An industrial policy for Italy and the EU for economic development and social balance
Is this an Epiphany of crisis or of a new start? In this new year, so full of uncertainties, will we still be walking in the winter of our discontent or will we have the chance to work towards a more robust recovery? We ended 2023 reading documented analysis from Censis on “Italians afraid and inert like sleepwalkers” and began 2024 with the survey by Nando Pagnoncelli of Ipsos (Corriere della Sera, 2 January) on an increase in “areas that concern Italians”: work and the economy, first and foremost, but also healthcare and the resurgence of Covid 19, the “resilience of purchasing power” and “the functioning of institutions and the political situation” (the issues of immigration slipped to fifth place, security to seventh). We know about “a country on hold that’s low on hope”, according to a Coop Report (la Repubblica, 6 January) that speaks of uncertain consumers, lacking confidence about change and therefore inclined to rein in consumption and try to save instead. And we read analysis with worries for the future almost everywhere, amid ongoing wars from Ukraine to the Middle East and major environmental, economic and social imbalances, tensions linked to the high number of elections (in 2024 there will be votes in 76 countries, from India to Brazil, China and Russia, in Europe for the EU Parliament and in the US for the presidential election).
At such a controversial and difficult time, Italy holds the presidency of the G7, and it can and must play a fundamental role in attempting to smooth out international tensions but also the evolution of institutions and alliances out of the traps of sovereignism and manoeuvring against western democracies and values (“What if the United States of Europe were the real protagonist of the century?”, Carlo Carboni rightly asks, as a favourable mantra, in Il Sole24Ore).
So what’s the atmosphere in the country? In short, we’re witnessing a “race on a knife edge for a 2024 caught between geopolitical crises and the spectres of recession” (Il Sole24Ore, 18 December 2023).
How is it to be navigated, in that case? The goal is to seek a good understanding of the world around us, avoiding that dramatisation of phenomena that it is so dear to agitated habitual social media users (above all those who exploit the same media and spread fake news to disrupt public opinion) and instead insisting on hard facts rather than factoids, data and analysis from authoritative research centres. We also need to work to re-establish a reasonable climate of trust, essential to stimulate investment and consumption.
This trust also depends a great deal on the responsible choices made by key figures in both politics and society.
Data and facts, therefore.
Istat confirms 0.7% growth for Italy in 2023, a three-point improvement on last year’s forecasts, still weak but in any case above the EU average and far from the recession that hit Germany (and created problems for many of the Italian companies that are qualified suppliers of major German industry, starting with the automotive industry). And the forecasts for 2024 aren’t great news either, with GDP still “zero point x”: “Little growth and little investment: Italy more fragile and unequal,” summarises Mario Deaglio (La Stampa, December 6, 2023), also recalling that “emigration has started again: over twenty years, 800,000 Italians have left”, looking elsewhere, in Europe and around the world, for better living and working conditions.
But, alongside weak growth, there is other data to read: on inflation, for example, that is slowing in both the US and the eurozone, on the rates ceasing to race upwards and that may lower, and on an economy slowly, painstakingly, starting to move again. The limits imposed by the slowdown in world trade due to exacerbated geopolitical tensions after Ukraine and the Middle East remain (boat attacks from Houthi Islamic extremists on ships crossing the Red Sea are seriously complicating crossings from the Far East to the Mediterranean, along the Suez Canal, generating an explosion in sea freight prices and therefore transport costs). Tensions in the Pacific around Taiwan are not easing either.
But there are also positive signs together with the tensions and fears. The reorganisation of globalisation and the redesign of supply chains with the related phenomena of back shoring, that is, the creation of “short supply chains” and favour towards local-for-local investments (produced as close as possible to the target markets) are reviving many economies and pushing political decision makers, starting with EU policymakers, to consider common European investments in energy, the supply of strategic raw materials and the manufacture of semi-finished products essential to industry, such as microchips.
It’s a changing world, a world in motion.
The stock markets appreciate these changes and, while affected by the risks of crisis and repercussions on economies, they see their figures rising. The Milan Stock Exchange recorded an increase of 28%, with a list now worth more than 760 billion euros (Corriere della Sera, 30 December).
Certainly, as far as Italy is concerned, it is worth focusing on the positive trend in exports, which may exceed the record of 2023, arriving at 660 billion euros, according to Sace forecasts, an increase of 6.8%.
The manufacturing trade balance surplus will exceed 100 billion, making a major contribution to our balance of payments performance. Italy, in short, is “third in surplus in two thirds of world trade”, after China and Germany, in strategic sectors involving navigation, machine tools, packaging machinery, heating equipment, tiles and sector machinery, pumps for liquids and a long series of furnishing and agri-food products, etc. (Marco Fortis in Il Sole24Ore, 21 December 2023).
These are clearly positive figures, to the extent that respectable journalists have spoken of “a great (or almost great) year” (Claudio Cerasa in Il Foglio, 15 December), bringing together data on GDP, inflation and exports.
Indeed, that’s a point to focus on: exports and their fundamental role in manufacturing.
