Serving as an opening premise for this meeting of the Former Aspen Junior Fellows was the observation that after years or even decades of being sidelined in economic and political debate, the issue of manufacturing development has made a comeback on the international policymaking scene. Many developed economies have long looked on – passively and sometimes even with a certain smugness – as national manufacturing industries declined, in the belief that the main engine of the economy was, and would increasingly become, the advanced services sector. Instead, the tide of globalization and the prolonged financial crisis have profoundly called this assumption into question, lending support to the idea that growth should in fact be kick-started by production and manufacturing, within the context of a full-blown “manufacturing renaissance”.
Just as the US – after having relaunched its auto industry – has placed emphasis on the renewed importance of the manufacturing sector (linked also to the development of clean energy), with the explicit goal of “reindustrializing America”, a key element of “Abenomics” (that is, the economic strategy of Japanese Prime Minister Shinzo Abe) is the promotion of incentives for manufacturing firms focused on advanced – and particularly energy- and environment-related – technologies. Europe could hardly have failed to join this roll-call, given its increasing awareness of the importance of EU industry (from which stems 75% of the region’s exports and 80% of its innovation) as a key engine of growth. This emerges, for example, from the manner in which the recent “Growth Compact” has been couched. Above all, on the back of an explosion in unemployment that now seems to be impinging on even the sturdiest countries in the region, the revelation that for every job created in industry two more are created in services is gaining increasingly more compelling purchase in the European agenda.
In such a scenario, Italy – a country with one of the most advanced manufacturing bases (the second largest in Europe after Germany, and the fifth largest in the world in terms of value added, industrial exports and employment) – is well-placed to be a major player. Indeed, it was stressed by the participants that the country should make the most of this long-held strength in plotting a course out of the crisis, by focusing on breathing new life into a robust, flexible and modern manufacturing base. The challenge may be tough, even exceedingly so, both for Italian businesses and for the workforce, but the rapid evolution of the crisis and geopolitical scenarios also heralds opportunities to redesign business models and rethink competitive strategies (especially in foreign markets), thereby enabling new markets to be conquered and inroads to be made in innovation. The re-industrialization of Italy would thus seem to be a crucial step in building a model of strong, diversified and sustainable growth for the country.
It was conceded, however, that the task of reviving Italian industry cannot be left solely to private initiative. This does not mean giving in to the temptation of pervasive and direct state intervention in manufacturing, but rather that efforts should be focused on improving the conditions in which private firms operate and compete. It was therefore felt that, at this stage in particular, the state should work incisively on establishing conditions that are enabling and facilitative of industrial growth, and which make the country attractive to foreign investment. In this regard, it was noted that no one single measure will ensure that this challenge is easily met, but rather, the avenues available are and should be manifold.
The participants pointed to borrowing costs, business taxation, and labor costs as matters all requiring urgent attention. At the same time, processes need to be set in train with a view to achieving regulatory simplification, overcoming delays in the civil and administrative justice system, deregulating and upgrading infrastructure, combating corruption more effectively, and incentivizing applied research and business start-ups.
Against the backdrop of globalization, the effects of which have yet to fully unfold, and in light of the highly unstable monetary and financial situation, Italian industry was called on to square up to important choices regarding changes to its production paradigm. It is to be expected, for instance, that the “Made in Italy” model will become increasingly more one of “Made by Italy” or “Devised in Italy”, which will see control of the value chain (hopefully) remain in Italian hands, but with manufacture broken down into a number of stages undertaken outside the country. In concluding, it was stressed that the management of these new levels of complexity will require leadership, vision, and talent. Italy’s best energies will need to be rallied around a national strategy for economic renewal, a cornerstone of which should be efforts to revitalize industry, so as to generate employment, investment, and innovation, and foster the development of the country’s stock of human capital.