When comparing the economic structure of the EU-15, Italy turns out to belong to the group of countries which are signiﬁ cant due to the very small size of their companies (Table 2.1). No other country records a higher percentage of employment in the area of micro ﬁ rms, while the share of all the other size categories in the total number of companies and employment is below the European average. The economic preponderance of micro ﬁ rms has its counterpart in the fact that large ﬁ rms account for a very low proportion of employment. Likewise, the segment of the very large companies is comparatively small.1 Altogether, 25 Italian ﬁ rms were listed among Europe’s 500 largest companies in 2003. Many of the very large companies (e.g. Fiat, Pirelli) are controlled by a few families through holding companies and cross-shareholdings with industrial and ﬁ nancial allies. Before their privatization from the early 1990s onwards, the state-owned companies formed a constituent part of the group of large companies. With its presence in such branches as electricity utility, gas and oil, industry, telecommunications, ﬁ nance and insurance, this public sector of the economy was larger than in the other major OECD countries (Goldstein 2003). Another property of Italy’s economic structure relates to the differences across regions, dividing the country into three main areas: the north-west as the traditional core of large-scale manufacturing; the notoriously backward south; and the northeastern and central parts, dominated by industrial districts of mainly familyowned SMEs which specialize in the ﬂ exible production of high-quality consumer goods (Piore and Sabel 1984; Pike et al. 1990; Onida 2004a; Fortis 2004). SMEs in general and the industrial districts in particular were by far most dynamic during the last decade. For instance, SMEs increased employment at an average rate of about 3.4 per cent per year between 1982 and 2001, while in the same period large ﬁ rms reduced employment at an average yearly rate of 3.1 per cent (Conti and Varetto 2004).