Research and innovation policy in Italy

Italy’s research and innovation are examined in this article moving from the structure of the country’s economy and innovation system, examining the dynamics of private and public activities and the impact of policies. As a result of the long recession started in 2008, industrial production and investment experienced dramatic reductions, weakening business performances in R&D and innovation; policies have relied on ‘horizontal’ tax incentives for R&D, patenting and new machinery, with limited effects. Austerity-driven reduction of public expenditure has led to major cuts in public R&D and university budgets, combined with new rules for evaluation and merit-based financing. As a result, gaps between Italy’s research and innovation and EU average performances have increased. Four key policy questions are identified: the possibility for Italians firms to grow with modest technological activities; the longer term impact of underfunding the public R&D and university system; the consequences of a low presence of university graduates in the labour force; the sustainability of the increasing regional divergence within Italy’s research and innovation system.