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The power of innovation: the challenges of development

    • Venice
    • 16 May 2008

          Innovation is a “complex science” that is distinct from invention. It is characterized by the key role played by human capital and, particularly, of the entrepreneur-leader intent on generating economic and/or social value. During the debate, it was noted that Italy has fallen behind the most developed countries, especially in the following areas (held back by the constraints described below):

          The education system
          a body of rules that does not adequately reward merit and mobility; a poor capacity for technology transfer between the academic and business spheres; permanent emigration of highly-skilled human resources and a low rate of attraction of foreigners;

          The business sphere
          a low level of expenditure that formally reported as R&D-related problems related to the size of businesses; difficulties in assimilating technology from the university sphere; conflict between the philosophies of family ownership and management;

          Public funding
          flawed selection and evaluation criteria underpinning allocations; overabundance of responsible authorities and overlapping levels of government; too many resources allocated for staff salaries instead of funding points/areas of excellence;

          Private funding
          wariness of the banking system in funding entrepreneurial innovators; a dearth of financing mechanisms to underwrite innovation-associated risks;

          The institutional framework
          too many rules imposed ex-ante and not checked ex-post; a low level of efficiency in public services; a marked North-South divide;

          Cultural make-up
          a mentality that is little-accustomed to change; a low propensity towards valuing meritocratic mechanisms; a low level of interest on the part of the general public, the media and politicians in innovation-related issues.

          Over the course of the debate, the following proposals were put forward with a view to addressing the abovementioned problems:

          The university system
          strengthening the autonomy of universities and diversifying funding methods; differentiating between generic universities and universities of excellence; stimulating the transfer of technology between universities and the productive sphere and the creation of spin-off enterprises; fostering an interdisciplinary approach between frontier disciplines; carrying out periodic evaluations; internationalizing universities in order to attract more overseas talent.

          The public research sphere
          reconfiguring the CNR (the Italian National Research Council) as a hub for basic, applied and developmental research; enhancing the role of new initiatives such as the IIT (the Italian Institute of Technology), including vis-à-vis frontier research; reducing the links between administrators and researchers.

          The business sphere
          reengineering the innovation process; reporting R&D expenditure in accordance actual spending; resolving the trade-off between selection and maintaining variety; facilitating growth in the size of businesses.

          Public funding
          conducting strategic foresight studies before allocating funds; exploiting the public-private leverage effect (a fund of funds); monitoring the use of funding and conducting peer reviews; refocusing the 5×1000 income tax donation scheme; automatic tax concessions for R&D expenditure and the non-taxation of the profits of start-ups; strategically managing the procurement role of public authorities; better optimizing the use of European Funds for Objective 1 Regions.

          Private funding
          providing incentives for venture capital and seed funds; facilitating the listing on the stock exchange of SMEs also; attracting foreign investment and finance.

          The institutional framework
          long-term regulatory certainty; strengthening the role of industry associations; more compliance checks and less laws and regulations; rapid and transparent decision-making processes; reducing the time needed to make investments and start-up businesses; rationalizing the initiatives of the various levels of government; reviewing the legal effects of insolvency; backing the proposed issue of European public debt securities.

          Cultural make-up
          responsibilizing the media and the political sphere regarding the importance of innovation; providing incentives for people to be mobile; spreading a culture of change at all levels and in all spheres of activity.

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