Report

Module name: International Economics

Professor: Sultanova Gavkhar Karimovna
Student: Okmamatova Zarnigor Zafarjonovna
Group: 0-1a-22
Chosen country: Italy
 1. Introduction.
1.1. Relevance of the topic:
Italy stands as the third-biggest European economy in the EU and Eurozone origin
member that actively influences EU trade policies while managing its domestic trade
matters. The country bases its strong export performance on its well-developed
manufacturing industry that produces luxury items with automobiles and
pharmaceuticals and food products. The country preserves enduring economic relations
throughout Mediterranean and European territories. The Italian economy continues to
excel on the world stage but it deals with ongoing barriers from official procedures and
economic gaps between northern industrial zones and southern farming districts and a
substantial debt problem. The substantial trade environment shifts necessitate
immediate research into related matters. Economic stability along with competitive
advantage requires Italy to find new market positioning. The global trade disruptions
due to Covid-19 pandemic accelerated the digital transformation while finding
innovative routes in supply chains which brought risks alongside new opportunities to
Italy’s economy. Rising energy expenses combined with the Ukrainian military conflict
push EU economies to perform strategic assessments about their trading relationships
especially in relation to energy supplies. To understand the strategies Italy uses for
external shock defense and sustainable growth evaluation of its foreign trade patterns
alongside policy measures becomes essential.
1.2. Goal and objectives of the study:
The research aims to assess Italian foreign trade tendencies along with its policy
instruments and their effectiveness and how external trade influences the national
economy. The evaluation enables us to develop effective recommendations that boost
Italy’s trade performance across the changing international market.
The study has four main objectives:
a) The research investigates the extended-term patterns in Italian export and import
activities regarding both goods and services from a ten-year perspective. Italy’s trade
movements and proportional breakdown across geographical areas during the latest
five-year period require analysis.
 b) The research looks into Italy’s foreign trade policy by examining its objectives
and tools together with policy results.
c) The analysis examines the degree to which Italy participates in international
economic integration through its relation with both the European Union and WTO.
d) It will analyze how foreign trade helps stabilize Italy’s macroeconomy and boost
economic growth while providing actionable recommendations.
1.3. Research methodology:
This study employs both quantitative and qualitative research methods, combining
statistical analysis with policy evaluation. For the quantitative analysis, data on Italy’s
trade flows, including exports, imports, and the balance of trade, will be gathered from
World Bank. The qualitative aspect of the research will analyze Italy’s trade policies
based on official government sources, European Commission reports, and WTO
documentation.
1.4. General characteristics of Italy:
Italy, officially known as the Italian republic, is a nation located in Southern
Europe and a member of a number of international organizations, including the
European Union, Euro zone, WTO, OECD, and G7. With an estimated population
of 58.9 million as of 20231, it’s the world’s eighth-largest economy by nominal GDP
and the third-largest within the European Union2, following Germany and France.
Italy’s economy is highly diversified, with significant contributions from sectors
including manufacturing, tourism, services, agriculture, and the creative industry.
Despite these strengths, the economy faces persistent structural issues, such as slow
productivity growth and high public debt, which currently stands at about 135% of
GDP3.
Macroeconomic indicators (2023–2024 estimates):
(Source: [Link]
• Nominal GDP: USD 2.301 trillion
• GDP per capita: USD ~39.003,32

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[Link]
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[Link]
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[Link]
 • Inflation: 5.6% (reflecting post-covid energy shocks)
• Unemployment rate: 7.62%
• Public debt-to-GDP: ~141%
• Exports of goods and services: ~31% of GDP
• Main sectors: manufacturing (machinery, vehicles, chemicals), fashion, food and
wine, tourism, banking, and logistics.
International rankings:
• Human development index (UNDP, 2023): 30th out of 191 countries4
• Global competitiveness index (in 2018): 43th out of 137 countries5
• Ease of doing business (WB, 2019): 58th out of 190 countries6
• World export ranking: 8th largest exporter of goods in the world7
As a member of the EU single market and customs union, Italy trades freely with
26 other European countries and benefits from numerous free trade agreements (FTAS)
negotiated by the EU with partners such as:
1) Canada (CETA): The final version of the CETA agreement, endorsed by Canada
and ratified by multiple European countries, represents a comprehensive accord that
transcends a simple trade deal centered on customs duties. Besides achieving its
primary goal, it regulates all sectors involved in economic and commercial activities.
In addition to abolishing tariffs, it covers a wide array of sectors such as
pharmaceuticals, automotive, intellectual property, investment, procurement,
certification alignment, recognition of professional qualifications, and others.8

