Jean-Philippe Cotis, OECD Chief Economist
Competitiveness and structural policy challenges for Italy:
some comments
0
0
Relative unit labour costs have risen sharply
Trade-weighted relative unit labour costs in manufacturing
130
Index, 1991 =100
120
110
100
90
80
70
1991
1993
1995
1997
Italy
France
1999
Germany
2001
Spain
2003
2005
1
1
…notably vis-à-vis Germany
Relative unit labour costs in manufacturing vis a vis Germany
110
Index, 1991 =100
100
90
80
70
60
1991
1993
1995
1997
1999
Italy
France
2001
2003
2005
2
Spain
2
The deterioration in the trade balance has affected more intra than extra euro-area trade
Italian trade balance as a % of GDP
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
1991
1993
1995
1997
1999
2001
2003
3
EU-12
Rest of the world
3
Labour productivity has stalled over the past decade
Labour productivity (total economy)
Index, 1991 =100
115
110
105
100
1996
1998
2000
Italy
France
2002
Germany
2004
4
4
Nominal wages have grown faster than in Germany
Nominal compensation per employee in business sector
130
Index, 1991 =100
125
120
115
110
105
100
95
90
1996
1998
2000
Italy
2002
France
Germany
2004
5
5
Inflation has been relatively high and persistent
Consumer price deflator
130
Index, 1991 =100
125
120
115
110
105
100
95
90
1996
1998
2000
Italy
2002
France
Germany
2004
6
6
Real labour cost have declined
Real compensation per employee in business sector
Index, 1991 =100
115
110
105
100
95
90
1996
1998
2000
Italy
2002
France
Germany
2004
7
7
Is the quality of trade specialisation deteriorating?
Dynamic simulation of a standard export equation over 1982-2006
50
4.00E+11
45
3.50E+11
35
3.00E+11
30
25
2.50E+11
20
2.00E+11
15
Italian exports volume
10
Italian exports volume simulated
5
1.50E+11
0
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1.00E+11
1982
Exports - Volume - euros 2000
40
8
8
Product market regulation remains strict in Italy despite substantial liberalisation
Product market regulation in OECD economies
1998
2003
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
9
BE
L
N
LD
A
U
T
SV
K
D
EU
N
O
R
K
O
R
PR
T
ES
P
CH
E
FR
A
CZ
E
G
RC
IT
A
H
U
N
M
EX
TU
R
PO
L
FI
N
N
SW
E
LU
X
JP
N
CA
K
ZL
N
L
N
D
IR
IS
L
U
SA
BR
G
A
U
S
9
OECD
Cross-country differences in PMR may have contributed to divergent productivity trends
Difference in average MFP growth rate between 1990-2000 and 1980-1990 1
2.0
Australia
Canada
Ireland
1.5
1.0
United
United States
Kingdom
New Zealand
0.5
Denmark
Sweden
Finland
Greece
0.0
0.3
0.8
1.3
1.8 Germany 2.3
3.3
Italy
Belgium
Netherlands
-0.5
2.8
France
-1.0
Japan
-1.5
-2.0
Spain
Correlation coefficient -0.51
t-statistic -2.29
Portugal
-2.5
Product market regulation, inward oriented 2 , 1998
1.0
1. Adjusted for hours worked.
2. Indicator of economy-wide regulation excluding barriers to international trade and investment.
The indicator ranges from 0 to 6, from least to most restrictive. See Nicoletti et al. (1999).
10 10
0.5
0.0
-0.5
-1.0
-1.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Employment protection legislation remains stringent in international comparison
1
Stringency of employment protection legislation in selected OECD countries, 2003
4
3
2
1
1. Index scale of 0-6 from least to most restrictive.
PRT
FRA
ESP
C
GR
DEU
E
SW
BEL
NLD
FIN
I TA
AUT
NZL
JPN
DNK
AUS
IRL
CHE
CAN
GBR
USA
0
11 11
Italy ranks low in terms of PhD graduates and business sector researchers
12 12
Italy has a much larger share of low-skilled workers than most other OECD countries
13 13