A brief history of Italian prosperity

Since 1950, Italy has exhibited a remarkable economic development. We aim to investigate the determinants of this evolution in a historical and regional perspective. Italy started with a GDP per capita roughly 40% below its peers. By 1980, the Italian economy has converged and closed the gap. In this paper, we first present the evolution of GDP per capita relative to selected groups of peers. We then propose a step function as the best means to estimate this time series. In this way, we determine four distinct periods. We will then look at these periods individually both in terms of growth accounting and from the composition of demand, to understand how Italy managed to converge to its peers.