4
[Link]
5
[Link]
pagerprofiles/WEF_GCI_2017_2018_Profile_Italy.pdf
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[Link]
7
[Link]
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[Link]
ratification-of-eu-canada-comprehensive-economic-and-trade-agreement-ceta
 2) Japan (JEFTA): The agreement provides for a gradual reduction of tariff barriers
for hard cheeses - now subject to a tariff that is close to 30% of their value - and an
increase in quotas for the importation of blue, soft and melted cheeses.9
and South Korea:

Italy’s geographic position at the heart of the Mediterranean also gives it a strategic
advantage in linking European markets with North Africa and the Middle East. Its
infrastructure—including major ports such as Genoa, Trieste, and Naples — makes it
a logistics hub for international trade flows.

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[Link]
trade-your-town/italy-canada-trade-your-town_en
 “These ports are economic powerhouses, handling a staggering amount of
cargo.”10
2. Analysis of trends in the development of foreign trade of Italy.
Over the last decade, Italy’s foreign trade has remained incredibly resilient and
adaptable. This is due to the fact that the nation has a strong manufacturing sector, its
geographical location within Europe, and its ability to respond to international
economic developments. This section presents an analysis of Italy’s foreign trade
dynamics, structure, and direction from 2013 to 2023, drawing from official
international trade databases and graphics for simplicity of understanding.
2.1. Dynamics of foreign trade (2013–2023):
The table below illustrates Italy’s exports, imports, and trade balance over a 10-
year period, from 2013 to 2022:
Year Exports (USD bln) Imports (USD bln) Trade balance (USD bln)
2013 518.095 479.336 +38.759
2014 529.529 474.083 +55.446
2015 456.989 410.933 +46.056
2016 461.668 406.671 +54.997
2017 507.430 453.583 +53.847
2018 549.907 503.581 +46.326
2019 537.748 474.957 +62.791
2020 498.804 426.476 +72.328
2021 615.910 568.202 +47.708
2022 659.387 695.236 -35.849

2.2. Key observations:

a) Imports and exports:

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 Consistent export growth: exports recorded high growth in the early years, peaking
in 2022 at 659.387 billion USD from 518.095 billion USD in 2013. The growth reflects
Italy’s strong manufacturing sector, particularly in machinery, fashion, and automotive.
Unstable imports: imports were relatively constant but tended to increase over the
years, with the gap well apparent in 2022 when imports reached 695.236 billion USD,
beating exports for the first time since 2013.
b) Trade balance:
Positive trade balance (2013-2021): Italy had a trade surplus from 2013 to 2021,
i.e., Italy exported more than it imported during these years. The trade balance reached
its peak in 2020 at +72.328 billion USD, despite the pandemic, as there was a steep fall
in demand for imports.
Trade deficit in 2022: for the first time since 2013, Italy had a trade deficit in 2022,
amounting to -35.849 billion USD. Several factors are the reason for this:
Higher import prices: world price rises for raw materials and energy weighed
heavily on import prices in 2022, especially in the context of the Ukraine conflict and
the consequent energy crisis. Such a shift from surplus to deficit reveals the frailties of
the Italian economy and raises concern about sustainability in the context of volatile
world prices and geopolitical [Link] average wholesale prices for
selected regions, 2018-2026 (energy):
 Continued export growth: although exports remained high, they were outpaced by
the rapid increase in imports, leading to a negative trade balance.
2.3. Composition of foreign trade:
Italy’s foreign trade is largely shaped by its specialization in high-value industrial
goods and luxury consumer goods, with machinery and transport equipment
accounting for the bulk of its exports. Italy’s economy is heavily dependent on energy
resources and raw materials to power its industries on the import side.
Exports: The top export category of Italy in the year 2023 was machinery and
nuclear reactors, accounting for around 17.2% of the total exports. Some other
significant export categories included transport equipment (10.7%), pharmaceuticals
(7.8%), and textiles and metal products (both at 10.4%). This pattern of exports depicts
Italy’s supremacy in the sectors of advanced manufacturing, automotive styling, high-
fashion, and pharmaceuticals.
Export value in 2023

