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The drivers of business development

Milan, 14/10/2022 - 15/10/2022, Conference for the Aspen Junior Fellows

We are living in times of crisis and discontinuity, the former of which has a beginning and an end while the latter endures, leaving its indelible mark. In the words of Pope Francis, ours is not an era of change but a change of era. From crises emerge opportunities, and it is in this context that the future must be planned in order to generate development. Industry needs to be able to ride the wave of change and institutions must be capable of offering its support. Despite contingent uncertainties and long-term dilemmas, such as the demographic crisis – it is estimated that the country will lose 15 million inhabitants over the next 30 years –, Italy continues to preserve its economic prominence, especially in the eurozone. Indeed, the country is ranked 8th among world economies, with growth in 2022 that exceeded that of both France and Germany. “Declinism” is a widespread attitude that needs to be addressed, since it is impeding the resolution of individual problems.

The Italian industrial system is lively and resistant, yet current challenges pertain not only to production but include human capital as well. Today’s most delicate issue lies in the pay/cost-of-living ratio, which could lead to disruptive social tensions that place democracy at risk. The social threat is enormous and businesses must confront it through personalized welfare and investments in training and wage adjustment, especially given the high inflation rate. To that end, it is vital to promote leadership capacity, i.e., the ability to observe holistically, manage change, make bold decisions and, as some participants observed, simplify those complexities that hinder responsible action and are the death of organization. Only through such efforts is it be possible to generate success and development. Nevertheless, it is not enough to involve the private sector alone; indeed, growth and development depend also on the quality and effectiveness of institutions.

Another concern is the small to medium size of so many Italian enterprises. While on the one hand this allows owners greater agility and marries easily with creativity, on the other it becomes a weak point when confronting exogenous crises such as Covid or energy price hikes, or when it is necessary to invest competitively at international level. The small size of Italian firms, along with their well-known problems with bureaucracy, the justice system, infrastructure and the public debt, forces many to sustain much higher capital costs than their competitors in other Western countries.

Education, training and research play an essential role in this context. It is vital to have the means to satisfy industry’s demand for specialized technicians and workers, as well as for researchers and professionals qualified in the sciences, data analysis and a range of soft skills. The university/industry relationship needs to be a closer and more virtuous one that creates a fertile setting in which careers become more fluid and products develop seamlessly out of research.   

Europe has had to confront three crises over the past fifteen years: the global financial downturn, which took the form of sovereign debt crises, the Covid pandemic and the war in Ukraine. Government responses have been varied. If the financial crisis led to the reduced role of government for reasons of both ideology and force majeure, the European reaction to the Covid crisis through the Next Generation EU has been cohesive and more virtuous. The Ukraine war, with its knock-on effects of inflation and the repositioning of value chains, now requires the government’s significant intervention, even though the expansion of its reach must not be considered representative of future normality. There needs to be a new equilibrium between the State and public and private autonomies. The State/market debate, as well as the current crisis, call for an approach marked not by ideology but rather by flexibility, pragmatism and skill.