Meritocracy, Growth, and Lessons from Italy's Economic Decline

The book draws lessons on the importance of rewarding merit for economic growth by analysing Italy’s decline in the past few decades. Connections rather than merit are a long-standing feature of the Italian elites, even in the corporate sector. This became a significant problem when Italy could no longer grow through imitation, devaluations, and public debt and faced the challenges of becoming a frontier knowledge-based open economy. The book uses international comparisons over many aspects of society, from social capital to governance, the role of the public sector, efficiency of the judiciary, education, gender and social inequality, social mobility, corporate standards, financial structures and more to evaluate the performance of Italy. It argues that the arrogance of a mediocracy is more damaging than that of meritocracy. Also, the former is more likely to facilitate the rise of populism. Studying Italy’s case can be helpful to many other countries: Italy was the country of the economic miracle after WWII, and it is still an advanced economy and a member of the G7 club. Until the 1960s, it seemed destined to catch up with the best-performing countries. Then the growth engine stopped, its debt skyrocketed, and Italy became the weak link in the Eurozone and might endanger its very survival.