1. CIA II ASSIGNMENT- ECONOMIC DEVELOPMENT: POLICY AND APLLICATIONS-II
Department of Economics
COURSE CODE: A.ECO.6.04
ANALYSIS OF DEVELOPMENT ISSUES- Italian Neo-realist Cinema
(The Bicycle Thief, Umberto D- Vittorio De Sica, supplemented by Pablo Picasso’s Guernica)
NAME- Namrata Bhatnagar
CLASS- TYBA
ROLL NO. – 057
UID- 120217

2. The greatest danger for those working in the Cinema is the extraordinary possibility it offers
for lying. – Michelangelo Antonioni
The Bicycle Thief (1948) and Umberto D (1952) are amongst the major cinematic works of the
20th century as part of the much celebrated Italian Neo-realist movement. The Neo-realist
movement sprung up amongst like-minded Italian directors and story tellers, but later
transformed into a transnational phenomenon which is deemed as one of the most significant
waves that happened in cinema in the previous century. These films, as against the so-called
White Telephone or popular Americanized films, stood apart from the Fascist nature of movies
which were made up until then. A film based in Italy itself showed a selective portion of the
entire landscape and aimed at mesmerizing the audiences with monuments and cultural artifacts
of Rome. Thus, it presented a highly skewed and more importantly, a very small section of what
made up a whole country. The 2nd World War left the entire continent of Europe drained and
ravaged. Italy which was heavily invested in the war was also left in a condition of dire poverty
and helplessness post-1945.
Antonio Ricci, the protagonist of The Bicycle Thief, played by a non-actor, depicts a common
man who is willing to do any kind of work to earn a living. We see a constant struggle in the film
to make ends meet and the resulting helplessness in times of distress. Antonio stands as a
representative of the millions of people who were left jobless and impoverished when Italy came
out of the war. The economy of the country was exhausted of all the resources it could spare to
meet the costs of the ongoing war. The failure of the Government in being able to protect and
provide for its citizens is clearly seen in these 2 films of Vittorio De Sica as he focuses on the
rural and crude landscape of Rome. Keeping true to the Neo-realist style, De Sica communicates
the extent of the issues of poverty, unemployment and degradation through the real life locations,
non-professional actors, use of huge crowds to depict the suffering masses and focus on the
diverse nature of social classes and age groups. In The Bicycle Thief, Antonio’s son Bruno who
is shown as working in a gas station is a way for the director to incorporate the youth element in
the movie so as to show how the young were forced to fend for themselves in the formative years
of their life. Umberto D on the other hand, through its protagonist Umberto, gives another
perspective on how the veterans suffered the consequences of war-induced poverty and their
constant struggle to survive on the little that they received as pension.

3. The theme of war is a central presence in the 2 films and the Neo-realist movement broadly.
Thus, a painting like Guernica of Pablo Picasso, being a 20th century anti-war symbol, is the
perfect medium to reiterate and supplement the cinematic depiction of the oppressive nature of
war and the resulting damage. This painting was completed in 1937 as a reaction to the first air-
bombing which happened in Guernica in Spain and as it travelled around the world, it has
continued to spread the message of the realities associated with war. If the 2 movies, describe the
aftermath of World Wars on Italy specifically, the painting helps to provide a clear idea about the
destructive nature of mankind which remains a universally relevant idea till date.
Coming back to the issues that have been highlighted in the above mentioned movies, one has to
understand the beginnings and dynamics of how they started and panned themselves out through
the course of the war and later. The 2nd World War went on for 6 years from 1939-1945 and was
shortly preceded by the Great Depression of the late 20s and 30s. The decades before that were
equally taxing on countries whose major focus at the time was to build up ammunitions and
strengthen their defense lines against enemies. Political climates all over the world were
extremely charged up and almost turbulent throughout these 4 decades. Various revolutions like
the Russian Revolution were contributing to the upsurge of radical ideas and the fruits of the
fairly recent Industrial Revolution were fuelling the ideas of a mechanized and organized world
scenario in the minds of various leaders. America emerged as a major and pivotal rival to the
Soviet Union only in the early 40s when it finally gave up its policy of Isolationism and actively
started fighting the war. As it emerged victorious in the war, it started its new pioneering
strategies to spread its control over Europe. This has been called the American Imperialism by
many historians like Niall Ferguson, Walter LaFeber and Victor David Hanson who have
compared these strategic movements to the British Imperialism and thus, the establishment of the
Bretton Woods System was perhaps another such move that gave America the power that it
needed to coerce the recovering European economies to formulate compliant policy frameworks
and political dispensations.
In Italy, the years which followed the end of the 2nd world war saw a great deal of
impoverishment among the masses which was a result of Joblessness, poor standards of living
and an unstable Government. It was only after the year 1948 when the Christian Democratic
Party won the Parliamentary elections that the so-called ‘Italian Miracle’ started unfolding in

