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The Italian economy has changed dramatically since the end of World War II. From an agriculturally based economy, it has developed into an industrial state ranked as the world's fifth-largest industrial economy. Italy belongs to the Group of Eight (G-8) industrialized nations; it is a member of the European Union and the OECD.

From 1992 to 1997, Italy faced significant challenges as voters (disenchanted with past political paralysis, massive government debt, extensive corruption, and organized crime's considerable influence) demanded political, economic, and ethical reforms. In 1993 referendums, voters approved substantial changes, including moving from a proportional to a largely majoritarian electoral system and the abolishment of some ministries (some of which have however been reintroduced with only partly modified names).

At the beginning of World War I Italy remained neutral, since the Triple Alliance had only defensive purposes, and the war was started by Austria. However, both the central empires and the Entente tried to attract Italy on their side, and in April 1915 the Italian government agreed (London Pact) to declare war on Austria in exchange for several territories (Trento, Trieste, Istria, Dalmatia). In October 1917, the Austrians, having received German reinforcements, broke the Italian lines at Caporetto, but the Italians (helped by their allies) stopped their advance on the river Piave, not far from Venice. After another year of trench warfare, and a successful Italian offensive in autumn 1918, the exhausted Austria surrendered to the allies on November 4 1918, soon followed by Germany.

Italy has few natural resources. With much of the land unsuited for farming, it is a net food importer. There are no substantial deposits of iron, coal, or oil. Proven natural gas reserves, mainly in the Po Valley and offshore Adriatic, have grown in recent years and constitute the country's most important mineral resource. Most raw materials needed for manufacturing and more than 80% of the country's energy sources are imported. Italy's economic strength is in the processing and the manufacturing of goods, primarily in small and medium-sized family-owned firms. Its major industries are precision machinery, motor vehicles, chemicals, pharmaceuticals, electric goods, and fashion and clothing.

As Germany annexed Austria and moved against Czechoslovakia, Italy saw itself becoming a second-rate member of the Axis. The imminent birth of an Albanian royal child meanwhile threatened to give Zog a lasting dynasty. After Hitler invaded Czechoslovakia (March 15, 1939) without notifying Mussolini in advance, the Italian dictator decided to proceed with his own annexation of Albania. Italy's King Victor Emmanuel III criticized the plan to take Albania as an unnecessary risk.

The Italian Republic or Italy (Italian: Repubblica Italiana or Italia) is a southern European country, comprising a boot-shaped peninsula and two large islands in the Mediterranean Sea: Sicily and Sardinia. It shares its nothern alpine boundary with France, Switzerland, Austria and Slovenia. The independent countries of San Marino and the Vatican City are enclaves within Italian territory.

Under the postwar settlement, Italy received most of the territories promised in the 1915 agreement, except for Dalmatia, which was mostly given to the newly formed Kingdom of Yugoslavia. - because some Italian workers, inspired by the Russian revolution began taking over their factories, mills, farms and workplaces. The liberal establishment, fearing a revolution, started to endorse the small Fascist Party, led by Benito Mussolini (a former socialist turned nationalist), whose violent reaction to the strikes (by means of the "Black shirts" party militia) was often compared to the relatively moderate reactions of the government. After several years of struggle, in October 1922 the fascists attempted a coup (the "Marcia su Roma", i.e. March on Rome); the fascist forces were largely inferior, but the king ordered the army not to intervene, formed an alliance with Mussolini, and convinced the liberal party to endorse a fascist-led government. Over the next few years, Mussolini (who became known as "Duce", leader) eliminated all political parties (including the liberals) and curtailed personal liberties with the pretext of preventing revolution.

At the end of the 18th century, Italy was almost in the same political conditions as in the 16th century; the main differences were that Austria had replaced Spain as the dominant foreign power, and that the dukes of Savoy (a mountainous region between Italy and France) had become kings of Sardinia by increasing their Italian possessions, which now included Sardinia and the north-western region of Piedmont. This situation was shaken in 1796, when French armies led by Napoleon invaded Italy; even if the states they created (e.g., Cisalpine Republic) were just satellites of France, they sparked a nationalist movement. Cisalpine Republic was converted in Italian Republic in 1802, under presidency of Napoleon.

The 11th century signed the end of the darkest period in the middle ages. Trade slowly picked up, especially on the seas, where the four Italian cities of Amalfi, Pisa, Genoa and Venice became major powers. The papacy regained its authority, and started a long struggle with the empire, about both ecclesiastical and secular matter. The first episode was the Investiture controversy.

The name Italy (Italia) is an ancient name for the country and people of Central Italy, with exclusion of Etruria in the North and the Greek colonies in the South. Coins bearing the name Italy were minted by an aliance of Italic tribes (Sabines, Samnites, Umbrians and other) competing with Rome in the first century B.C. By the time of emperor Augustus approximately the present territory of Italy was included in Italia as the central unit of the Empire; Cisalpine Gaul, the Upper Po valey, for example was appended in 42 B.C. Ever since, "Italy" or "Italian" was the collective name for diverse states appearing on the penninsula and their overseas properties. Italy is one of the few modern countries bearing a name of such long tradition.

As a country, Italy offers many different faces, both culturally and geographically. The far north has many German speaking areas, popular destinations for skiing in the winter and walking during spring and summer. The Italian Lakes attract large numbers of visitors yearly, Tuscany (Toscana) and Umbria have been popular destinations for centuries, as has the Amalfi coast.

From 1861 until 1922, Italy was a constitutional monarchy with a parliament, mostly elected with restricted suffrage (in 1913, the first universal male suffrage election was held). The so called Statuto Albertino, which Carlo Alberto conceded in 1848 remained unchanged, even if the kings usually abstained from abusing their extremely large powers (for example, senators were not elected but chosen by the king). The new state faced immense problems, both because of the widespread poverty and illiteracy (especially in the south), and the deep cultural differences (for example, there existed no common language) between the various parts of Italy: there were even peasant insurrections asking for the return of former rulers.

In 1929 Mussolini signed the Lateran Pacts with the Catholic Church (with whom Italy was in conflict since the annexation of Rome in 1870), leading to the formation of the tiny independent state of Vatican City. He was initially in friendly terms with France and Britain, but the situation changed in 1935-36, when Italy invaded Ethiopia despite their opposition (Second Italo-Abyssinian War); because of this and of the ideological affinities with the Nazi party led by Hitler,

While the Allied troops slowly pushed the German resistance to the north (Rome was liberated in June 1944, Milan in April 1945) the monarchic government finally declared war on Germany, and an anti-fascist popular resistance movement grew, harassing German forces before the Anglo-American forces drove them out in April 1945.

The musical influence of Italian composers Palestrina, Monteverdi, Corelli and Vivaldi proved epochal; in the 19th century, Italian romantic opera flourished under composers Gioacchino Rossini, Giuseppe Verdi, and Giacomo Puccini. Contemporary Italian artists, writers, filmmakers, architects, composers, and designers continue to contribute significantly to Western culture.