Focus on Industry – Policies for recovery

The pandemic experience and consequent evolution of the global economic picture make even clearer than before the need for Italy and Europe to cultivate an attractive environment for industrial investments, primarily those strategic to national growth and security. This along with the promotion of adequate public and private level competences and a deep reform of the public administration aimed at higher quality and rapidity in decision-making. 

Many factors have converged to bring radical change to the scenario:

• productive sectors and markets labor under the strain of the lockdown effects; manufacturing, jobs, consumption and supply chains need to regain previous levels as well as recuperate ground already lost to the earlier economic downturn;
• the global competition for new investments is already changing the equilibria that will mark the coming years, thus a quick response is needed in order not to fall behind competitors;
• the rising geopolitical importance of both strategic investments and key global supply chain materials; examples include raw materials, health-related products, commodities, energy, rare earth minerals, microchips and so forth, all of which will be critical to strengthening national economies and expanding spheres of influence.

Global factors have also generated rapid and intensely disruptive phenomena that now combine with the many waves of innovation already underway prior to the Covid outbreak:

• scientific and technological progress resulting from research and development, digitization and the growing importance of Artificial Intelligence, Big Data, Cloud technology, IoT, Machine Learning and advanced automation; needed are new national security and corporate capital paradigms aimed at addressing cybersecurity issues, among others;
• an evolution in the demand for goods that has created new growth drivers and new priorities. Thanks to a virtuous cycle made possible by new technologies it is now possible to respond to structural factors such as demographic growth, population ageing, consumer preference personalization and increased awareness of a range of concerns (e.g. environmental).

The need to interpret and keep pace with the transformations underway calls for the inclusion of multidisciplinary skills and the development of a poly-technical culture across the educational spectrum (compulsory schools, technical secondary schools and universities), combining STEM disciplines (Science, Technology, Engineering and Mathematics) and Humanities studies with a view to developing the capacity for an integrated understanding of evolving phenomena.

It is even more fundamental that institutions, industrial spheres, research centers and universities cooperate on defining new professional profiles with vision and with the ability to keep stakeholders informed. This since, over the span of time physically needed to train human capital, technological innovation and successive “mini-revolutions” may change the forms of knowledge that are currently needed. Technological clusters, digital innovation hubs and competence centers will be very useful in staying abreast of these changes.

Having the right skills to generate economic development is no less strategic than having access to raw materials. Take the example of the large number of Big Data analysts or cybersecurity experts necessary for implementing effective and secure digital technologies. Charting career paths by sector and section of the country thus becomes part of economic planning and educational and industrial policy.

Another decisive factor in economic recovery will be upgrading public administration staff and services, since regulatory framework efficiency is a competitiveness factor that reflects speed of execution, flexibility and the preparedness of economic and social systems – priorities for both NextGen and the Green New Deal funding. These offer major opportunities for recovery, but also hinge on the correct reforms being enacted, in the absence of which projects cannot gain access to resources.

Italy has had structural weaknesses and sluggish growth for a long time. Nevertheless, the country’s world-class industrial excellences place it second in Europe for luxury goods manufacturing and fifth in the world for foreign trade surplus in the sectors of traditional Made in Italy products: the “three Fs” of design and quality, Fashion, Furniture and Food & Wine; and the “three Ms”, Metal products, Machinery and equipment, Medicines. Sustainability pluses include the fact that Italy is also the third-ranked G20 member for CO₂ emissions and fourth on the UN Human Development Index[1].

Economic growth, then, is possible through new industrial policies capable of ensuring the appeal of strategic production, efficiency of regulation and public administration, supply chain security, charting and planning of competences, the ecological and digital transitions and welfare systems in order to address the demographic trends and generational turnover spurred by innovation.

For all these reasons, and today more than ever, how systems are organized is having a major influence on competitiveness, thus calling for continuous dialogue between institutions and industry. The point is to build a collective intelligence capable of providing the country’s economy with all the data needed to manage complex, multidisciplinary global processes.

The Economist recently dedicated a cover to “The Shortage Economy”, citing the biggest threat to global growth. The reaction to Covid has resulted in the development of important synergies between science and technology and human and artificial intelligence. The shortages to which the magazine refers, therefore, is not one of technology, which to the contrary has enormous potential, and neither has it to do with resources. The shortages to be addressed lie at the level of organization, vision and competences.

This is the fundamental task that falls to new industrial policies, and is the only route to ensuring economic development and social recovery. The challenge is a crucial one both for Italy and for Europe as a whole.