4. stages. As soon as the war ended, Italy like many other European nations was experiencing a
high inflation rate but it was able to control this by 1948. A major factor responsible for the
inability to control inflation immediately was the political tussle between the Communists and
the Christian Democrats in Italy. It is believed that it was after the expulsion of the Communists
from the Ministry overlooking Monetary Policy decisions that finally inflation rates could be
controlled in the economy. Along with this, reserve requirements were imposed in the Banking
sector which up until then had been extending credit to private sector freely. The major cause for
Inflation in Italy was thus, excessive money supply in the economy and unrestrained credit
creation by commercial banks. Despite attempts by the Communists, who had supporters in the
country, to launch strikes, eventually workers returned to their jobs and finally they lost power to
the Christian Democrats who were in power till the 60s.
Political stabilization coupled with corrected Monetary and Fiscal policies were given the ‘Big
Push’ by the Marshall Plan that was launched by the US for the European economies in need.
Large scale funding was provided to the country to repair and rise out of the losses of the World
war and this ultimately led to the period of boom that the Italian economy experienced for a very
long time and which ended along with the collapse of the Bretton Woods System. Following the
fall of this system, Globalization ushered in new avenues for the people of the country and
tertiary sector activities found footing in the economic framework of the country.
The Marshall plan also known as the European Recovery program (ERP) was a financial aid
program undertaken by the US Government to industrialize, liberalize and rebuild post-war
Europe. This Plan begun in 1948 and over the course of 4 years gave out $17 billion as aid. Out
of this entire amount, Italy received a total of $2- $3 billion. However, a closer look at the policy
implementation of the Italian Government in 1948 and after that explains the question as to why
the masses experienced positive outcomes from this kind of large scale capital investment only in
the late 50s and 60s. The 2 movies show a clear picture of the lives of Italian people who were
rendered jobless by the poor economy of their country and the need for specialized labor that
came in with Industrialization. If we look at the painting by Picasso, on the upper side of the
canvas we see a bulb emitting light over the whole scene. This bulb in the painting stands as a
symbol of industries and the fact that it is placed in a picture depicting the oppressed human

