5.1 The growth of industry did exceed that of agriculture (or so it would appear from the ISTAT data) but, because expectations were higher, its performance is considered unsatisfactory. Italy lagged behind in the adoption of modern techniques of production and organization (Castronovo 1980), especially in sectors such as steel and engineering in the nineteenth century and chemicals in the twentieth, where mass production and scale dominated (Amatori 1997). Aside from Hunecke (1977), however, who argues that industrialists voluntarily refrained from introducing new techniques for fear of the social and political consequences, most historians do not view entrepreneurs as the villains of the piece, but stress instead the formidable hurdles that they had to overcome. These included a small domestic market, competition from abroad, expensive power and shortages of key inputs such as capital and skilled labour. The success that Italy did manage to achieve late in the period has been attributed to three factors: the German-style, universal banks, industrial policy that promoted growth among capital goods industries, and the abundance of unskilled labour that sparked the development of textiles and other consumer goods.

Two distinct patterns of industrial development emerged in Italy, often referred to as the Mancunian and the oligopolistic (Sapelli 1992). The first, typical of consumer goods, featured small-scale firms in competitive industries reliant on cheap labour and labour-intensive techniques, and located for the most part in the North.