Foreign investment is returning to Italy
Interview with Marco Fortis
With the recession coming to an end in the last quarter of 2013, benchmark bond yields in free-fall, signs of recovery in the housing market, and privatizations taking place, The Wall Street Journal – in its popular MoneyBeat blog – made plain that “investors are looking at Italy and liking what they see”. The Foreign Press Monitoring section of the Aspen Italia website team discussed the subject with Professor Marco Fortis, a member of the Institute and Vice Chairman of Fondazione Edison.
To what do we owe this good news on the Italian economy? Is it because the country’s strengths have been rediscovered or because investors are returning to the outer countries of the eurozone? I believe that the renewed interest with which Italy is being looked at from abroad is mainly to do with the return of investors to Europe’s outer markets. In order to raise the international profile of all Italy’s efforts in recent years – and they have indeed been many – we first need to be aware of them ourselves, and this is often not the case.
Over the last 22 years, Italy has run a government primary surplus – that is, net of interest on public debt – on 21 occasions, and in 14 of these the surplus was higher than 2% of GDP. We could claim this as a world record. In fact, if we had stopped paying interest in 1996, our debt would now be 49% of GDP. It’s enough to consider that if in recent years we had paid the same interest as Germany, our national debt would now be more or less around 100% of GDP. In short, we have no reason to envy Berlin, especially as between 1996 and 2013 Italy generated a cumulative primary surplus of 47% of GDP, while Germany only achieved 16%.
How important for Italy’s image was the Oscar win for “The Great Beauty”? Is it a point in our favor or is it playing to stereotypes again? Stereotypes themselves, especially if positive, may not even be a problem. But it is necessary to round them out by painting a broader and more complete picture of the country. The problem is that the negative perception often associated with our economy cannot be changed overnight. And sometimes, it only takes another collapse at Pompeii to overshadow the country’s many efforts. So we should use this moment of grace to convey in earnest what Italy has achieved and is capable of doing.
How many people in the world know that Italy is a real player in the pharmaceutical industry, with exports reaching 15 billion euro? And that we are actually a greater force in this sector than in a traditional Made in Italy flagship industry like clothing, where we export 14 billion euro?
There, you see – the case of the pharmaceutical industry is a useful paradigm for understanding the strengths Italy has and that the country is capable of attracting investment: where the right conditions, skills and cost levels are in place, the foreign majors are willing to overlook any bureaucratic shortcomings. Many major multinational pharmacos have continued to invest in Italy, as is demonstrated by places like Ascoli Piceno, Latina and Frosinone. And in the pharmaceutical sector, our country currently has one of the best labor quality/labor cost ratios in Europe, in contrast with what might happen in other industries. Yet no one talks about this Made in Italy sector which is the product of research and innovation.
If the problem is one of getting this message across, what should be the approach to relaunching Italy as a brand? We must avoid ineffective official efforts at promoting the country, and publicize the country’s real strengths. Are we ranked first, second or third for balance of trade with respect to a thousand products? Great! Then let’s hang posters in front of the headquarters of our institutions around the world and let everyone know about it. We need to make people understand that, in addition to Fellini, we also have a pharmaceutical industry in Italy, and that alongside “The Great Beauty”, we are a world leader in packaging machines. All this combined in a single country speaks of a great capacity for innovation – an Italian tradition that dates back to Leonardo and Galileo, and which continues even today. We are the second-largest manufacturing country in Europe, and, in terms of foreign trade, we can bank on having the fifth-largest trade surplus in manufactured goods in the world. These are things we mustn’t forget.
