Italy’s lack of natural resources and long history of fragmentation were its greatest obstacles on the road to industrialisation. The disparity between North and South only became acute as a result of unwise political and economic decisions in the 19th century: Naples, for instance, was still one of Europe’s leading manufacturing cities in the 18th century.

Italy’s history was not lacking in economic innovations: in the Middle Ages, Italy was Europe’s leader in paper manufacturing; quasi-industrial forms of production emerged in the textile sector early on; and the powerful naval city of Venice, whose arsenals at times employed over ten thousand workers, began standardising components – the key prerequisite for mass production – for ship construction in the 14th century. But it was the modernisation of banking, which took place as a consequence of the thriving city-states of the Renaissance, that had the greatest impact.

However, this dynamism had largely run its course by the Industrial Age. A large-scale cotton industry developed around 1840, particularly in and around Milan and in the Piedmont region. Silk working, for centuries an Italian tradition, become concentrated in the regions of the North. However, the productivity of the spinning works lagged dramatically behind that of the British industry. Later, a major industrial zone evolved when the first tentative attempts at machine tool manufacturing emerged in the Milan-Turin-Genoa triangle. Around 1850, however, Naples remained the great exception to the North-South disparity. This city was home to shipyards and iron works, machine shops and vehicle makers. As a result,, Italy’s first railway was laid from Naples to the nearby Portici industrial region in 1839.

The modest industrial upswing continued after national unification in 1861, but the new national currency, the lira, crippled the economically weaker South: exports declined, factories were forced to close. A severe agricultural crisis that broke out at the beginning of the 1880s caused the situation to worsen dramatically. While agriculture in Lombardy, Piedmont and, to an extent, in the Emilia Romagna region had been modernised, the great landowners of the Mezzogiorno still adhered to the production methods of the past. Consequently, the agricultural regions of the South were unable to compete with cheap grain imported from the USA, grain production collapsed and more and more people were forced to emigrate.

Additionally, industrial development was driven mainly by the state, as there was little enthusiasm for private investment and capital was scarce. The governments in turn bought the consent of the elite to modernization programmes by leaving the anachronistic land ownership structures in the South intact. Driven by nationalistic motivations, they channelled funding primarily toward developing heavy industry. The result was a disastrous and enduring alliance between the political and industrial elite. Stefano Breda, for instance, built the steel works in Terni, Umbria, from which the government ordered warships, and also acquired control of the large shipyards in Genoa and Livorno. The Pirelli rubber plant was founded in Milan around this time as well, and food manufacturer Círio opened its first factory, for canned goods, in Turin.

The Industrial Revolution swept the northern half of Italy between 1897 and 1913. In 1899, Giovanni Agnelli founded the Fiat works in Turin. Steel plants were built in Piombino and on Elba; the steel barons launched the powerful Ilva group in Genoa, which opened a plant near Naples in 1908. The North also benefitted from the hydroelectric potential of the Alps: the Edison Company built the largest hydroelectric plant in Europe on the Adda river near Paderno. Machine tool companies and cement works emerged, and the electrical and chemical industries also benefitted from this new energy source. Electricity was also produced geothermally starting in 1916. The Milan-Turin-Genoa triangle boomed – but no more than half of Italy was industrialized by the start of World War One.