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Challenges for businesses in Italy’s northeast

  • Crocetta del Montello
  • 22 May 2023

        The importance of the Italian northeast to the nation’s overall economy is immediately evident from a glance at a map of nighttime illumination, which reveals a clear duality between this most luminous, and consequently most productive, portion of the country and the rest.

        Over the past 20 years, the industrial triangle of the Ford era has been replaced by a new one: the Milan-Bologna-Venice triangle – which also coincides with the current peaks on the map of Italian GDP. The skill of business persons strongly anchored to the local territory and their capacity for doing business has made the northeast the country’s economic engine. A locomotive that has always embodied and underpinned a deeply-rooted and cohesive value system. 

        The northeast regions are in the midst of changes that call for vision. The challenges of resilience and adjusting to those changes are two-fold, consisting on the one hand of specific local issues such as the pandemic response, generational turnover, the size of businesses, capacity for innovation and infrastructure; and on the other, of national issues such as justice, demographics, the attraction of young talent and the reorganization of work.

        The companies of the northeast reacted well and more swiftly than others to the pandemic, which struck there first and most dramatically; yet, some remaining elements of weakness call for ulterior effort. The pandemic changed the playing field, with some markets closing down and others accelerating, and now businesses also having to absorb the energy shock. Although the worst seems to be over, the cost of energy (especially electricity) is still high, even compared with other European countries, such as Germany. What is needed now is to understand how to stabilize the situation.

        The area’s capitalism is founded on family-run businesses or, better yet, on firms whose capital is controlled by families. Companies confronting the pivotal issue of generational turnover and at the same time business size need to consider the broader picture of the future of the planet, starting with the concept of the circular economy. The energy transition, in that regard, is a necessary but far from sufficient prerequisite for the creation of new sustainable economic models. The digital transition too poses questions about the northeast’s capacity ride the crest of the new innovation wave.

        Reflection on the businesses of the northeast offers considerable food for thought on how the world is changing. Confronting change with resilience, Italy has the ability to preserve its cultural and artistic patrimony while at the same time keeping pace with the innovation needed to make its companies grow. It is people who will continue to make the difference and who are decisive to the success, or failure, of the economic system.

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