidential election; They’re just about off,” The Economist.  Volume 362.Number8260.

[6] “France economic indicators” www.geoinvestor.com

[7] “French consumer spending surges,” www.cnn.com

[8] “Italy,” Microsoft Encarta Online Encyclopedia

[9] Information obtained from Italian National Statistical Institute

[10] “Italy pledges anti-mafia fight,” BBC News. Aug.28, 2001.

[11] “Italy and corruption: Is there less than before?” The Economist. Volume362.Number8260.

[12] “Mafia – past and present,” BBC News.6, Jan 2001

[13] Information obtained from Quarterly Economic Accounts-2nd Quarter 2001

 

 

 

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