The Azzurri striker arrived in Serie A from Manchester City in January 2013, and has scored 26 goals in just 43 league outing appearances since.
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And Raiola feels the blame his client has received since Italy's World Cup first-round elimination is reason enough as to why he should never have brought him back to the country.
"Winning the 2006 World Cup disguised the real problems in Italian football and today they are doing the same thing with Balotelli. You talk about him and therefore hide the real problems," he told Rai Sport.
"It irritated me to see all the blame dumped on to a 23-year-old. It annoyed me and I don’t think this would’ve happened anywhere else in the world.
"I made a mistake in bringing Mario back to Italy."
Raiola has previously called on Milan to allow Balotelli to leave, claiming he is "sad and desperate", and though chief executive Adriano Galliani has ruled out a move, Goal believes the seven-time European champions would accept an offer in the region of £35 million for the striker.