The Role of Fiat in the Development of the Italian Car Industry in the 1950's

Abstract

During the 1950's, Fiat, one of Italy's most important manufacturing companies, grew at enormous speed. Two factors helped the car maker achieve this impressive performance: For one, a set of import barriers virtually denied foreign producers access to the Italian market until the founding of the European Economic Community (EEC). Moreover, Fiat managed to remain at the cutting edge of car manufacturing technology, enabling it to expand production, foreign sales and profits. Combining a reliance on trade barriers with technological change as well as an aggressive export strategy, Vittorio Valletta, Fiat's post-World War II general manager, bet on serving the more dynamic foreign markets from modern plants built with the help of Marshall Plan funds. From this basis he later sold into a growing domestic market, where Fiat was without serious competition.

Real Exchange Rates, Trade, and Growth: Italy 1861-2011

“…whereg EXP n;t;j = g EXP n;t;j g EXP n;t;j and n;t;j is the residual. 45 By estimating the e¤ect of u m n;t in equation ( 30), we test whether the growth of Italy's exports of good j to country n at time t are higher with respect to Italy's average export growth of the same good in the same year because the undervaluation of the lira/euro with respect to country n's currency was larger (after controlling for other determinants of g EXP n;t;j ). Panel B of Table 6 reports the results of the estimates of equation ( 30), which con…rm the previous results: the sign and statistical signi…cance of the coe¢ cients for undervaluation is consistent across measures.…”

“…The aggressive export strategy adopted by Vittorio Valletta, FIAT general manager at that time, was feasible because pro…ts could be made in the domestic market, also thanks to the high tari¤ barriers imposed to foreign producers (seeEichengreen, 2007, pp. 112-116, andFauri, 1996).…”

Impediments to the Schumpeterian Process in the Replacement of Large Firms

“…16 Political connections, including those through some of the heirs of the founder, continued over time and included the founder's grandsons Giovanni "Gianni" Agnelli, Umberto Agnelli, and granddaughter Susanna Agnelli, who occupied positions in the Italian parliament at various time periods between the 1970s and the early 2000s. The company is well-known to have continued to benefit from regulatory barriers after World War II in the form of high tariffs and quotas that protected their competitive position against entry by foreign auto makers (Fauri (1996)). By 2018, Fiat Chrysler Automobile NV was the 7th largest firm in Italy and the 8th largest car manufacturer in the globe with a book equity capital exceeding 28 billion U.S. dollars.…”

Making automobiles in Yugoslavia: Fiat technology in the Crvena Zastava Factory, 1954–1962

“…Fiat was considered the 'best known example of an engineering firm able to renew its plants thanks to the Marshall Plan', and this company was also the prime beneficiary of American aid in Italy. 25 As a consequence, it controlled more than 80 per cent of the entire Italian motor vehicle market and in the early 1950s was exporting roughly 30 per cent of its total production. 26 Naturally, Fiat's role in leading Italy's industrialisation, mainly based on the American technology and production model, and its almost monopolistic position in the country did not go unnoticed and without sympathy in Yugoslavia.…”