Introduction

Economies of Italy and Greece have faced significant challenges for decades, stemming from a combination of systemic corruption and poor economic management. This article delves into the reasons behind these struggles, examining corruption, tax evasion, high public debt, lack of industrial modernization, and an unfriendly business environment. Additionally, the role of the European Union and cultural differences are explored to provide a comprehensive analysis.

Corruption and Its Impact

The persistent problem of corruption has plagued both Italy and Greece, significantly hampering their economic progress. According to studies, Italy and Greece are among the highest in terms of corruption in the European Union (EU). In Italy, corruption costs the country 13% of its GDP, equivalent to approximately 236 billion euros, with a majority of Italians believing that corruption is widespread in their country. Greece faces a similar issue, with corruption costing 14% of its GDP.

Figures and Statistics

The figures cited come from an analysis conducted by the European Green Party for the European Parliament in 2018, based on data from the American NGO RAND. These statistics highlight the deep-rooted issues of corruption in both nations, making it crucial for systemic reforms.

Tax Evasion: A Common Problem

Tax evasion is another significant factor contributing to the economic struggles of Italy and Greece. In Greece, tax evasion is almost seen as a cultural norm, leading to significant losses for the state. Similarly, in Italy, citizens often take pride in evading taxes, further eroding the government's revenue. Both countries struggle with effective tax collection, hampering their ability to fund essential public services and infrastructure.

High Public Debt and Poor Governance

The burden of high public debt has further exacerbated the economic challenges in both countries. Italy and Greece hold the highest public debt in the EU, ranking first and second respectively. Incompetent governments, widespread corruption, and tax evasion contributed to the skyrocketing public debt, severely limiting their ability to manage their economies effectively.

EU Influence and Regulation

The European Union (EU) has also played a role in the economic struggles of these nations. While the EU's regulations generally aim to foster economic prosperity, some argue that they often benefit the northern member states more, particularly Germany. For example, the EU closed down Greek shipyards to prevent state subsidies, while energy sources under Greek waters have been neglected until recently.

Lack of Industrial Modernization

The lack of industrial modernization in Italy and Greece is another major issue. Italy's economy is heavily reliant on family-owned, smaller companies that are typically less productive than their international counterparts. Similarly, Greece's economy lacks modern industrial infrastructure. As per the European Commission's SME tracker, about 95% of businesses in both countries have fewer than 10 employees, and these businesses have lower levels of labor productivity compared to larger companies. Additionally, both countries face difficulties in innovation due to traditional family ownership or difficulty in obtaining credit.

Unfriendly Business Environment

The business environment in both Italy and Greece remains unfriendly due to inefficient public administration and over-regulation. According to the World Bank, Italy ranks 111th and Greece ranks 116th out of 190 countries globally for ease of doing business. Civil and criminal justice systems suffer from corruption and lengthy delays, making it difficult for businesses to function effectively. This has resulted in a significant drain on foreign investments, with both nations failing to attract the necessary capital for growth and development.

Conclusion

Economies of Italy and Greece face a multifaceted challenge rooted in corruption, tax evasion, high public debt, and a lack of industrial modernization. Addressing these issues will require comprehensive reforms and a commitment to systemic change. The involvement of the European Union and its regulations must also be critically evaluated to ensure a fair and balanced economic landscape for all member states.