Italy has not gone into recession, despite all its limitations (starting with productivity, stagnant for over twenty years, in part due to the indifferent function of the machinery of public life) thanks to the positive contribution of the manufacturing industry, foreign tourism and the dynamics of construction stimulated by the “superbonus” (which, however, has unfortunately led to very serious distortions in the markets and especially trends in public finances).
But “the two strengths of industrial exports and tourism are no longer enough, and nor will the next drop in rates and the flexibility granted by the new European Stability Pact. The challenge to overcome is that of productivity” (Oscar Giannino in “Affari&Finanza”, la Repubblica, December). Gianmatteo Manghi, CEO of Cisco, confirms: “Italy is a country of excellence, but it lags behind in productivity. And it is necessary to link the digital transition to the green transition” (Corriere della Sera, 28 December 2023).
Talking about productivity, also linking its growth to improved wages, means committing to radical and courageous reforms of the public administration (bureaucracy, taxation, contracting, justice, job market, training, health, etc.) but also to an industrial policy that aims to strengthen the world of the manufacturing industry and related services during the twin digital and green transition. It means facilitating competition and a market culture (the complete opposite of protecting electorally significant lobbies like beach facilities, taxi drivers, street traders, holders of various types of income, often verging on social parasitism). It means insisting on modernising our production infrastructure according to the values of the ‘knowledge economy’.
It means, for example, reinstating the tax incentives for ‘Industry 4.0’ and expanding them to ‘Industry 5.0’ and to the spread of artificial intelligence (in government circles, 2024 is said to be the right year). It means loosening the knots of crises and transitions in strategic sectors, like steel and automotive, starting from the effective investment of Stellantis in Italy.
All this has a name: industrial policy, both Italian and European.
Investments in innovation, research, patents, human capital and training (so in immigration management policy as well). Investments in quality, safety and environmental and social sustainability, considered as genuinely competitive assets. Investments in the capitalisation of companies and reinforcement of industrial supply chains, looking at international markets. Infrastructure investments both material and intangible, in logistics, to promote knowledge (and therefore in correct spending of PNRR resources).
There is scant evidence of all this in public discourse, government measures included (“Meloni’s great removal” the headline in Il Foglio, 6 January), as though privilege and support for microeconomic categories and corporations, also through bonuses, can guarantee robust GDP growth and the elimination of social imbalance.
Instead, it is necessary to acknowledge that the future of the Italian economy has a modern and competitive manufacturing industry as its backbone, around which most of the rest of the national economy should revolve, including corporate finance and high-tech services. All the data we have examined says so, starting with the fundamental lever of exports.
A far-sighted industrial breakthrough is needed.
Is this an Epiphany of crisis or of a new start? In this new year, so full of uncertainties, will we still be walking in the winter of our discontent or will we have the chance to work towards a more robust recovery? We ended 2023 reading documented analysis from Censis on “Italians afraid and inert like sleepwalkers” and began 2024 with the survey by Nando Pagnoncelli of Ipsos (Corriere della Sera, 2 January) on an increase in “areas that concern Italians”: work and the economy, first and foremost, but also healthcare and the resurgence of Covid 19, the “resilience of purchasing power” and “the functioning of institutions and the political situation” (the issues of immigration slipped to fifth place, security to seventh). We know about “a country on hold that’s low on hope”, according to a Coop Report (la Repubblica, 6 January) that speaks of uncertain consumers, lacking confidence about change and therefore inclined to rein in consumption and try to save instead. And we read analysis with worries for the future almost everywhere, amid ongoing wars from Ukraine to the Middle East and major environmental, economic and social imbalances, tensions linked to the high number of elections (in 2024 there will be votes in 76 countries, from India to Brazil, China and Russia, in Europe for the EU Parliament and in the US for the presidential election).
At such a controversial and difficult time, Italy holds the presidency of the G7, and it can and must play a fundamental role in attempting to smooth out international tensions but also the evolution of institutions and alliances out of the traps of sovereignism and manoeuvring against western democracies and values (“What if the United States of Europe were the real protagonist of the century?”, Carlo Carboni rightly asks, as a favourable mantra, in Il Sole24Ore).
So what’s the atmosphere in the country? In short, we’re witnessing a “race on a knife edge for a 2024 caught between geopolitical crises and the spectres of recession” (Il Sole24Ore, 18 December 2023).
How is it to be navigated, in that case? The goal is to seek a good understanding of the world around us, avoiding that dramatisation of phenomena that it is so dear to agitated habitual social media users (above all those who exploit the same media and spread fake news to disrupt public opinion) and instead insisting on hard facts rather than factoids, data and analysis from authoritative research centres. We also need to work to re-establish a reasonable climate of trust, essential to stimulate investment and consumption.
This trust also depends a great deal on the responsible choices made by key figures in both politics and society.
Data and facts, therefore.
Istat confirms 0.7% growth for Italy in 2023, a three-point improvement on last year’s forecasts, still weak but in any case above the EU average and far from the recession that hit Germany (and created problems for many of the Italian companies that are qualified suppliers of major German industry, starting with the automotive industry). And the forecasts for 2024 aren’t great news either, with GDP still “zero point x”: “Little growth and little investment: Italy more fragile and unequal,” summarises Mario Deaglio (La Stampa, December 6, 2023), also recalling that “emigration has started again: over twenty years, 800,000 Italians have left”, looking elsewhere, in Europe and around the world, for better living and working conditions.
