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Macro Environmental Analysis Of Italy

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Published: Mon, 5 Dec 2016

Political aspects

The Italian politics and government are a fusion of democracy and republic, with people’s representatives in the parliament ruling the country. Italy’s Chief of state is President Giorgio Napolitano. Premier Minister Silvio Berlusconi is the head of the state in Italy. He administrates a multi-party system for successful running of the political activities. Italy was a founding member of the European Union (EU). Today Italy is a member of many significant international organsations like MIF, UN, G8, NATO, OECD, GATT/WTO or the OSCE. Italy has been a member of WTO since 1995 and it is also important to say that all EU member states are WTO members. So Italy’s trade policy is almost the same as that of other members of the European Union. This fact makes clear that WTO trading partners have less problems in trading because of the removal of all barriers to international trade in goods and services.

Demographical aspects

Italy has developed into an industrial country, which is divided in two parts. The first part is the industrial developed north, which is dominated by private companies. The second part is the agricultural south. The unemployment in the south is pretty high and it is clearly to see that this part of Italy is less developed. The Gross Domestic Product (GDP) is one of the most important economical indicators. For Italy the GDP is $1.823 trillion in 2008. But one has to keep in mind that this number does not refer to the population. If one wants to take in this aspects one should look at the GDP (PPP). For Italy this is $31,300 this means how much the average person living in Italy hast to spend. As an investor this number might become very handy because one can see how much money a country has to consume in luxury goods. Instead of being able to afford ones basic needs. The real GDP growth rate in Italy achieved an amount of -1% in 2008. The main industries in Italy are tourism, machinery, iron and steel, chemicals, food processing, textiles, motor vehicles, clothing, footwear, ceramics. The main resources of Italy are mined products like coal, zinc, natural gas and a crude oil reserves.

Macro environmental analysis of India

Political aspects

India is a democracy. The people of India elect their governments at all levels (Union, State and local) by a system of universal adult franchise; popularly known as ‘One man one vote’ .

The central government exercises its broad administrative powers in the name of the President, whose duties are largely ceremonial.

The constitution designates the governance of India under two branches namely the executive branch and Real national executive power is centered in the Council of Ministers, led by the Prime Minister of India.

India suffered political instability for a few years due to the failure of any party to win an absolute majority in Parliament. However, political stability did not change India’s economic course though it delayed certain decisions relating to the economy.

Membership of international organizations:

ADB, AfDB (nonregional member), ARF, ASEAN (dialogue partner), BIMSTEC, BIS, C, CERN (observer), CP, EAS, FAO, G-15, G-20, G-24, G-77, IFAD, IMF, IMO, Interpol, IOC, LAS (observer), NAM, OAS (observer), PIF (partner), SCO (observer), UN, UNESCO, UNWTO, WFTU, WHO, WMO, WTO

International Relations:

International relations ships between India and a lot of the countries in our world have been relatively good.

Trade Policy:

India is a member of the World Trade Organization and its predecessor the General Agreement on Tariffs and Trade (GATT). While participating in its council meetings, India has been crucial in voicing the concerns of the developing world. For instance, India has continued its opposition to the inclusion of such matters as labour and environment issues and other non-tariff barriers into the WTO policies.

Despite reducing import restrictions several times in the 2000,India was evaluated by the World Trade Organization in 2008 as more restrictive than similar developing economies, such as Brazil, China, and Russia. The WTO also identified electricity shortages and inadequate transportation infrastructure as significant constraints on trade. Its restrictiveness has been cited as a factor which has isolated it from the global financial crisis of 2008-2009 more than other countries, even though it has reduced ongoing economic growth.

Demographical aspects

India has a total population of 1,17 billion people in 2009 and growth rate of 1.5 % in 2009 with an average age of 25 years.

India has a lot of young people and with a Birth rate of 21.76 births/1,000 it has the highest birth rate of the three countries. Little over a quarter of the population in India lives in city’s with 29% this is relatively low. However the degree of urbanization in india is 2,4% wich is also the highest urbanization rate of our three countries.

The labour force in india is the second largest in the world with 523.5 million people in 2008 it is also the biggest of our three countries. There is a lot of difference in education levels in india.

There is a strong line between really high education and people that are not or poorly educated.

Comparison between Italy and India

Political aspects

India is a democracy, Italy is a fusion of democracy and republic.

This means that both countries are free and people who live there make the decisions.

The people of India elect their government by a vote, which have the function of a President.

Italy’s leader is President Giorgio Napolitano and Premier Minister Silvio Berlusconi.

India is one of the major producing countries of coal. It also has significant deposits of iron, manganese, mica, bauxite, titanium, bromine, natural gas, diamonds, petroleum and limestone.

The natural resources for Italy are mainly mined products like coal, zinc, natural gas and a crude oil reserves. India is not a member of the EU like Italy, which was a founding member of the EU, nevertheless international relationships between India and a lot of other countries have been relatively good.

Demographical aspects

India has a population of 1.166.079.217 habitants. In comparison Italy’s population is 58.000.000.

Apart from the major difference in population, the demographical aspects for India and Italy are unequal. India has a population growth rate of 1.548% whereas Italy has a growth rate of -0.047%.

The population in India is quite young in comparison with the population of Italy.

In year 2005 India’s urbanization had an annual rate of 2.4%, Italy only 0.4%.

These facts show us that there are a lot of differences between the two countries.

Economical aspects

As an economical indicator, often it is reffered to the Gross Domestic Product (GDP).

