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Impact of terrorism on Italian economy Research Paper


Background Information

Terrorism has become a global phenomenon. This has been boosted by the hard economic times that have been witnessed in the world. Various studies have been conducted, and they indicate that terrorism has had on a number of developing countries. The same can be said about the US and UK. However, there is little literature on the impact terrorism has had on other developed countries especially in Europe. Italy is a developed country in southern Europe. The country has borne the blunt of terrorism in the last two decades.

Thesis statement

This paper seeks to find out the impact that terrorism has had on the economy of Italy, a developed country.

Terrorism has had on the economy of Italy

In the 17th century, Italy had been undergoing a recession and Spain had taken advantage of its weakness to rule most of Southern Italy. Towards the end of the 17th century, Spain had declined in terms of political and military power. The Italians in Southern Italy had tried to rebel in the 17th century. However, their rebellion had often been quelled.

It was not until the beginning of the 18th century, particularly in 1713, when Spanish succession came to an end after they lost the war of Spanish Succession (1700-1713) to Austria which then took the part of Spain in dominating Southern Italy. In 1734, Spain would regain Naples from Austria. There was a lot of progress in the 18th century, and church powers were reduced.

The Italian rulers also implemented major reforms in the country. In 1796, Napoleon successfully invaded Italy. The Napoleon conquered the Naples in the year 1798. However, Napoleon proceeded to win at Marengo. On the other hand, Piedmont was taken in as part of France. The Cisalpine Republic, was given a different name, the Italian Republic. When the Napoleon was defeated, the old regime was recaptured. This happened in 1815.

Most of the old kingdoms were reinstated in the 19th century. However, Venice and Genoa remained without reinstatement. This era was marked by a high level of restlessness and discontent. Carbonari organized rebellion in Naples. In addition, there was another rebellion that was instigated by the same group in 1821. The rebellions were both unsuccessful as the Austrians were able to quell these rebellions.

One Italian nationalist, Giuseppe Mazzini was a key figure who championed for a united Italy. After leading an unsuccessful rebellion in 1831, he had to flee to France and later to Britain but continued to agitate for Italian nationalism. The year 1848 was marked by a number of revolutions in Europe (Duggan, 2006). Palermo was the first, Naples and Venice followed soon and succeeded in restoring its status as a republic.

The Pope had been prevailed upon to rescue the Italians. Nevertheless, the Pope did not intend to fight the Austrians. Naples’ King staged a coup. He was supported by the Swiss mercenaries. Later on, the Pope was forced to flee his home after a coup that made Rome a republic albeit short lived since the French soon restored the Pope.

Creating unity in Italy started in 1852. This is the time when Camillo Cavour was stated to be captured by the Prime Minister of Piedmont. Camillo joined the French and British people to fight Rusia in 1855. None of the countries wanted the unity of Italy. In 1860, a unified Italy was established. This happened when King Victor Emmanuel established a treaty with Garibaldi. The latter yielded to pressure and gave all his powers to the King.

Italy had been on the same side with Germany and Japan. The three countries had all lost terribly to the allies. The reconstruction of Italy started in 1946. This was the year when Italy had a referendum to create a republic. Later, the elections for the assembly were held and soon the first president became Luigi Einaudi in 1948. Italy stood to benefit from the Marshall Aid from the USA (Ferraresi, 1996).

The industries were soon flourishing, and the standards of living continued to increase. The growth continued until the late sixties when university students showed unrest. This was followed by labor unrest. This perhaps forms the first incidents of modern day terrorism in Italy. Failed university systems radicalized the students, and this was fuelled by the failure of the then governments to deliver to a section of the citizenry.

The centre of these radical movements was the perception that communists had given upon the ideals on which communism was founded. The citizens were losing confidence in the Italian government to preserve these ideals. Some Italian students even saw the cooperation between their communist leaders and Christian Democratic representatives as a sign of contempt for the working class.

