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“People first”, investing in social and human capital as taught by Munari

“People first” speaks to the role of social and human capital in the development of Italy as a nation. It is a role to be promoted and strengthened if it is true that Italian businesses, and the Italian economy as a whole, are investing much less than necessary in training, research, innovation and the proper exploitation of their employees’ talents. This was the topic of two days’ of discussion in Bari this weekend at a Confindustria conference, and it was a Confindustria study out of the association’s Research Centre, directed by Luca Paolazzi, that provided the facts and data on Italy’s limitations and on the investments to be made.

The key numbers are no surprise: investment in research equals just over 1% of GDP, too little when compared to the 3% target set by the EU for 2020, or to the current EU average of 2%, or the levels in Germany (2.9%) and France (2.2%), and 54.5% of the total fell upon private-sector firms (data for 2012, up from the 53.6% of 2008). The share for universities has declined, from 30.5% to 28.6%, as has the share for other public bodies. The result of the crisis, of course (in Italy, the lengthy recession has been much more severe than in the rest of Europe), but also the result of a disturbing short-sightedness in policy and of shown by some of the businesses themselves. It is true that the statistics underestimate investment in research and innovation (for small and mid-sized firms, this investment is recognised on the accounts as “consulting”, not as R&D, and a great deal of adaptive innovation—in production processes in particular—is not even fully recognised), but the problem remains, especially in terms of public investment.

There are some highly active innovators, particularly among mid-sized organisations with competitive international operations, which have managed to increase their exports even through the crisis (e.g. the dynamic world of medium high-tech as recently analysed by Gianfelice Rocca, chairman of Assolombarda, in his book entitled Riaccendere i motori, recently published in Italian by Marsilio), and Italian exports are on the rise in industries such as engineering, specialist chemicals and certain cutting-edge pharmaceuticals, along side the more traditional industries like fashion, interior design, and food and agriculture, but none of this is enough to act as a driver of better economic and social growth in Italy. There needs to be more investment in social and human capital.

How exactly?  In Il Sole24Ore (29 March), on the back of the Confindustria study mentioned above, Paolo Bricco explains that, in Italy, “human capital” means three things: real efficiency in the university system; improvements in technical training; and the intelligent integration of immigrants. And there is much that needs to be done in all three areas. Italy has a low number of university graduates (just 15% of the population of people aged 25 to 64, as compared to 42% in the US, which can be seen in a comparison of pro capita GDP: €40,000 in Italy vs. €55,000 in the US), but also a wide gap in degrees in engineering, maths and other scientific fields and a lack of harmony between the necessary conveying of “knowledge” and a lack of real applied “know-how”, which is essential in business.

Little is being done in terms of lifelong learning, and there is no strategy for focusing on training to help redirect segments of the workforce (such as the older generations) that are being left behind as production processes evolve (and training entrusted to the regions unfortunately displays scandalous examples of waste, protectionism, distortion and other unproductive conduct), but there is another area in which Italy is particularly weak: attracting talent. We are losing our most talented, most dynamic graduates to other countries, and we aren’t attracting enough from the rest of the world. Job mobility, which is generally a good thing, has become a “brain drain” for Italy, and to make matters worse, there is more than just the fact that we are unable to attract high-quality talent (hindered by inadequate immigration laws and Italian “bureau-crazy”), but also our poor use of the immigrants that we already have (with Ukrainian mathematicians caring for Italian elderly or Romanian computer scientists unloading fruit at Italian markets, to cite the examples given by Confindustria).

In short, we need a change in policy and in culture – greater, and better, investment in the “knowledge economy”, as summarised by Fulvio Conti, CEO of Enel and deputy chairman of Conti for the association’s Research Centre – and it’s also worth taking another look at the teachings of a great thinker like Bruno Munari, an extraordinarily innovative designer (Munari politecnico is the title of an exhibit that recently opened at Museo del Novecento in Milan), who said, “Imagination is a skill of the spirit, the ability to invent mental images that differ from the reality of the details or of the whole, images that may not even be achievable in practice. Creativity is a productive skill whereby imagination and reason come together such that the result is always practically achievable.”

Italian business is rich with creativity and “polytechnic culture”, but this capital is to be nurtured and grown, not wasted or left to wither and die. That is the key to development.