Italian History from 1870-1913: Why did Italy have such a hard time becoming a "Great Power" like Germany?

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December 2012 BBC History magazine contains an article that analyzes popular support for Benito Mussolini. In passing the article mentions a widespread perception on the part of Italians that liberal government had utterly failed. Fascisim saved them from the obscurity and humiliation to which liberalism would have doomed them. I suspect that the conditions that led to the perception that liberal democracy had failed also contributed to Italy's inability to project power on the world stage.

I don't have sufficient scholarship to make the case, but I suspect that the first generation after unification set the stage for divergence between Germany and Italy. Germany under Bismarck developed a vigorous central state that opposed democracy. Italy pursued a more liberal democratic course:

The government of the new kingdom took place in a framework of parliamentary constitutional monarchy dominated by liberal forces. In 1913, male universal suffrage was adopted. As Northern Italy quickly industrialized, the South and rural areas of North remained underdeveloped and overpopulated, forcing millions of people to migrate abroad, while the Italian Socialist Party constantly increased in strength, challenging the traditional liberal and conservative establishment. Wikipedia

If I remember correctly, Niall Ferguson's book Civilization also contains a discussion of the difference in development between Northern and Southern Europe that may be relevant to your question.

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Italy is also more separated by geographical features than Germany is. I also am under the impression that the linguistic differences among various groups that became Italy were greater than those in Germany.

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Italy had a much smaller population and far less resources (coal, iron ore etc), which meant Italy would have to pay for and import many of the materials required to run their industrial economy. It was much less developed industrially and educationally, and much of southern Italy was pretty backward by European standards.

That Italy, with a much smaller population, far smaller resources, much less education, much less developed industrial base and with large backward regions failed to become a major world power is hardly a surprise.

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Compared to the Great Powers, Italy had two important disadvantages: 1) she started later and 2) she was smaller. No Great Power had both those disadvantages.

Italy had about the same land area and population as the United Kingdom. But the UK was the "home" of the Industrial Revolution, and had a "head start" of half, or even three quarters of a century. Enough said.

Italy was nowhere near the size of either the United States or Russia in either land area or population. More to the point, Italy was smaller in land area and population than France, Germany, or Austria Hungary. The latter two countries started their industrialization shortly before Italy, but France several decades earlier.

Germany and Austria Hungary, who started their industrialization closest to Italy, had the advantage of a common language and a contiguous land mass that allowed for cooperation. Thus, the Austrian and Czech parts of that empire had an industrialization level that was comparable to (and tied to) Germany's while the Hungarian and Slavic parts of the Empire were actually worse off than Italy. But if you take the weighted "average" of rich Austria and poor Slavic lands, Austria-Hungary was better off "on average." The other nation that Italy was comparable to in the early 20th century was Japan, which had a slightly larger population and land area, and started industrializing at about the same time.

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