The engines of growth for Italy’s future

Discussions at this ASL session got underway with the observation that the current economic woes are indicative not of a simple downturn but of a profound crisis, which calls for a radical alteration in lifestyles and development models. It was felt that without such far-reaching changes, levels of growth throughout Europe will continue to be very low in the coming years, in part because it will be impossible to kick-start development and employment without incurring some cost. In respect of Italy, improving the functioning of the institutional set-up, ensuring a regulatory framework that does not serve as a disincentive to investment, and genuinely reducing the burden on firms and households, through effective liberalization and simplification measures, were all seen as crucial. Also deemed indispensable was a redefinition of the scope of the state’s role, entailing an abandonment of any non-core responsibilities which, among other things, are becoming increasingly difficult to deliver on with an aging public service that has failed to keep pace technologically. It was stressed, above all, that there is a need for renewed investment in order to return to real growth, and that the resources for this must be found by making bold political choices. The current spending review should not be confined to cuts calculated on the basis of existing spending levels, but should instead serve as an opportunity for an overall rethink of public policies and services provided to citizens. Only in this way can the necessary investments in both tangible and intangible infrastructure be effected, with the situation on both these fronts being a cause for concern in Italy. It was further noted that the country’s education system has been weakened by the reduction of investment for schools and the proliferation of small universities. The incentives for academics to find new sources of funding are low, whilst small and medium-sized enterprises do not have a sufficient critical mass to invest in research. Nor has a system of public and private research institutions been put in place to assist businesses in the process of technological innovation. Finally, it was observed that Italy is also trailing behind in the area of physical infrastructure. The cost of energy continues to be very high due to the lack of diversification of sources and an inability to access the most advantageous gas spot market. The fact that plans to invest in new generation telecommunications networks are proceeding slowly, combined with low levels of digital literacy, also means there is a risk that Italy’s lag in developing ICT services will increase.