The Innovation Gap of Italy’s Production System: Roots and Possible Solutions

68 Pages Posted: 23 May 2012

Date Written: April 27, 2012

Abstract

The lag in innovation in Italy vis-à-vis the other main industrial countries is one of the effects of the fragmentation of the production system into many small firms that have trouble bearing the high cost of R&D and taking the related risks. Such other causes as shortages in human capital for management and R&D and excessive labor flexibility, undermining the incentive to invest in training, also play a role. Lack of financial sources is a further hurdle; equity, more suitable than debt for financing innovation, is less common than in other countries. Public incentives for firms have had modest results. To enhance the capacity for innovation some actions should be taken to help firms grow, adopt a more managerial approach, and increase their equity. It is important to support the venture capital market, which is less developed than in other countries. The design and management of public funding for innovation need improvement.

Note: Downloadable document is in Italian.

Keywords: R&D, innovation, policy measures, Italy

JEL Classification: O32, O38, L11

Suggested Citation

Bugamelli, Matteo and Cannari, Luigi and Lotti, Francesca and Magri, Silvia, The Innovation Gap of Italy’s Production System: Roots and Possible Solutions (April 27, 2012). Bank of Italy Occasional Paper No. 121, Available at SSRN: https://ssrn.com/abstract=2064679 or http://dx.doi.org/10.2139/ssrn.2064679

Matteo Bugamelli

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Luigi Cannari (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Francesca Lotti

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Silvia Magri

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

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