Italy is the place where the history, the countryside, the food,
the style, and the people make you want to return again and again.
Drawing on its rich traditions, Italy is now looking forward to a very high-tech
future.
A Look at the Past
The Italian countryside outside Assisi, in the Umbria region
(photo courtesy Yossi Yerushalmy)
Since
1995, the intensity of R&D in the EU has been moderate compared to that
of the United States and Japan. Italy is no exception. It has experienced
very slow growth (along with France, the UK,
Ireland, and the Netherlands). But
change is underway, as the country looks back to its strong
merchant banking traditions and forces that built the four repubbliche marinare: Pisa,
Amalfi, Genoa, and Venice.
These republics and the trade clusters they formed positioned Italy as a driving
force in the economic revolution. Yet, even today Italy remains split between
the more agricultural, pastoral south and the heavily industrial north.
An Eye on the Future
Italy in Brief
Population: 58 million (2004)
Currency: euro (€)
GDP (purchasing power parity): $1,55 trillion (2003)
GDP real growth: 0.4% (2003 est.)
GDP per head (market exch. rate): $25,418
$26,195
(PPP) (2003)
Industries: tourism, machinery, iron and steel, chemicals, food processing,
textiles, motor vehicles, clothing, footwear, ceramics
Exports: $278.1 billion f.o.b. (2003 est.)
Selected export commodities: engineering products, textiles and clothing,
production machinery, motor vehicles, chemicals
Export partners: Germany 13.8%, France 12.3%, U.S. 8.5%, Spain
7.0%, UK 6.9%, (2003)
Imports: $271.1 billion f.o.b. (2003 est.)
Selected import commodities: engineering products, chemicals, transport
equipment, energy products, mineral and noferrous metals
Import partners: Germany 17.9%, France 11.2%, Netherlands
5.8%, Spain 4.8%, UK 4.7% (2003)
Sources: The Economist, CIA World Factbook
While this split makes Italy’s development and unity difficult, the country
has gone through great economic restructuring in the past, starting
with the liberalization and privatization of its chemical, electrical, broadcasting,
and telephone systems. The private economy that was famous in the 1980s for industry
clusters such as leather, plastics, textiles, and manufacturing equipment is
now pushing into new segments.
Efficiency is all over in the private sector and Olivetti (12th largest company
in Italy) has gone through the sad period of restructuring and they are now coming
back to be a new powerhouse. FIAT, and other private corporations, are now undergoing
restructuring. Mobile telecommunications company Vodafone has chosen Italy to
try new services and mobile 3G operator Umts di Hutchison Whampoa started in
Italy.
Now the driving force of change comes also from the public companies. Today
trains run on time — it takes half of the time to get from somewhere than what
it took 10 years ago. This overall improvement process has created a boost
to the economy and is producing opportunities in different sectors.
In 2000, private equity firms in Italy raised a total of €2.92 billion.
The rapid expansion of the Italian private equity market has continued over the
last year as recent regulatory reforms have taken hold.
These changes are bringing about the winds of a new economic renaissance.
The leading companies in Italy today are ENI - Chemicals (ranked 50 in the
Fortune 500), followed by Telecom Italia and Tim,
Generali (large insurance company), a few banks, and Mediaset (ranked 400 in
the Fortune 500).
Viva IP
Every now and then articles appear describing Prime Minister Berlusconi's willingness
to sell Mediaset to Rupert Murdoch, but Italy's advances in the IP sector are
attracting attention in other ways.
The house of the future will probably be based on technologies that were started
and tested in italy. Italy is trying everything possible to bring its "audiences"
the best possible content through the fastest networks. New regulations (Italy
is one of the first countries to have adopted MHP as a standard) and sponsoring
a new type of STB will probably result in Italians having the first true
digital home media interoperable player. As first adaptors, Italy already
have functional IPTV system and will soon integrate new technologies. Italy's
3G networks are changing the communication habits of the talkative Italians and
creating business opportunities. It is expected that Wi-Max will be present even
in the rural centers.
With these major infrastructure changes, private investment is becoming popular
and efficiency is making its way throughout the public and private sectors, which
makes Italy once again a place for business and investors to return to again
and again.
About the author: David Vita has more than 20 years of experience
in fund management, financing strategy, and business development. He began his
career in Europe, spending several years at Coopers & Lybrand before moving to
McKinsey & Co. as a consultant. He gained in-depth knowledge of seed investment
management through his work at Invest IL — a joint venture between the Industrial
Development Bank of Israel (IDBI) and MBI Partners, a private investment banking
firm. David headed the state of Massachusetts trade office in Israel for more
than 10 years. He was born in London and grew up in Italy and Switzerland.