Nuclear reactors and machinery 17.24% $116.73 billion

Vehicles 7.95% $53.83 billion
Pharmaceutical products 7.43% $50.32 billion
Electrical machinery and equipment 6.54% $44.27 billion
Plastics and articles thereof 3.64% $24.67 billion
Mineral fuels and oils 3.52% $23.81 billion
Articles of iron or steel 3.33% $22.56 billion
Precious stones and metals, pearls 2.99% $20.22 billion
Optical, medical, or surgical instruments 2.56% $17.32 billion
Iron and steel 2.53% $17.12 billion
 Imports: On the import side, energy goods led the charge in 2023. Mineral fuels
and gas comprised 14.6% of Italy’s imports, valued at approximately $93 billion,
showing the country’s reliance on foreign energy sources.
These figures reflect Italy’s import needs in order to propel its industrial backbone,
fund domestic consumption, and sustain competitiveness in production.
Import value in 2023
Mineral fuels and oils 14.63% $93.65 billion
Vehicles 9.61% $61.52 billion
Nuclear reactors and machinery 9.14% $58.51 billion
Electrical machinery and equipment 8.64% $55.27 billion
Pharmaceutical products 5.11% $32.73 billion
Organic chemicals 4.1% $26.24 billion
Plastics and articles thereof 4.04% $25.83 billion
Iron and steel 3.97% $25.40 billion
Optical, medical, or surgical instruments 2.69% $17.22 billion
Precious stones and metals, pearls 2.66% $17.03 billion
 2.4. Geographical direction of trade:
Exports (2023): Italy’s largest single market for exports was Germany with a share
of 12.3% in overall exports. America came next with 10.39%, then France at
9.98%. The facts above identify a robust business nexus within Europe as well as tran
satlanticity.

Imports (2023): Germany led again as the biggest source of Italy’s imports with a
share of 15.2%. China came in second at 8.04%, followed by France at 7.86%. These
figures reflect Italy’s reliance on EU countries and major world suppliers of raw
materials and manufactured products.

2.5. Additional graphs:

 2.6. Direction (main trade partners):
European Union: Italy’s major trading partners are other countries within the EU.
This is indicative of the EU’s customs union, which makes trade flows between
member states easier.
Non-EU partners: the US and China are also principal trading partners. The
relationship with China has been rising sharply, notably in goods like electronics and
machinery.

