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Italy's Economic Growth Struggles to Bridge North-South Divide

A worker inspects a jar of pasta sauce in one of Paolo Ricciulli's factories - which employs around 220 people at his Althea-Delfino group, Italy's biggest manufacturer of ready-made pasta sauce, with revenues of 62 million euros and two plants in Parma a

Italy is one of the most economically divided countries in Europe. The north - with cities like Milan and Turin - accounts for a large majority of the country's GDP, while the south often is viewed by outsiders as a land of siestas and organized crime. Some analysts say Italy's south, however, amounts to a vast underdeveloped resource that could pull the country out of its economic slump.

Lasers cut the latest tire tread patterns, ready for road testing at the Pirelli factory in Milan. It is a futuristic image of Italian industry. Pirelli has just announced strong results - nine month earnings rose by nearly 50 percent compared to 2010.

CEO Marco Tronchetti Provera is proud of the company’s 140-year heritage. He said, though, the source of the profits lies outside Italy.

“We are a global company so we have the head and the heart in Italy. Then more than 90 percent of our products and of our production is in the rest of the world. Europe is slowing down, that is a fact,” said Provera.

Milan is the home of Gucci, Versace, Prada and many other famous names. Luxury Italian trade group Altagamma predicts sales growth in Asia will soar by 16.5 percent next year alone.

The glitz belies Italy’s economic crisis.

“There are too many complexities in our bureaucracy, our justice system. All this is old-fashioned, we have to change it,” said Provera.

Naples lies 700 kilometers south of Milan. GDP here in the south of Italy is just over half that of the north.

Analysts say the region has suffered from decades of underinvestment - despite the European Union’s Development Fund pumping in billions of euros.

Giampiero Gallo, economics professor at the University of Florence, said the imbalance has diverted attention.

“Somewhat the polarization between the north and the south has given the north a sort of reassurance that the fault for things not going well was lying somewhere else,” said Gallo.

Salvatore Miele runs the family business, Vincenzo Miele Transport, from Naples portside, shipping containers throughout Italy and across the world.

“Compared to the rest of Italy, bureaucracy here in the south delays everything and this is blocking growth,” he said. “The south of Italy has been ignored by politicians and the ruling elite. So we move with a slower rhythm here.”

Southern Italy has a reputation for organized crime. Miele said he’s lucky not to have been affected.

“If we give young people a future, criminality will decrease… Southern Italy’s potential is huge, we have the great resource of many young people. We need to help them get into work so they can build a future,” said Miele.

Naples and Milan: two cities and two sides of the Italian economy. Analysts say that if Italy is to return to growth and navigate out of the debt crisis, the gulf between the north and the south must be resolved.