Although copious literature exists on French, German, and even Austrian industrialization, academic literature on Italy is sorely lacking, especially with regards the period prior to unification. This does not mean that examining the impact of pre-unification Italian economic policy is impossible, only that it is difficult.

First, a bit of narrative. Any study of modern Italian history could conceivably start at the fall of the Roman Empire. The rich and tumultuous history of the Kingdom of Italy as ruled the Ostrogoths, Lombards, and Carolingians, as well as the subsequent emergence of new polities centered around urban centers, were both cause and consequence of important determinants of Italy’s social and economic development. However, it would be the French Emperor Napoleon, through his conquest of the ten 18th century successors of the medieval Italian city-states, to lay the definitive foundation for what would become modern Italy.

Although the enthusiasm with which different regions of Italy embraced the Napoleonic reforms differed (French reforms were popular with both the urban and rural populace in Lombardy and Piedmont, but French rule in the south faced stiff popular revolts as well as opposition by the powerful clergy) the Italian states reinstated after Napoleon’s fall can be said to have emerged with a new lease on life, with more or less equal opportunity to shape their destiny. The same can be said for much of Europe: Between 1820 and 1850, French GDP pro capita (measured in 1990 US dollars) grew from 1,135 to 1,597. In the same period, German GDP pro capita grew from 1,077 to 1,428 and growth would accelerate to rival the United Kingdom after unification. The United Kingdom itself is estimated to have grown from an already high 2,074 to an astounding 2,774 (All GDP estimates taken from the 2013 update of the Maddison Project by Jutta Bolt and Jan Luiten van Zanden: "The First Update to the Maddison Project: Re-Estimating growth before 1820").

However, the new industrial era the Italian States would find themselves left behind. Even limiting estimates to the urbanized and agriculturally productive north, Italian GDP pro capita between 1820 and 1850 fell from 1,511 to 1,481 Why didn’t Italy achieve the same economic growth levels as the rest of Europe? The size of the Italian states is certainly a factor, but cannot explain the whole story: Italy started off more developed than France and Germany, and the largest Italian states were comparable in size to the Netherlands, the second-most economically developed region in Europe (Dutch GDP pro capital grew from 1,874 to 2,355 between 1820 and 1850). Rather, in keeping with modern economic history theory, institutional activity seems to be the most decisive factor in economic development.

In Papal States, in spite of the initial retention of the best features of Napoleon’s fiscal and administrative apparatus, by the 1820’s had regressed by reinstating old feudal and ecclesiastical rights and exemptions. Coupled with the dismantling the Napoleonic police and bureaucratic apparatus, the result was administrative chaos and breakdown of law and order. By the 1830’s some regions were in a state of endemic revolt. The Emilia-Romagna region did see some important landowners set up agricultural cooperatives to share and encouraged agricultural development techniques, however this represented the exception rather than the rule.

The Grand Duchy of Tuscany was one of the few states whose precedent for innovative government predated Napoleon. Following the death of the heirless Grand Duke Gian Gastone de’ Medici, foreign intervention had placed Maria Theresa of Austria’s youngest son Leopold on the throne, who had energetically embraced policies of liberal modernization. However, restoration-era economic policy was sorely misguided. A notable example is the 1816 ban on steel imports in order to safeguard the mining activity on the island of Elba and the steelworks in Piombino, of which the only result was complacency by domestic producers as small internal demand yielded no incentive for modernization. Although there certainly are anecdotes to recount about the individual initiative of some entrepreneurs, especially in agriculture, the institutional willingness to capitalize on these personal initiatives was wholeheartedly absent.

The quaint but minute duchies of Parma, Modena, and Lucca were so small that industrialization was not only impossible; the immediate aftermath of the end of the Napoleonic wars was characterized by overproduction of agricultural goods as well as commodities, causing a decrease in prices rendering increasing productivity via industrialization pointless. Further, in the post-Napolenic restoration the small Italian monarchs were painfully aware of their precariousness, and opposed to reform or innovation of any kind. Plus, the guarantee of intervention by the new hegemon, the Austrian Empire, in the case of popular revolt led rulers to make little or no effort to improve the life of their subjects.