3. Analysis of Italy’s foreign trade policy.

Italy’s foreign trade policy is shaped by membership of the EU at its establishment
and membership in a series of other international economic organizations such as the
WTO and OECD. The membership of Italy in the EU implies that it complies with the
EU common external tariff, as well as its customs regime, which forms part of the
country’s trade policy. However, Italy also possesses special trade policies that are
meant to aid exports, protect home industry, and sustain economic stability. In this
segment, Italy’s foreign trade policy, its motive, aims, and instruments are analyzed,
alongside its integration within global processes as well as the implications of
[Link] and Objective:
Italian foreign trade policy works to promote domestic business expansion
internationally and boost global market dominance as well as draw foreign capital into
Italian territory. One main goal target enhanced export value with greater export market
variety to develop Italy’s economic resistance abilities. The policy underlines the
requirement for Italian businesses to join international value chains to boost their
market performance because of present-day market disruptions from COVID-19 and
international conflicts. Italy focuses on sustainable growth through sectoral promotion
alongside digitalization and innovation which provides global business access to
market information and international business opportunities.
a) Instruments:
Italy establishes a complete system of institutional tools and specialized support
programs for international trade advancement. ITA stands as a leading agency in Italian
export promotion activities by supporting exporters while facilitating international
trade operations. ITA delivers help through market research and business consulting
and training and international growth strategy support to businesses through a
combination of services.
ITA offers international events and fairs free of charge to companies through its
role as the Italian Trade Agency which also gives businesses access to global
exhibitions and promotional campaigns and digital platforms. ITA published 3,000
market and tender reports through 2022 which served more than 12,782 clients by
delivering 35,500 services.
ITA maintains the Export Flying Desk as its specialized initiative to approach
businesses directly across Italian territories until executives met with 1,300 companies.
The Export Tutor initiative expands the support provided to 1,000 SMEs through
mentorship with structured digital support tools.
Successful export managers of future generations can enroll in the CORCE Master
Program to receive their training. International trade management finds a vital talent
pipeline through this program that places 91% of its participants because of its success
rate. The agency leads multiple initiatives for export operations digitalization while it
protects intellectual property rights of businesses and guides them through international
fair-trade requirements.
Italy prioritizes expanding its exports through two main strategies which focus on
business development across EU territories as well as emerging markets like the United
States in combination with Turkey and the countries of the Middle East. The policy
aims to lower exports to traditional markets as well as seize untapped potential in
vibrant international markets. The 2022 Italian Budget Law dedicated €168.7 million
for reinforcing trade promotion activities. The resources help establish communication
tactics while advancing digitalization efforts and facilitate participation in trade shows
and work to attract direct foreign investment into the country. The integrated set of
economic policies creates a toolkit which makes Italy more competitive in global trade
and boosts sustainable national development.
b) Outcomes and results:
Organized endeavors between ITA and the government administration have
produced concrete achievements. ITA-supported companies saw a 22% increase in
exports while non-supported companies only gained 4.75% more during the period
from 2020 through 2022. The increases in export contributions to Italian GDP slowed
down in the period from 2019 to 2022 due to external forces affecting supply chains
and varying commodity prices. The supply portfolio of Italy extends into new sectors
of electronics and chemicals and production while Food and Fashion and Machinery
industries track varying success rates. The country focuses on digital trade policies
which intend to decrease digital service restrictions because these sectors experience
less barriers compared to professional services or transport thereby boosting digital
economy competitiveness. World markets experience external obstacles that stem from
escalating geopolitical disputes together with increased energy pricing and active
protectionism policies which shape global trade relationships. The focus on innovation
alongside digital transformation and market diversification stands as Italy’s primary
directing force in its trade policy strategy.
c) Integration in International Organizations
Italy dedicates itself to several international organizations that promote global open
trade together with investment. The country participates actively in the World Trade
Organization along with the European Union and other multilateral establishments to
synchronize its trade approaches with universal standards and international
agreements. Italy prioritizes WTO regulations together with trade negotiations and EU
cooperation mechanisms to advance free trade principles. The country works together
with financial institutions such as the International Monetary Fund (IMF) and the
World Bank to ensure its economic plans support worldwide development initiatives
and trade simplification. As a result Italy maintains its dedication to multilateral
institutions where it advocates for free trade and minimization of trade restrictions and
support for sustainable development.
d) Analysis of Effectiveness as well as Policy Results
The effectiveness of Italy’s foreign trade policy can be observed in some positive
outcomes indicated in the report. For example, in 2020–2022, Italian companies that
used facilitation services such as promotion, support, and training registered high
growth in export performance. A study carried out in collaboration with ISTAT reveals
that firms that have benefited from ITA services experienced a 22.09% increase in
exports compared to a control sample, with a difference of 4.75 percentage points. In
addition, Italy’s export of goods increased considerably in recent years — amounting
to €625 billion in 2022, with geographically diversified growth including the US
(+32%), Turkey (+40.9%), and the Middle East (+28.9%). The policy indeed enabled
Italy to gain the ability to maintain its market share despite external shocks, including
energy price rises and global uncertainties. Yet there remain challenges in
diversification, digitalization, and in successfully targeting emerging markets. One can