For India the GPD is $3.297 trillion with an annual growth of 6.7%. In Italy this amount is $1.823 trillion with a clear smaller growth rate of -5.1% per year. Both countries have in common that most of the GDP is made in the service sector. In Italy the service sector makes up 71% of the total GDP while in India it is 53.4%. Italy’s major exports are precision machinery, motor vehicles (utilitaries, luxury vehicles, motorcycles, scooters), chemicals and electric goods, but the country’s more famous exports are in the fields of food and clothing. India’s major export commodities included engineering goods, petroleum products, chemicals and pharmaceuticals, gems and jewellery, textiles and garments, agricultural products, iron ore and other minerals.

Italy and India in comparison to The Netherlands

Political aspects

In the Netherlands the form of government is not similar to the ones from India or Italy. It is a parliamentary representative democratic constitutional monarchy state. The administration constitutionally consists of the Queen and the Cabinet Ministers.

By the early eighties the Dutch welfare state had become the most extensive social security system

In the world but the welfare state came into crisis when spending rose due to dramatic high unemployment rates and poor economic growth. The centre-right and centre-left coalitions wanted the Dutch welfare state to create new jobs and to bring the budget deficit under control. So that they reduced social benefits, lowered the taxes and deregulated the businesses. With these solutions the economy was recovered and the budget deficit and unemployment were reduced considerably.

The Netherlands has a total of 11 Parties and the major political parties are CDA (Christian Democratic Appeal), PvdA (Labour Party), SP (Socialist Party), and VVD (People’s Party for Freedom and Democracy). The Dutch Parliament consists of a Second Chamber and a First

Chamber. Both chambers of parliament discuss proposed legislation and review of the actions of the cabinet. The CDA has the most seats in the Chambers.

Membership of international organizations:

The Netherlands is an active and responsible participant in the United Nations system as well as other multilateral organizations such as the Organization for Security and Cooperation in Europe, Organisation for Economic Co-operation and Development (OECD), World Trade Organization (WTO), and International Monetary Fund.

Trade Policy:

In 2007 the exports of the Netherlands were $457.2 billion. The main export commodities are machinery and equipment, fuels, chemicals and foodstuffs. The Netherlands is a strong proponent of free trade and is a member of international forums like WTO and OECD. The share of foreign trade in its GDP is more than 125%. The Netherlands’ top three export partners are Germany, Belgium and France.

Demographical aspects

With 16.5 Million inhabitants The Netherlands have a high population density of almost 400 people per square kilometres. The birth rate exceeds the death rate with 10.9/1000 people against 8.68 death/1000 population and a very high net immigration rate with 2.72 migrants/1000 people also contributes to this. Therefore the Dutch population increased by 50% since the 1960’s. Lately the population boom is slowly declining. The population is mostly divided in middle-sized cities.

Economical aspects between the different countries

Economical aspects of the Netherlands

The Netherlands has a prosperous and open economy, which depends heavily on foreign trade. Its economy is also noted for stable industrial relations, fairly low unemployment and inflation and a sizable current account surplus.

From 2004 till 2006 the GDP went from about $610 billion up to $670 billion. The GDP per capita in the Netherlands is the highest of the tree mention countries.

The country has been one of the leading European nations for attracting foreign direct investment and is one of the four largest investors in the US. The pace of job growth reached 10-year highs in 2007, but economic growth fell sharply in 2008 as fallout from the world financial crisis constricted demand and raised the specter of a recession in 2009.

Main industries:

Natural gas; Dutch industry is diversified and includes a variety of businesses that range from manufacturing, mining, and energy production to construction and chemical manufacturing.

Economical aspects of Italy

Italy has developed into an industrial country ranked by both the World Bank and the International Monetary Fund as the world’s seventh largest economy in USD exchange-rate terms and tenth largest in terms of purchasing power parity (PPP) by World Bank, IMF and the CIA World Factbook. More recently, Italy has faced sluggish economic growth and reduced international competitiveness. Italy’s economic strength is in the processing and the manufacturing of goods, primarily in small and medium-sized family-owned firms. The country has been less successful in terms of developing world class multinational corporations.

Economical aspects of India

India has had a market based system from 1991 till now. Before that the government blocked a lot of the import/ export products to protect the people. India achieved 9.6% GDP growth in 2006, 9.0% in 2007, and 6.6% in 2008 this probably due to the global economic crisis putting the country on position 28 in the world. The GDP (purchasing power parity) did however grow from $2.816 trillion in 2006 to $3.069 trillion in 2007 to $3.297 trillion in 2008 placing india on position 5 according to the cia world factbook.

Most of this (53.4% 2008) comes from the services sector in India.

Conclusion

Which country will have the best market to export goods and products to?

India is a very interesting country to trade with. The economy is on a strong growth trajectory and predictions are that it keeps growing. All India has to do is keep their market open and keep on working on improving their infrastructure and educational system, this would also improve their GDP per capita. India has also barely been affected by the economic crisis of 2008/2009

Italy on the other hand has had a real problem since the beginning of the crisis, in the EU Italy has taken one of the hardest hits on GDP (PPP) and GDP Growth rate, however, even before the start of the crisis the Italian economy had already been ‘sluggish’.

In the end, it all depends on what goods and products you are planning to export.

Italy has few natural resources because Italy has specialized on industry and building luxury goods and for all this you need materials so exporting natural resources would be best here.

In India we would export capital/consumer goods, if the economy keeps growing as predicted than that combined with the fact that the liberalization of import taxes continues also adding a population of over 1 billion people. Makes it one of the biggest potential markets in the world at this time.

Concluding that both of the countries have their advantages, the EU in Italy and the market potential of India, we prefer India to trade with.

Sources:

www.cia.gov

www.demographic-research.org

www.economist.com

www.geohive.com

www.oecd.org

www.oup.com

www.wikipedia.org

www.de.statista.com

www.economicshelp.org

www.wiki.answers.com


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