5. condition, it is clear that it was included to convey the fact that Industrialization has a role to
play in the ongoing scheme of things.
The Bretton Woods System was adopted by the world community in 1944 after finally
abandoning the Gold Standard that was responsible for more problems than good in the years of
the wars and the Depression. Within this system, America, which was in control of almost 3
quarters of the world’s gold, used the status of dollar as being the reserve currency to its
advantage. The Bretton Woods System pegged different currencies to the dollar including the
Italian lira. Thus, at this time in an attempt to increase reserves of dollar abroad, US involved
itself in a ‘triangular trade’ system with Europe and the developing economies. As it could
source raw materials from the developing nations at lower costs, it engaged in mass production
and sent huge amounts of money to Europe as financial aid. This ‘generous’ gesture on the part
of US was accompanied with conditions which were negotiated between the 2 countries with the
objective of establishing a quid pro quo arrangement, as also mentioned in the speech given by
US Secretary of State George Marshall in Harvard University in 1947. In its attempt to reduce
the Communist power in Europe, US brought in capital with the requirement to establish a stable
and non-Communist Government in Italy and this can be seen happening in the case of other
European economies as well. Thus, it can be said that the Marshall Plan was a calculated move
to ensure politically benign presence in Europe which would by extension provide America the
ideal climate to penetrate these countries in economic, social and cultural ways. The rapid
industrialization activities in the US found a new and awaiting market in Europe and this saw the
beginning of American Consumerism going beyond the reel to influence people in Europe.
Objectively looking at the finances that were brought in through the Marshall Plan, it is observed
that there was a discrepancy of sorts when it came to prioritizing development goals for the
country. Much before the Marshall Plan kicked in financial aid was flowing in from America to
Italy. So it raises the question that why did mass improvement programs take so long (till 50s) to
come into effect? Here, the most important factor is the focus of the government allocation of
funds. Italy suffered financially great losses because of the war and in the immediate years after
it ended, the major area where finance was directed was in recovering the trade deficit. Thus, the
capital which the Marshall Plan brought in was also used in financing current and capital account
deficits of the nation. It wasn’t until 1950 when the Casa del Mezzogiorno, the government

6. supervising agency of the long-term national investment plans was set up that a comprehensive
public works program was enacted by the Government to aid the masses, especially in the south.
An obvious dichotomy was present in the country, as the English dualistic system of the ‘haves’
and ‘have-nots’ continued.
As the movies clearly depict, government schemes were poorly functioning at this time and its
focus on growth rates further deepened the problem. The Italian Miracle or the economic boom
that occurred in the country post-1948 can be misleading when one wants to gauge the changes
that were brought about in general i.e. for all. Even though Italy was experiencing an average
growth rate of 5.8% in the years 1951-1963, ‘development’ in its true sense of the word was not
happening at the same time. As Antonio pawns off his sheets to buy a bicycle and as Umberto
sells his books and a watch to pay off his rent, it is clear that the standards of living for the
common man were just as poor as they were during the war years. Both these movies do not
show a happy ending scenario as was popularized by Hollywood at the time. This was
intentionally done by Neo-realist film-makers to portray everyday life in all its complexities and
crudeness. So it can be said that even though Economic growth rates were high and trade deficits
were decreasing, this was a macro-level change for a very long time. These benefits took longer
to ‘trickle down’ to the micro-levels and initiate the development aspect of growth which looks
at sustainable improvements in lifestyle patterns. Later, in the 60s and 70s, as the Bretton Woods
System garnered negative response from the agreement members and the US’s position as the
economic hegemon declined, the growth rates in the country also slowed down. The economy
has since then never had an as heady climb up.
Liechtenstein alongside Switzerland remained neutral during the Worlds Wars and this non-
participation protected its then largely rural economy from being completely drained. It was after
the war that due to investor-friendly taxation laws, it attracted foreign capital and transformed
from being an agrarian economy to becoming one of the major financial centers of Europe. This
is a commonality between Liechtenstein and Italy, as the latter as well transformed from a rural
to an industrial economy in the span of a few years. In both cases, external financing played a
pivotal role; be it in the form of investments (former) or financial aid (latter). However, a sound
and responsive political set up is crucial to be able to collate resources and regulate the degree of
growth so as to ensure development to catch-up. The 2 countries, lying in the same continent,

