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Innovation “moderate” as Italy struggles to grow

Italians are “moderate innovators”, well below the EU average and still far too far behind the “champions of innovation”, which remain the US and Japan, as well as Korea and—within Europe—Switzerland, Denmark, Germany and Finland. The negative impact is, of course, being felt in terms of competitiveness and economic growth and is weighing on the economic imbalance that the EU has recently defined as “excessive”, while urging the Italian government and the social partners to bring about the sort of reform needed in order to jumpstart the economy.

A recent EU report (as reported in leading newspapers on 5 and 6 March) has also reiterated Italy’s limits in innovation. Based on 25 parameters, this report ranked countries as “innovation leaders” (such as Switzerland and Germany, in particular), “innovation followers” (from Luxembourg to Cyprus and including Sweden, the UK, Austria and France), “moderate innovators” (Italy, followed by Spain, Portugal, Greece, Hungary, Poland and Croatia), and “modest innovators” (Romania, Latvia and Bulgaria). These rankings also looked at the various regions within the country, and only three—Emilia, Piedmont and Friuli—rose above the Italian average to be classified as “innovation followers”.

Why such a mediocre ranking for Italy? The usual reasons: limited public and private-sector investment (held back by excessive taxation on businesses); general context not well suited to innovation (because of all the red tape); little openness to international education (as seen in the low number of post-graduate degrees by students outside the EU); below-average patent filings; limited partnerships among innovating businesses; low levels of venture capital, and so on. In short, much needs to be done in order to be up to the challenge and able to compete with the other, more dynamic EU countries.

Europe, of course, has promised to do much more in the form of investment and incentives and has underscored the importance of the €80 million in the budget for the Horizon 2020 programme. In Italy, which has been slow to make use of those funds, it will be up to the regions and to business to prepare programmes to be included within this co-financing framework.

The European figures are to be taken very seriously, and the government and businesses are to be stimulated to invest more in research and development, much more than the 1% of GDP that we are, unfortunately, still stuck at. More investment also must be made in quality education, and we must bring an end to the disastrous policy of budget cuts for education and of mediocrity in the content being taught.

Great care must also be taken in interpreting the numbers, and we must recall that, while it is true that Italy lags in innovation, we also fail to proper account for all of the innovation that businesses do, in fact, do, particularly in terms of adaptation and process innovation. In fact, there is an apparent contradiction between the low level of investment in R&D and the growth of Italian exports. If we really are failing to innovate, how can we explain being competitive in the international marketplace, particularly when we haven’t competed on price in some time? The truth is that businesses are innovating, but they are failing to document it. They are making high-quality products without patenting the discoveries that enabled them, recognising investment in innovation as simply “consulting”. Especially within smaller businesses, the accounts do not properly show how widespread innovation is. In short, we do need to invest more, but we also need to properly account for the investments that are already being made.

At the same time, we must also recall that we need to develop a true culture of innovation throughout the Italian economy. Although there are some highs and lows, the manufacturing firms have it, but the service sector, not so much. And central and local government sees innovation as an attack on the Italian tradition of slow, asphyxiating,  conservative (not to mention corrupt in many areas) bureaucracy.

So what do we mean by innovation? Technology, yes, beginning with ICT and the essential, urgent dissemination of broadband connectivity. Automation, too. Robotics. Digital manufacturing (and the extraordinary phenomenon of 3D printing). Bioscience and biotech. But also a more favourable climate for start-ups and venture capital in order to support the growth of the most innovative businesses, along with an intelligent use of tax incentives and close collaboration between universities, private and public research facilities, and business.

That culture of innovation. A way of looking at the world. A methodology. An approach to reality. Experimentation and transformation. It does involve technology, but also materials and labour relations, standards of governance and relations with stakeholders, strategies of marketing and communication and of design. In these areas, Italy, a hotbed of culture historically, has a great deal to contribute, so long as we learn to think like an evolving system with a bright, exciting past, but one which must also want to build a more dynamic future.