Italy

Why Italy?

1. One of World’s Top Economies 

Italy is the 3rd largest economy of the Euro Zone and the 8th largest in the world, with a GDP of more than 2.1 trillion dollars, bigger than India or Russia. The domestic market offers many opportunities, with a population of more than 60 million and a per capita GDP of 36,000 dollars. The net wealth of Italian households is 8 times their disposable income (a higher ratio than US, Germany and Canada) and their indebtedness remain relatively low (82% of disposable income.

Source: IMF, 2014, Bank of Italy, 2013

2. Strategic Logistic Gateway 

Italy represents a strategic gateway to 500 million consumers across the European Union and to 270 million in northern Africa and the Middle East, and is the main thoroughfare linking southern Europe to central and Eastern Europe. Transport networks include 6,800 km of motorways (1); 926 km of high-speed rail with a top speed of over 300 km/h (190 mph), in addition to nearly 200 km under construction (2); strategic ports for maritime freight and transshipment along the Italian coast and islands.

Source: Aiscat, 2014,RFI, 2015

3. 2nd Largest Manufacturing Economy of Europe

For over 30 years, Italy has been the 2nd largest manufacturing economy in Europe after Germany, and the 6th – 7th top world manufacturer. Italian manufacturing trade surplus is the 5th amongst G-20 countries, exclusive of energy and mining, with a value of 96 billion Euros in 2014. Italy holds leadership positions for trade surplus in 935 products out of 5,117 marketed goods (the most detailed breakdown of world trade by industry): 1st in 235 products, 2nd in 377 products and 3rd in 323 products.

Source: World Bank, 2015, WTO, 2015, Fondazione Edison, 2012

4. SME Network & Industrial Clusters

Investing in Italy means having access to unique export knowledge in leading sectors like machinery, automation, fashion, design and food. Companies investing in Italy can also rely on extensive networks of SMEs and many industrial clusters throughout the country, able to supply high-quality intermediate products specifically tailored to meet customers’ needs. Since the middle class in the BRICs will increase by 800 million people by 2020, so global demand for ‘Made in Italy’ goods are expected to increase in the coming years, with the attendant increase in tourist arrivals.

Source: Goldman Sachs, 2010

5. Skilled Workforce

Italian hourly labor costs are below the Eurozone average: they are only 82% compared to the cost in France, and 90% to Germany. More than 20 Italian universities are ranked in the top 500 academic institutions in the world, with about 300,000 graduates per year.

Source: Eurostat, 2015, Academic Ranking of World Universities, 2014, MIUR, 2014

6. Brilliant R&D and innovation

Research and innovation are widely integrated into industrial processes with a long tradition of excellence in many fields of life sciences (e.g. neurosciences), physics and engineering (e.g. robotics), and social sciences and humanities (e.g. high tech archaeology). Italian researchers, internationally recognized as highly productive in terms of articles and citations, actively participate and/or lead R&D European networks, such as the CERN physics laboratory, and top level research infrastructures of transnational interest in sectors such as aerospace, earth observation, system biology, nanobiotech, marine and maritime research in the Mediterranean area and beyond.

7. Unique Quality of Life and Cultural Experience

Italian cities are overflowing with ancient monuments and treasures, and this – combined with its world-famous art, culture, music, food, and quality goods – gives Italy an unparalleled quality of life, which is the envy of the world. Italy is ranked 1st worldwide for UNESCO World Heritage (50 sites as of end 2014). As a result, international tourist arrivals to Italy are nearly 50 million annually, placing Italy 5th among the world’s top destinations. As the 3rd top global country brand relating to ‘experience’, Italy inspires passion and interest the world over in its heritage & culture, tourism and ‘Made in Italy’ goods. The ‘Made in Italy’ factor makes every brand unique and attractive.

Source: UNWTO, 2014, Country Brand Index, 2014

8. Distinctive Tax Credit Schemes 

Tax credit schemes support companies to improve their competitiveness: 25% tax credit for private investments in R&D (50% for projects with universities or research centers), 15% tax credit for investments in machinery and capital goods. Employing researchers in technical and scientific fields also attracts tax credits. Further public incentives support new investments in manufacturing and R&D, especially in southern Regions.

9. Enduring Reforms Strategy 

A fast and comprehensive reform strategy is in place to build a more friendly business climate, simplifying and adapting bureaucracy, improving education and justice. Many of these reforms will make Italy a more attractive economy to invest in, such as new labor legislation, more flexibility to conclude tax agreements with the tax authorities, simplified procedures to access and exploit oil and gas resources, new financial tools for Real Estate, dedicated business courts to resolve disputes involving foreign investors.

10. FDI Confidence Index

Strong performance of Multinational companies: industrial foreign affiliates employ 11% of total workers, produce more than 20% of domestic turnover, and export 26% of national exported goods. The presence of foreign affiliates is significantly higher in high-tech sectors, high-level services, and among the largest companies. According to the FDI Confidence Index, Italy ranks 12th overall in 2015, up from 20th in 2014. Thanks to recent regulatory reform, there is much greater flexibility in setting up a new business for start-ups: Italy now precedes Germany in the ‘starting a business’ ranking. In 2014, Italy had the highest growth rate among European countries of inward Greenfield FDI projects (+31%).

