A Teetering Domino

Antonio Merlo riffs on Italy’s looming economic collapse.

Tuesday, March 20, 2012

By Blake Cole and Rachel Witte

With the Eurozone in dire straits and Greece’s economy up against the wall, all eyes have turned to Italy—once a bastion of wealth, it is now threatened by massive debt and widespread corruption. Silvio Berlusconi, Italy’s ex-Prime Minister, was forced out after weathering scandals of moral, economic and political consequence. How did his decisions, over generations, affect Italy’s eventual decline, and what steps are necessary to keep the country afloat?

“It’s clear that the only way you can really make an important change [in Italy] is by changing the culture, the mentality of the country, and the institutions that are not facilitating growth.” – Antonio Merlo

Antonio Merlo, Lawrence R. Klein Professor and Chair of Economics, Director of the Penn Institute for Economic Research, and native of Italy explains why bad economic decisions—and poisonous cultural trends—have taken their toll on a once-prosperous country.

How does the financial crisis in Italy compare to the economic downturn in the United States? 

What role did politics play in Italy’s economic collapse? 

Does political corruption threaten Italy’s future? 

What legacy will Italy’s ex-Prime Minister Silvio Berlusconi leave behind? 

What lessons can be learned from his forced resignation? 

What lies ahead for Italy? Will the Eurozone survive?