From Relief to Reconstruction to Development: Defining and Implementing Foreign Aid in Post-war Italy, 1943-1958

Abstract

This dissertation traces the emergence of a post-Second World War paradigm for conducting foreign economic assistance, which grew out of the challenges of reconstruction in Europe. It focuses on the case of Italy, tracing the parallel evolution of domestic reconstruction and development programming and international assistance geared toward the same ends. A unique combination of extensive war damage, problems of underdevelopment not commonly associated with Western Europe, and a strong tradition of domestic interest in economic development made Italy a battleground for ideas about development and a laboratory for their translation into practice. As a result, the Italian experience as an aid recipient between 1943 and the late 1950s played an important role in shaping how development was understood and practiced in that crucial period. On the other hand, foreign aid shaped the economic environment in Italy in the post-war period, contributing to its “economic miracle.”

Through analysis that synthesizes economic, intellectual, and institutional history approaches, I argue that negotiations between donors/lenders and the Italian government, and lessons drawn from Italy as a site of aid implementation, helped to establish a conception of development that stressed regional buy-in and emphasized using industrial productivity gains to raise standards of living. I show that this new paradigm was part of a broader movement to create structures that would ensure economic global stability in the face of future challenges, both foreseen and unforeseen. When foreign grants and financing (from the United Nations Relief and Rehabilitation Administration, the United States, and the World Bank) met with a decades-old Italian approach to the so-called “Southern Question,” not only did the Italian South see the trend of income and productivity divergence reversed, but for more than a decade Italy experienced growth rates unmatched by the majority of other aid recipients. Thus, Italy should be viewed as an important site in the history of development assistance, the study of which has traditionally focused on the Third World.