Source: ISTAT, 2014, A.T. Kearney, 2015, Doing Business, 2015, FDI Report, 2015

An overview of Italy’s economy

Italy was one of the six member states that established the European Economic Community (EEC), one of the predecessors of the EU. Italy was a founding member of the Euro area and was among the first group of countries to introduce the euro on January 1, 1999. Euro notes and coins entered general use on January 1, 2002, replacing the Italian Lira. After the 1950s, Italy transformed from a weak agriculture-based economy, severely affected by the consequences of World War II, into one of the ‘World’s Most Industrialized Nations’.

 It has a highly developed infrastructure and was ranked number 10 in The Economist’s Quality of Life 2010 Index. The country grew only at a 1.26% rate from 1992 to 2008 in terms of real GDP, just prior to the global downturn. Italy has developed a reputation for producing high quality luxury goods. Due to its strong financial sector, which was not heavily exposed to property developments, Italy was not as badly affected by the global financial crisis as other countries. Euro Challenge 2012 Exports Around 44% of Italian exports was to the Euro area, while barely 2% to China. Therefore, the outlook for Italy’s exports depends on its Euro area partners, and thus it does not benefit directly from vigorous growth in emerging markets. Due to Italy’s wage supplementation scheme, whereby employees stop working but keep their job.

At a reduced income, the crisis had a relatively small impact on the labor market. Inflation like elsewhere in Europe, Italy also saw a decline in its inflation rate due to the fall in energy prices and weak demand. The 2011 average was 2.9%, but the 2012 average is expected to decline to 2.5%. The Italian economy is driven in large part by the manufacture of high-quality consumer goods produced by small and medium-sized enterprises, many of which are family owned. Demographics Median age in Italy is 43.5 years and the proportion of the population that is older than 65 is 20.3%. On both these measures Italy is the second “oldest” EU country (after Germany). 

Italy’s Exports  1991-2016

Exports from Italy increased by 3.3% to €34.39 billion in December of 2015 from €33.38 billion a year earlier, as shipments of consumer goods grew by 4.6%, capital goods by 4.4% and intermediate goods by 1.5%. By contrast, sales of energy products dropped 13.4%. Among sectors, the country exported mainly machinery and equipment; pharmaceutical, chemical and botanical medicines; refined petroleum products; and vehicles. The biggest increases were reported for Japan (+19.9%), the US (+18.4%), ASEAN countries (+17%), Romania (+16.6%) and Spain (+11.5%) while sales to MERCOSUR (-25.7%) and Russia (-16.7%) declined. Considering full 2015, exports increased by 3.7 percent compared with 2014. Exports in Italy averaged 22945.30 EUR Million from 1991 until 2015, reaching an all time high of 41055.27 EUR Million EUR in July of 2015 and a record low of 5946.40 EUR Million in August of 1991. 

Exports in Italy is reported by the National Institute of Statistics

Tourism- Catalyst for Italy’s Growth

With more than 79.6 million tourists a year (2015), Italy is the second highest tourist earner and second most visited country in the world, behind France (83.7 million (2014)), United States (74.8 million (2014)), Spain (65 million (2014)) and China (55.6 million (2014)). People mainly visit Italy for its rich art, cuisine, history, fashion and culture, beautiful coastline and beaches, its mountains, and priceless ancient monuments. Italy also contains more World Heritage Sites than any other country in the world. Tourism is one of Italy's most significant economic sectors accounting for 4.1% of Italy’s GDP in 2012. Over the past 10 years, employment in the industry has risen from 4.6% of total employment to 5.2%. While in 2013 there were approximately 1.1 million people employed in the hotel and restaurant sectors (4.8% of total employment) 

The sector is highly globalized and a significant export driver, representing around 40% of exports

service, with main origin markets being Switzerland, Germany (although declining with respect to the

past), United States, France, United Kingdom, Switzerland, Austria and more recently Russia.

The great variety of tourism resources allows Italy to offer four-season tourism. 

According to the National Agency for Tourism (ENIT) in 2010 

a. Towns of historical and artistic interest attracted most of the visitors i-e 45%

b. Seaside attracted 17% visitors 

c. Mountain and lake locations together accounted for nearly 22%

Despite the fact that tourism is internationally recognized as a major strategic asset for Italy, it has developed an integrated strategy (the National Tourism Development Plan of 2013) to boost tourism competitiveness and productivity and turn it into a major source of revenues and employment. The main priorities of the plan include:

a. Making governance more effective by equipping the Ministry of Tourism with increased Power and Autonomy and re-launch the National Agency for Tourism;

b. Improving tourism offer, with focus on southern regions and the islands;

c. Re-qualify the hospitality sector;

d. Reinforce infrastructures, with focus on air accessibility;

e. Invest in education and training and support high-skilled professionals in the sector;

f. Attract international investments through fiscal incentives and reduction in bureaucracy burdens

Main Tourism Offer

• Coastal tourism
• Winter sports
• Cultural tourism
• Food and wine guided tours
• Health and wellness tourism
• Events and folklore
• Spiritual tourism
• Cruising/Yachting/Sailing

Particularly, recent trends show that demand in the sector is growing for intermediate and low qualified professionals, while demand for high-skilled professionals, technical and white collars is generally decreasing.

With the project “Lavoro e Sviluppo” (Work and development) – the government is now aiming to fulfill  ‘Supply and Demand’ on the labor market in the tourism sector and increase the sector attractiveness and productivity, via sector-specific vocational training intervention for unemployed people, especially in the southern regions.