also observe a visible contraction of Italy’s market share in the world in certain sectors,
partially caused by exogenous commodity effects and unstable global demand.
e) Recommendations for Improvement
Further improvements to Italy’s foreign trade policy are necessary in order to
further improve it. Greater focus on digital innovation and online commerce platforms
may broaden the scope of export, especially for the Small and Medium Enterprises
(SMEs) that constitute much of Italian export. The improved digital support facilities
and accessibility of online markets could lower the entry costs. Secondly, Italy needs
to step up engagement with the emerging markets aside from the conventional ones,
diversifying export markets and supply chains to prevent dependence on some regions.
Third, the country needs to intensify support for green and sustainable exports as
per global environment commitments — incentivizing sustainability-compliant
industries and building green technologies. Fourth, strengthening coalitions across
global organizations to set more trade-supportive policies and reducing non-tariff
barriers may open up new channels. Finally, monitoring and feedback arrangements
must be put in place to monitor policy impacts and fine-tune interventions based on
sectoral realities and market developments.
Overall, Italian trade policy is characterized by strong institutional support and
measurable positive results. However, digital revolutions, diversification of markets,
sustainability, and rigorous policy scrutiny might continue and accelerate Italy’s
globalization.
4. Conclusions and recommendations.
4.1. Conclusions:
Italy shows significant flexibility together with robustness in its international
trading activities despite current worldwide obstacles from the COVID-19 pandemic
and geopolitical tensions and uncertainties across the economy. The Italian Trade
Agency (ITA) stands as a primary cause of business resilience by delivering its
extensive range of trade promotion services and knowledge-sharing programs and
advisories. Measurements reveal that businesses supported by the ITA achieved export
growth of 22% higher than unsupported entities mainly because of their focused
intervention programs.
Globally competitive sectors within Italy including pharmaceuticals as well as
furniture and textiles and precision machinery maintain and grow their presence in
international markets. Italy maintains strong export outcomes because it participates
actively in international entities like the European Union (EU) and World Trade
Organization (WTO) which let the country develop coherent trade strategies. These
regulatory structures allow both national and international market access for Italy
through regional and multilateral cooperation.
The structural trade challenges which Italy encounters continue to exist because of
its existing trade attributes. Exponential growth in Italian exports has resulted in lower
total goods shipments as a proportion of total exports which now sit at 17.5% compared
to 18.6% ten years ago because of industry concentration and strong ties with previous
markets. Strategic moves toward trade diversification combined with innovation and
digital transformation are crucial because external market instability primarily
targeting raw materials shows the immediate need for better adaptation in Italy’s trade
framework.
Fiscal restriction adds itself to the list of existing worries. The government debt to
GDP ratio in Italy reached 135% during December 2024 indicating a minor quarterly
rise from 136.2%. While some improvement is reassuring the government faces severe
constraints because of its elevated debt burden when trying to execute necessary
economic policies or counter-cyclical measures. This fiscal rigidity continues to pose
long-term risks to Italy’s economic stability and resilience.
4.2. Recommendations:
4.2. Recommendation:
• Invest in technological infrastructures and foster e-commerce platform with a
special priority to SMEs; enabling market access to foreign countries.
• Develop export markets beyond the traditional countries to emerging economies
by bilaterally contracting and building local partnerships.
 • Promote green technologies in line with world’s environmental standards to
achieve competitiveness.
• Invest in innovations with R&D with high-value manufacturing to upgrade some
main sectors like electronics, pharmaceutical products, and machinery.
• Streamline administrative and customs procedures to minimize non-tariff’s
barriers in trading and minimize cost.
• Strengthen policies aimed at facilitating SME export capabilities, including
targeted training and support programs.
4.3. Recommendations for Policy:
Increase resources for export support: Provide additional funding for use in the ITA
and related programs targeted on export promotion and digitalization and training
efforts.
Broaden the digital and e-commerce approach: Formulate all-encompassing
digitalization strategies to enhance online trading, virtual trade, and digital
matchmaking platforms.
Boost diversification of markets: Formulate tailored market-entry strategies for
high-growth markets in Asia, Africa, and Latin America, including trade missions and
bilateral agreements.
Integrate trade policy with sustainability: Environmental objectives into trade
policies-incentives to green products and facilitate sustainable supply chains.
5. References:
1. Reports:
- EU, Institutional paper. (2023, may). Country report – Italy. Available at:
[Link]
b7eb-24b58225cd4d_en?Filename=ip214_en.pdf
- EU, Institutional paper. (2023, June). Country report – Italy. Available at:
[Link]
2. Websites and online databases:
 - International Trade Administration. (2024). Italy, country commercial guide.
Available at: [Link]
overview
- Statista. (2025, march 3rd). Italy – statistics & facts. Available at:
[Link]
- TradeImeX. (2023). Italy export statistics. Available at:
[Link]
- TradeImeX. (2023). Italy import statistics. Available at:
[Link]
- TrendEconomy. (2024). Italy | imports and exports. Available at:
[Link]
- WTO. (2019). Ease of doing business rankings. Available at:
[Link]
3. Reports:
- Italian Trade Agency. (2023). Italy in the World Economy. Available at:
[Link]
o_2023_eng.pdf
- Human Development Reports. (2024, march 14th). Italy (HDI). Available at:
[Link]
- World Economic Forum. The global competitiveness index 2017-2018 edition.
Italy. Available at: [Link]
2018/03countryprofiles/standalone2-
pagerprofiles/wef_gci_2017_2018_profile_italy.pdf
6. Appendices
Appendix A – Italy’s export, import and trade balance growth (2013–2022)
(Source: TrendEconomy, 2022) [table]
Appendix B – Quarterly average energy wholesale prices for Italy (2018-2026)
(Source: International Energy Agency) [line graph]
Appendix C – Export value of Italy in 2023 (Source: TradeImeX) [Table and pie-
chart]
 Appendix D – Import value of Italy in 2023 (Source: TradeImeX) [Table and pie-
chart]
Appendix E – Export and import value of Italy (2014-2023 (Source: Italian Trade
Agency) [bar chart]