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The innovation gap of Italy’s production system: roots and possible solutions

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  • Matteo Bugamelli

    ()
    (Bank of Italy)

  • Luigi Cannari

    ()
    (Bank of Italy)

  • Francesca Lotti

    ()
    (Bank of Italy)

  • Silvia Magri

    ()
    (Bank of Italy)

Abstract

The lag in innovation in Italy vis-Ã -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.

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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Questioni di Economia e Finanza (Occasional Papers) with number 121.

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Date of creation: Apr 2012
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Handle: RePEc:bdi:opques:qef_121_12

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

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Cited by:
  1. Silvia Angilella & Sebastiano Mazz\`u, 2013. "The Financing of Innovative SMEs: a multicriteria credit rating model," Papers 1308.0889, arXiv.org, revised Jun 2014.
  2. Valerio Vacca, 2013. "Financing innovation in Italy: an analysis of venture capital and private equity investments," Questioni di Economia e Finanza (Occasional Papers) 209, Bank of Italy, Economic Research and International Relations Area.
  3. Stefania De Mitri & Antonio De Socio & Paolo Finaldi Russo & Valentina Nigro, 2013. "Micro-enterprises in Italy: a first analysis of economic and financial conditions," Questioni di Economia e Finanza (Occasional Papers) 162, Bank of Italy, Economic Research and International Relations Area.

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