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How Inefficient is Italy? Grossly.

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Italy’s nightmarish bureaucracy and dysfunctional political system are legendary. Well, they do say there’s often more than a grain of truth in legends and the World Economic Forum’s Global Competitiveness Report 2014 – 2015 contains not one but several grains of truth.

In terms of government efficiency and effectiveness, out of the 144 nation’s assessed by the World Economic Forum, Italy is  in 143rd place – only Venezuela is worse.

Although it may be hard to believe, Italy tends to discourage efficiency, as this amazing but true story – in Italian – about a local council which was fined, wait for it…for being too efficient (!) and working to keep costs down. Not only was the council made to pay for its efficient management, it was also ordered to quadruple prices! Complete and utter insanity.

Italy does very badly in many other areas too. Take, for example, Efficiency of legal framework in settling disputes and Transparency of government policymaking – Italy is in 143rd place, again.

Then there’s the Burden of government regulation which puts Italy in 142nd place – out of 144, remember – but Italy tends to blame the European Union for all the regulations. Another EU member state, Finland, handles the regulation front rather well and is in 7th place.

How about Wastefulness of government spending? Italy ranks 139th. Finland, by the way, is in 9th place. The United Kingdom sits in 33rd place. Germany is in 20th place. Sounds as if Italy could do better, except it is unlikely to.

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Cronyism and clientelism have long been part of the Italian way which explains why Italy sits in a lowly 135th place in terms of Favoritism in decisions of government officials.

Don’t expect impartiality from Italy’s politicians or (un) civil servants – you won’t get it. Official arms, however, can be twisted relatively easily. Unsurprisingly, Italy ranks 74th in terms of Irregular payments and bribes. The corruption problem is unlikely to end anytime soon as Italy’s politicos have worked exceptionally hard to ensure nation’s judiciary is not independent which probably explains why out of 144 nations, Italy is in 78th place in terms of Judicial independence.

Then there’s Italy’s age old bugbear, organised crime. The efficiency of organised crime, in stark contrast to government and institutions in Italy, is exceptionally high, indeed, Italy ranks 132nd in terms of Organized crime in the World Economic Forum ranking.

Prime Minister of Italy Matteo Renzi has his work cut out for him. Whether the reforms his government are passing will lift Italy from 143rd place remains to be seen but the expectations of Italians are not at all high. No surprise really: in terms of Public trust in politicians, Italy is in 139th place. Maybe Italy needs to act?

Italy’s gross inefficiency might explain why the nation’s growth has been dire since 1999. This article goes some way towards explaining why Italy is stuck in a rut: Why does Italy not grow?

The next World Economic Forum Global Competitiveness Report will make for interesting reading and will indicate whether Mr Renzi is actually turning Italy around. In the meantime, you can download the full 565 page report here: World Economic Forum’s Global Competitiveness Report 2014 – 2015 – the Italy profile is on page 222.

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