7. went through different phases of economic growth because of the differing degrees of their
involvement in the war.
Through the exploration of the historical causes of the issues highlighted in the movies of
Vittorio De Sica and the juxtaposition of the message of Guernica, it can be said that the direct
impact of the World Wars was further amplified by the accompanying failures of a sound system
of governance. The Italy that we see through the movies clearly shows a rural and yet recovering
country with its citizens in urgent need of help. What is however also seen in the films is an
absence of a public sector intervention to provide avenues of employment to people, thus,
resulting in jobless growth that Italy experienced for a few years post-1948. By analyzing the
internal and external factors responsible for the economic growth of the country in the initial
phase, a few observations emerge. Firstly, financial resources, basically, capital is a crucial
requirement for any kind of growth activity to take place. As seen in the case of Italy or even
Liechtenstein, the external financing that these countries received played a monumental role in
transforming their orientations from being agro-based to industrial economies as it was important
to keep up with the other developed powers like USA and the Soviet Union, both of whom were
technologically much more advanced and equipped than the recovering European economies.
The second observation is an extension of the first because a need for proper allocation of funds
is just as important as the availability of the same. As we have seen from the case of the Italian
government, a politically unstable environment can lead to misguided investments and this can
present a façade of all round growth as it did in Italy’s case. Keynesian Economic principles
were highly regarded in the aftermath of the World Wars and it was no different for the Italian
people, as we have seen that rampant unemployment was curbed in Italy only when appropriate
public works programs were initiated and the ongoing trend of jobless growth was finally
brought into focus. Impressive growth rate figures do not indicate an equally impressive standard
of living and equitable distribution of resources amongst the common people. Thirdly, we have
seen that Italy was majorly aided by the US Marshall Plan in its recovery and steady growth.
However, it can’t be overlooked that Italy’s dependence upon the capital provided by this plan is
also what led to its economic slowdown once the Bretton Woods System collapsed. The US was
looked upon as a ‘generous benefactor’ for the Italian economy but in the process it was also a
beneficiary because the agreement was based upon a quid pro quo principle. Thus, financial aid
schemes can be extremely helpful for an economy during its critical periods but a prolonged

8. dependence on them leads to a loss of self-sufficiency. These are some of the important lessons
that the case of Italy brings forward as we look at its revival out of the ruins of the 2nd World
War. Italy experienced another ‘Miracle’ in the 1980s but again this was accompanied with high
rates of unemployment and debt. After the slowdown of the 60s and 70s and the Oil Shocks of
1973 and 1979, Italy has continued to face problems in its political sphere. Constant tussles
between parties and a lack of social consensus in the country has made it difficult for the
reformative policies to reach their optimum levels.
In conclusion, it should be mentioned that the Neo-realist cinema was a revolutionary take on
film technique and was not well-received by Italians themselves. Today however, we can see the
amount of critical acclaim that these films have received and the movements in other cinemas
that they have inspired, like The French New Wave, The Indian Parallel Cinema, The Kitchen
sink Realism of Britain etc. This response to a reality based cinema provides a kind of reassuring
answer to the questions raised by the quote of Michelangelo Antonioni at the beginning of this
essay. Neo-realism as a movement dealt with issues as they existed in real life and the fact that
they were largely overlooked by those in power, these films and figures like Vittorio De Sica
succeeded in presenting a slice of the gray reality through their stories to garner awareness and
provide a voice to the unheard masses.

9. BIBLIOGRAPHY
-Burke, Sara. Puty, Claudio (2004), In the Belly of the Beast- A perspective on the Global Justice
Movement in the United States: Its roots and emergence, [Online]
Available: http://www.glovesoff.org/features/gjamerica_intro.html [8 January 2015]
-CineCollage, Italian Neorealism, [Online]
Available: http://cinecollage.net/neorealism.html [26 January 2015]
-Vietor, Richard H.K (2001), Italy’s Economic Half-Miracle, [Online]
Available: http://www.strategy-business.com/article/17213?gko=2b421 [30 January 2015]
PUBLICATIONS
-Casella, Alessandra. Eichengreen, Barry, 1991, ‘Halting Inflation in Italy and France after
World War II’,
Working Paper No. 3852, National Bureau of Economic Research
-Piepergerdes, Brent J, 2007, ‘Re-envisioning the Nation: Film Neorealism and the Postwar
Italian
Condition’, Department of Geography, University of Kansas
-Wallis, Brandon, 2009, ‘PICASSO’S GUERNCIA: A Critical Analysis of Allegorical Meanings
Behind
a Modern Anti-War Statement’, University of Lethbridge