The Italian balance of payments problem

Abstract

Italy’s foreign trade deficit, one of the countries most pressing problems, remained at a high level in 1953, giving fresh zest to the debates on the policy of trade liberalisation and tariff reductions followed by the Italian Government. According to the author, the situation calls for the adoption of re-equilibrating measures. Among such possible measures, a policy of financial and credit import restrictions should be avoided, as it would reduce the volume of domestic investments and thus aggravate the unemployment problem. Moreover, the manipulation of exchange rates would be of little use as its effects would soon be effaced by a rise in home prices. On the other hand, efforts should be directed towards assuring larger exports. The author argues that it is essential to secure a geographical reorientation of Italy’s trade policy which would shift “imports towards those areas where Italian exports have the greatest possibilities of finding outlets”. Such a policy would, however, imply more definite recourse to methods of centrally managed trade policies.