“Human capital is at the crux of our reasoning,” said Ignazio Visco, Governor of the Bank of Italy, a few days ago during an address at the 10th Book Forum entitled “Investire in conoscenza, cambiare il futuro” (Invest in knowledge. Change the future). For Visco, this forum was an opportunity to talk about the two-way links between education, growth and enterprise in Italy and to assess the status of knowledge and the economy as they stand today in Italy, showing, if not new, at least little explored paths forward for both the public and private sectors.
Visco’s analysis has been condensed nicely into a 15-page work to be read straight through from cover to cover. He begins with a famous quote by Benjamin Franklin: “An investment in knowledge pays the best interest.” Of course, this implies the ability to invest in knowledge – and so in education and all that goes with it – but it also (especially now) requires awareness of the need for high levels of knowledge to be a part of the very culture of enterprise.
As Visco explains, “For production, adequate human capital facilitates the adoption and development of new technologies, acting as a driver of innovation and so of economic growth and employment. Employee training, managerial skill and organisational capabilities are key resources in what is being called ‘knowledge-based capital’ as measured by the OECD, most recently related to 2009, along with other intangibles such as software, databases, research and development, patents and design. Such investment as a percentage of GDP varies greatly from one OECD country to another, ranging from 11% for the United States to just 2% for Greece. Italy is also among the lower ranks at just over 4%.”
It is on this reasoning that the Bank of Italy governor bases his analysis of the actual health of education in Italy and the connection this has with the status of the economy. Visco then looks more closely at the origins of Italy’s deficiencies and points to a series of steps to be taken to enable the country to close these gaps. These actions concern households, the level of focus and spending on education, and the better use of mechanisms (such as internships and training programmes) for inserting young people into the job market.
Investire nella conoscenza (Invest in knowledge)
Bank of Italy, Governor’s Address at the 10th Book Forum, “Investire in conoscenza, cambiare il futuro” (Invest in knowledge. Change the future), 19 October 2013