But, alongside weak growth, there is other data to read: on inflation, for example, that is slowing in both the US and the eurozone, on the rates ceasing to race upwards and that may lower, and on an economy slowly, painstakingly, starting to move again. The limits imposed by the slowdown in world trade due to exacerbated geopolitical tensions after Ukraine and the Middle East remain (boat attacks from Houthi Islamic extremists on ships crossing the Red Sea are seriously complicating crossings from the Far East to the Mediterranean, along the Suez Canal, generating an explosion in sea freight prices and therefore transport costs). Tensions in the Pacific around Taiwan are not easing either.
But there are also positive signs together with the tensions and fears. The reorganisation of globalisation and the redesign of supply chains with the related phenomena of back shoring, that is, the creation of “short supply chains” and favour towards local-for-local investments (produced as close as possible to the target markets) are reviving many economies and pushing political decision makers, starting with EU policymakers, to consider common European investments in energy, the supply of strategic raw materials and the manufacture of semi-finished products essential to industry, such as microchips.
It’s a changing world, a world in motion.
The stock markets appreciate these changes and, while affected by the risks of crisis and repercussions on economies, they see their figures rising. The Milan Stock Exchange recorded an increase of 28%, with a list now worth more than 760 billion euros (Corriere della Sera, 30 December).
Certainly, as far as Italy is concerned, it is worth focusing on the positive trend in exports, which may exceed the record of 2023, arriving at 660 billion euros, according to Sace forecasts, an increase of 6.8%.
The manufacturing trade balance surplus will exceed 100 billion, making a major contribution to our balance of payments performance. Italy, in short, is “third in surplus in two thirds of world trade”, after China and Germany, in strategic sectors involving navigation, machine tools, packaging machinery, heating equipment, tiles and sector machinery, pumps for liquids and a long series of furnishing and agri-food products, etc. (Marco Fortis in Il Sole24Ore, 21 December 2023).
These are clearly positive figures, to the extent that respectable journalists have spoken of “a great (or almost great) year” (Claudio Cerasa in Il Foglio, 15 December), bringing together data on GDP, inflation and exports.
Indeed, that’s a point to focus on: exports and their fundamental role in manufacturing.
Italy has not gone into recession, despite all its limitations (starting with productivity, stagnant for over twenty years, in part due to the indifferent function of the machinery of public life) thanks to the positive contribution of the manufacturing industry, foreign tourism and the dynamics of construction stimulated by the “superbonus” (which, however, has unfortunately led to very serious distortions in the markets and especially trends in public finances).
But “the two strengths of industrial exports and tourism are no longer enough, and nor will the next drop in rates and the flexibility granted by the new European Stability Pact. The challenge to overcome is that of productivity” (Oscar Giannino in “Affari&Finanza”, la Repubblica, December). Gianmatteo Manghi, CEO of Cisco, confirms: “Italy is a country of excellence, but it lags behind in productivity. And it is necessary to link the digital transition to the green transition” (Corriere della Sera, 28 December 2023).
Talking about productivity, also linking its growth to improved wages, means committing to radical and courageous reforms of the public administration (bureaucracy, taxation, contracting, justice, job market, training, health, etc.) but also to an industrial policy that aims to strengthen the world of the manufacturing industry and related services during the twin digital and green transition. It means facilitating competition and a market culture (the complete opposite of protecting electorally significant lobbies like beach facilities, taxi drivers, street traders, holders of various types of income, often verging on social parasitism). It means insisting on modernising our production infrastructure according to the values of the ‘knowledge economy’.
It means, for example, reinstating the tax incentives for ‘Industry 4.0’ and expanding them to ‘Industry 5.0’ and to the spread of artificial intelligence (in government circles, 2024 is said to be the right year). It means loosening the knots of crises and transitions in strategic sectors, like steel and automotive, starting from the effective investment of Stellantis in Italy.
All this has a name: industrial policy, both Italian and European.
Investments in innovation, research, patents, human capital and training (so in immigration management policy as well). Investments in quality, safety and environmental and social sustainability, considered as genuinely competitive assets. Investments in the capitalisation of companies and reinforcement of industrial supply chains, looking at international markets. Infrastructure investments both material and intangible, in logistics, to promote knowledge (and therefore in correct spending of PNRR resources).
There is scant evidence of all this in public discourse, government measures included (“Meloni’s great removal” the headline in Il Foglio, 6 January), as though privilege and support for microeconomic categories and corporations, also through bonuses, can guarantee robust GDP growth and the elimination of social imbalance.
Instead, it is necessary to acknowledge that the future of the Italian economy has a modern and competitive manufacturing industry as its backbone, around which most of the rest of the national economy should revolve, including corporate finance and high-tech services. All the data we have examined says so, starting with the fundamental lever of exports.
A far-sighted industrial breakthrough is needed.