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Holding

Companies

for

Government

Enterprises

The Italian Experience
Philip Thomas
Recently there have been reports that, the government of India is considering the setting up of
holding companies in the. iron and steeland oil and petro-chemical industries.
In this context, it would be useful to drav attention to the pattern of holding companies set up
to control and manage government-owned undertakings in Italy since the size of the public sector in
the Italian industrial structure and the success of igovernment companies in that country are both
striking.
ONE feature of the Italian economy policy1. Thisrole for the IRI set by the
which is not widely known or appre- Fascist government has remained unciated abroad is the extent of State changed in the post-War years although
domination in the ownership and ma- naturally the goals of economic policy
nagement of industrial undertakings and have changed. In the post-War period,
financial institutions in the country. the Institute has acted as aneffective
Thus two large holding companies, the instrument for the industrial develop.
Industrial Reconstruction Institute (IRI) ment of Italy and more recently for the
and the National Petrochemical Institute economic development of Southern Italy
(ENI) own and manage between therm and for filling the gaps in the country's
hundreds of companies in the manuifac- industrial structure.
Some ideaof the, importance oI the
turing and services sectors of the economy, accounting for a substantial part IRI Group in the Italian economy may
of national production, investment and be had from the fact that it includes
employment. The extent of State owner- over 130 cornpanies in the manuifacturship in the financial sector is seen Iiot ing and services sectors, employs over
only in the dominantrole of the Insti- 3.75 lakh persons and has an annual
tuto Mobiliare Italiano (IMI), the GCov- turnover of $ 6 billion. In fact IRI and
ernment-owned term lending inistitution, ENI together accounlt for half the anbut also in other term lending, banking nual total of industrial investmenit in
and other financial institutions owned Italy.
and controlled by the Industrial ReconsIn some of thekey industries, IRI's
share of production is substantial. It
truetion Institute (IRI). Among the coinpanies controlled by IRI/ENI are also accounts for 95 per cent of Italian pig
such internationally well known ones as iron production and 60 per cent of steel
production. In ship-building, it accounts
Alitalia and Montecatini Edison.
The purpose of this article is to illus. for .80 per cent...