Further, there was easing of tensions between the west and the communists in the east. This led to the adoption of hybrid business philosophies that were both borrowed from the capitalists and communists. However, the capitalist policies were highly loathed by the working class as they saw this as the cause of the disparities that were emerging in the Italian societies.

The western philosophies allowed companies to adopt the technology that was quickly replacing the workforce. These tensions between workers and their unions coupled with the disgruntled university students soon give birth to a number of leftist and terrorist organizations. The most notorious would emerge the Red Brigade. It is largely acknowledged as the most dominant and ruthless terrorist organizations the country had ever had.

The Red Brigade was formed in 1970 by a group of university students. It had emerged from the late 1960s’ protests by workers and students where they had joined workers in demonstrating against the right wing political leaders. They initially operated in the major cities within Italy such as Milan and Turin.

They would target factories which were viewed as the breeding grounds for social disparities (Willan, 1991). Its leaders advocated for the formation of a revolutionary state by use of armed struggle so as to separate the Italian government and the western elements.

As a result of the group’s hatred for the manner in which union leaders were treating workers coupled with the refusal by the government to solve salient social and economic issues, many of the early ideological targets of the group’s leadership involved attacking the establishment which included trade Unionists, politicians, and business owners.

In 1971, the group enthusiasm led to a change in the change of internal terrorism procedures from a tactical point of view to a more strategic approach. Members had previously participated in the destruction of vehicles belonging to union officials and factory equipment.

The new strategy involved broader attacks on buildings and offices. They later started engaging in human targeting when during the year 1972, the group claimed responsibility for the kidnapping of a foreman. The group was fast becoming the most stubborn terrorist group in Italy.

The organization was fast growing, and it soon established an organizational command similar to that of a military force. It had the executive committee, which was the headquarters as it was in charge of ensuring the smooth running of the organization’s activities. The field unit structure composed of sections the urban regions. This was aimed at breaking down the command unit along the regional boundaries.

The Italian government was unable to stop the organization, which boosted its growth. Notably, many believed that the Italian government was on its way to collapse. The incident finally puts this organization on the focus of the country. After the abduction of the Prime Minister, the group had sought for 55 days to dialogue with the government to release sixteen of its members. Unfortunately, the government and the Christian Democrats did not yield.

After the death of the then Prime Minister, the government engaged in a war to capture the leaders and silence the organization. The group ceased to exist in the early 80s. In the early 1980s, Italy experienced a recession. This is an aspect that affected other countries in the world too.

However, the recession did not last long as it came to an end in 1983 which continued to the end of the Cold War. In 1984, a new terrorist organization emerged. The new group did not use kidnapping though it continued with assassinations and terrorist bombs. The new red brigade movement survived even after the Cold War (Carbone, 2011). However, the group was not very active, but they continued to carry out attacks against government figures.

The movement later extended its opposition to the Italian policy on foreign relations. In this case, there was a believe that the government of Italy was being manipulated by the western powers. After the 9/11 terror attacks, the group commended the attackers, an act that would increase the focus the Americans had on the group. BR/Pcc, in 1999, attacked and some people in the group slew an officer who worked in the ministry of labor.

The Institute for International Affairs in Rome was bombed by the BR/Pcc in the year 2001. Fortunately, there were no deaths reported in that bomb attack. With the rise and growth of the terror group reminiscent the earlier Red Army Brigade, the Italian government embarked on an exercise to eliminate the group. The new strategies used by the government included extensive use of the media, and an increase in the source payments.

This new tact enabled the government to separate the extremists from the general public and for the police authorities to infiltrate the terror group easily. The police could identify members of the terror group, map the networks, and then establish measures to prevent future attacks.

This was by arresting all known members and sympathizers of the group. These efforts began to pay as soon as the government arrested various members of the group. In addition, other individuals who were in the former movement and had been implicated in the assassination of Prime Minister Aldo Moro were arrested too. These groups rose to the top of the terrorists’ food chain in Italy.