This is curiously contrastable to direct Austrian rule in the Kingdom of Lombardy-Venetia. The bourgeoisie in the city of Bologna, for example, even expressed a preference for Austrian rule over returning to the Papal States, while the aristocracy of the city of Venice was notoriously passive, primarily because their city was awarded the shared status of capital along with Milan, with all the pomp and circumstance that the position warranted. Indeed, Lombardy-Venetia was the most stable part of the Italian Peninsula in the early restoration. It is important to note that discontent did grow as key appointees in the government were not only selected directly by the Emperor, but were also given little leeway with regards to the directives set by their superiors in Vienna. This stood stark contrast with the pre-Napoleonic Austro-Lombard government primarily run by the Milanese aristocracy. The result was an unusual alignment of interests between the nobility and the middle class, the latter having been disappointed in the loss of the opportunity and equality that Napoleon’s rule had afforded. However, although slower and less efficient than its Napoleonic predecessor, the Austrian administration was mostly unaffected by corruption and legitimately interested in keeping the local population content in the interest of preserving the empire. The economic development of the region, the highest in Italy, led the imperial administration to consider it a cash cow, but in spite of this conscription and taxation were less burdensome than they had been under Napoleon. Indeed, the Austrian Empire’s policy emulating British industrialization, a necessity for a continental great power, led to the institution of empire-wide protective tariffs fostering internal development. In the Lombard-Venetian Kingdom, awarding government contracts in sectors like transport and arms also fostered economic growth. Although low trade barriers within the realms of the empire meant that some sectors, notably ironworking, faced stiff competition from the resource-rich Austrian region of Carinthia, sectors where the Lombardo-Venetians held a comparative advantage, like textiles flourished. However, this economic policy cannot be studied isolated from the wider Austrian Empire: the Kingdom of Lombardy-Venetia was not an Italian state.

In contrast to his successors, the restored king of Sardinia-Piedmont Victor Emmanuel was initially one of the more reactionary rulers in restoration-era Italy. However, tensions between the monarchy and army officers as well as government bureaucrats who had benefitted from the career opportunities present in Napoleon’s large meritocratic military and bureaucratic apparatus led to an insurrection in 1821, which was only placated with Victor Emmanuel’s abdication in favor of his brother, Charles Felix. Less repressive, but nonetheless unsympathetic towards the liberal Turinese bourgeoisie, Charles Felix delegated most matters of government to his ministers and governed from his palaces on Ligurian coast. Charles Felix and his ministers adopted an economic policy was somewhat indifferent with regards to industrialization. Thus, now that the ample consumption needs of Napoleon’s Grand Armée had been replaced by the more modest needs ot of the Piedmontese army, industry regressed to a series of decentralized small workshops, altogether lacking any sort of mechanization. Further, internal demand was too small to justify economies of scale, while low tariffs meant that marketplaces were soon saturated with cheaper Lombard imports. Although there certainly were some attempts by Italian and foreign entrepreneurs to introduce modern machinery, efforts remained small: in 1823, only three of the thirty-one factories in Biella are reported to use any sort of modern machinery. However, military contracts awarded to Genoese shipbuilders did create a small uptick in modern naval construction. Capital investment through investment banking, although present, remained small. Long-term investments were often limited to the shareholder’s own capital, and activities were mostly limited to depository services and short-term loans.

The situation in Naples was no less complicated: King Ferdinand oscillated between retaining the efficient Napoleonic institutions, supported by the army and bourgeoisie, and appeasing the reactionary nobility anxious to monopolize high offices and regain ancient privileges. This resulted in the alienation of both parties, leading to revolt in 1820 which was only repressed due disunity between revolters. Preserving the status quo would thereafter become the order of the day.

Below follows a slightly more in-depth examination of industrialization policies undertaken by the Piedmontese and Neapolitan governments.