of italian consumer and producer households is high by international standards and is associated with low debt. the ratio of households ’ financial debt to disposable income is 65 per cent in italy, above 80 per cent in france and germany, and nearly 100 per cent in the euro area. the vulnerability of the 2 per cent of italian households that have to sustain debt service of more than 30 per cent of income depends strictly on cyclical developments and the state of the labour market, and it has been attenuated by programmes of support for households in difficulty, such as the debt moratorium agreed on by the italian banking association and consumer organizations and recently extended to january 2013. the financial debt of italian firms amounts to about 80 per cent of gdp, some 10 percentage points more than in germany but over 20 points less than in france, almost 30 points less than in the uk and over 50 less than in spain. however, corporate balance sheets are suffering from the impact of two recessions within the span of just four years and the consequent decline in profitability to a twenty - year low. despite low interest rates, financial expense now absorbs over one fifth of internally - generated resources. in the course of the year some faint signs of improvement have emerged. the lengthening of payment terms between businesses has ceased, and large corporations have resumed issuing bonds. financial analysts ’ forecasts and the most recent business surveys point to an attenuation of the pessimism over the outlook for economic activity, especially exports. in very difficult times the italian financial system has continued to function as a fundamental infrastructure for the economy. in the early part of the crisis the italian system was less severely affected than those of other countries, having practically negligible recourse to government support, far less than other banking systems. the latest survey by the european commission found that as of last june public capital injections into italian banks amounted to 0. 2 per cent of gdp, against 5. 2 per cent in the netherlands, 4. 3 per cent in belgium and 1. 8 per cent in germany. here, in contrast with other countries, the banks suffered from, did not cause, the deterioration in the public finances. the sovereign debt crisis is still limiting their access to wholesale funding. the bank of italy ’ s controls and supervisory practices, banks ’ low exposure to structured finance products, and the absence of a real estate bubble are what underlie the stability of the italian banking system. these factors explain the lesser

mario draghi : education and economic growth lectio magistralis by mr mario draghi, governor of the bank of italy, at the inauguration of the 100th academic year, university of rome “ la sapienza ”, economic faculty, rome, 9 november 2006. * 1. * * education and development italy set out on a path of rapid development after the second world war and kept on it for more than a quarter - century. a substantial part of the country ’ s disadvantage with respect to those with higher levels of economic welfare was made good. although it was marked by sometimes acute social tensions and distributive conflicts, growth benefited from several domestic and external factors that made for extremely large productivity gains. increasing resources, which had been largely underutilized in the agricultural sector, were employed in the sectors with higher output per worker, completing the transition to an industrial economy. this unprecedented rapid and sustained growth was accompanied by a progressive rise in the educational level of the population that fitted nicely with the state of technological knowledge. since the 1990s the inrush of the emerging economies on the international markets and the advent of the new information and communications technologies, biotechnologies and thin material technologies have radically altered the characteristics of global economic development. they have created new hierarchies, revolutionized production processes and, especially in the advanced countries, thoroughly modified the characteristics of the labour input demanded by firms. the ample strand of economic literature that investigates the connection between education and development has gained new vigour. broadly speaking, the level of education carries decisive weight in explaining processes of economic growth from two fundamental angles. one concerns the improvement of knowledge applied to production : human capital formation fuels efficiency in production and drives up the remuneration of labour and the other factors of production. this engine of growth becomes still more important in phases characterized by rapid technical progress. in the 1960s edmund phelps observed that the acquisition of advanced knowledge was an essential condition for innovation and for adapting to new technologies. the endowment of human capital assumes a crucial value that transcends those who benefit from it in the first instance : it promotes the generation and diffusion of new ideas that impart impetus to technical progress ; it improves earnings prospects and, closing the virtuous circle, increases the incentive for further investment in human capital. as a primary source of accumulation of this type of capital, the educational system produces major externalities that help raise the growth prospects of the entire economy. this is one of the