From sabotaging economic activities and causing political anxiety, these groups continued to be a hindrance to the growth of the Italian economy. The fact that these terror groups targeted factories and offices essentially mean that any success in their activities meant there would be a breakdown in the economic growth of the economy.

However, even as the country was able to finish these terror groups, a new form of terror had emerged. With the increase of these activities, the economy has suffered immensely.

Firstly, terrorism has an effect on GDP per capita growth. This is especially the case where the rate of terrorism is great. It also means that the capital formation to GDP is affected by a rise in the rate of terror activities. Terrorism affects the performance of an economy. It has been found that terror activities will most likely happen in a democratic country that enjoys high income.

Italy is such a country, and this explains the rise in terror activities from international terrorists. Countries with developed institutions will even suffer severe consequences from a terror attack. Political instability is also a huge negative in the economic situation within a country. Terror attacks will likely lead to political instability. Take the example of Italy after the assassination of the then Prime Minister.

The incident caused instability in the country’s political arena and economic growth stopped as investors did not know what to expect in the future. It is important to note that modern day Italian economy is very much reliant on tourism, education, and banking. For the tourism industry, terror completely eclipses any tourism activities in a country. Further to the economic misfortunes that bedevil, Italy, the country joined the European Union in 1999.

That decision seems to have been disastrous as that has led to unimaginable levels of unemployment (Bindi, Scuola superiore Della pubblica amministrazione (Italy), & Brookings Institution 2011). The country’s northern region remains very industrialized while the south drags on with poverty. Italy has a current population of 61 million people.


Summarize/Review key points

As Italy faces the Euro crisis, most analysts are skeptical about what the future portends for the country. The Euro crisis is one of several other crises that are likely to face Italy if the companies in Italy refuse to act together. As discussed earlier, Italy faces a major problem in that the south and the northern regions continue to operate in very different economic environments.

While the north has innovative and robust companies that continue to grow and employ more Italians, the south has smaller government and family companies which operate in a domestic market that is not competitive. Production in this region continues to go down over the years. A balance of the two economies essentially means Italy is undergoing no growth as it moves into the future. As such, Italy’s future is bleak.

Concluding thought

Compared to Germany, the Italian economy has fallen behind by thirty percent. The industrial production in Italy continues to go down- 25 per cent since the start of the 2008 recession. However, given the change in the political leadership it remains to be seen what the future of Italy is going to be. Therefore, the leaders should improve all the sectors of the country.


Bindi, F. M., Scuola superiore della pubblica amministrazione (Italy), & Brookings Institution. (2011). Italy and the European Union. Rome: Scuola Superiore della Pubblica Amministrazione (SSPA).

Carbone, M. (2011). Italy in the post-Cold War order: Adaptation, bipartisanship, visibility. Lanham, Md: Lexington Books.

Duggan, C. (2006). A concise history of Italy. Cambridge [England: Cambridge University Press.

Ferraresi, F. (1996). Threats to democracy: The radical right in Italy after the war. Princeton, N.J: Princeton University Press.

Willan, P. (1991). Puppetmasters: The political use of terrorism in Italy. San Jose: Authors Choice Press.

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IvyPanda. (2018, December 17). Impact of terrorism on Italian economy. Retrieved from https://ivypanda.com/essays/impact-of-terrorism-on-italian-economy/

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"Impact of terrorism on Italian economy." IvyPanda, 17 Dec. 2018, ivypanda.com/essays/impact-of-terrorism-on-italian-economy/.

1. IvyPanda. "Impact of terrorism on Italian economy." December 17, 2018. https://ivypanda.com/essays/impact-of-terrorism-on-italian-economy/.


IvyPanda. "Impact of terrorism on Italian economy." December 17, 2018. https://ivypanda.com/essays/impact-of-terrorism-on-italian-economy/.


IvyPanda. 2018. "Impact of terrorism on Italian economy." December 17, 2018. https://ivypanda.com/essays/impact-of-terrorism-on-italian-economy/.


IvyPanda. (2018) 'Impact of terrorism on Italian economy'. 17 December.

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