Italy is in need of a jolt that not only kick-starts the economy but is also capable of restoring confidence among its citizens. What’s needed is not just new technologies, but also a renewed sense of civic duty. In the following interview with the Aspen Italia website team, Ferdinando Beccalli-Falco – one of the top executives of corporate giant GE, an investor in Italian technology – explained that companies, particularly large conglomerates, also have a role to play in galvanizing this change.
Given that Italy is losing production capacity, are foreign multinationals set to be the saviors of its homegrown technology?
When GE acquired Avio from private equity funds in 2012, we saw a great company with fantastic aircraft engine component technology. This led us to invest a billion dollars over five years. Of course, any corporate group – whether Italian or foreign – can make an investment of this sort, provided that they’re large. In fact, in the technology sector, small and medium enterprises find it difficult to grow beyond a certain size. This is because the road to innovation is generally strewn with errors.
Let me give you an example: at the moment, the best aeroplane engine on the market is the GE 90, the one which, for instance, Boeing 777s are equipped with. It is an engine that at first had many problems, but which GE has managed to transform into an excellent product. But it was only able to do so thanks to the financial and time resources it can draw on as an enormous market player. For small or medium-sized businesses, however, every error carries much risk, and so they must be very cautious in developing technology, thus inevitably slowing down the process of innovation. This is why any country’s economy requires a mix of large, medium-sized and small firms.
So what steps should be taken next?
In Italy, so many things need doing that I don’t believe it really matters which ones we start with. The important thing, in my opinion, is to embark on a process of change and to follow it through to the end. The Italian economy has been flat for a decade now, so there’s a need to try and address problems that have even deeper roots. Obviously, it’s clear that a government can’t turn around a situation that has been stalled for decades within just a few months. For this reason too, unlike what’s happened in recent years, governments need to be given time to act. Despite everything, however, we have a major strength we can use as a starting point: our great ability as Italians to bounce back.
Is there an Italian model we should adopt for the reforms that need making?
I don’t think it’s necessary to come up with an Italian model. All that’s needed to change things is to draw inspiration from and implement the many ideas that are already out there in the world. It’s not so difficult. Just look at Mexico, for example, a country that in 18 months managed to turn a stagnant economy into one of the greatest economic successes of Latin America. Reforms played a decisive role in this process, starting with those adopted in the energy sector, which were fundamental for the country. Of course, for a developed country like Italy, Mexico isn’t the only model we should be looking at, but it does demonstrate how quickly an ailing economy can be turned into a success story. Indeed, let’s not forget that Italy’s problem goes beyond the recession: if we manage to grow but do so less than other countries, we will still lose ground.
So what should we aim for in order to achieve this goal?
To me, the key to success is to rally public consensus around a particular economic and social model. Think of the labor market, currently at the center of Italian political debate. In my professional career, I have seen various models in action: the US one is extremely flexible, while the Japanese model is very rigid. Each has its advantages and disadvantages, as has the German model, even with its demonstrated ability to function based on cooperation between social partners and shareholders. All of these are cases of models that work because they have managed to garner a certain level of consensus. This is the crucial leap that needs to be taken in Italy. It is only, after all, with a renewed and shared sense of civic duty that the endemic level of corruption that exists in our society can be fought. Reducing that corruption would not only unleash enormous resources, but it would also help to attract those international investors so key to the growth of our economy.
Ferdinando Beccalli-Falco is President and CEO of GE Europe, and has served as CEO of GE Germany since January 2011. He is responsible for directing GE’s growth strategies in these markets, working to expand customer and government relationships and develop new business markets.
