Innovation, and Economic Recovery of Italy and Southern Europe—Interview with Marco Del Panta Ridolfi, the Secretary General of the European University Institute

THE FUTURE AHEAD OF US: THE EDUCATION, INNOVATION, AND ECONOMIC RECOVERY OF ITALY AND SOUTHERN EUROPE—INTERVIEW WITH MARCO DEL PANTA RIDOLFI, THE SECRETARY GENERAL OF THE EUROPEAN UNIVERSITY INSTITUTE

Alessandro D’Onofrio, 4 March 2021 The interview was conducted in Italian and translated by Alessandro D’Onofrio.

The NGEU represents a historical opportunity for all the EU member states, especially for those countries that suffered the pandemic the most at its early stage. These countries are the southern member states and, in particular, Italy and Spain. This situation, however, also creates a good chance to revise the executives’ priorities because—and I mostly refer to Italy here— intervention and economic policies have so far been based on short-term plans. As we know, this attitude, together with the instability of the Italian political system, could not guarantee the continuity of government action. Therefore, relying on short-term policies means focussing on measures which may have positive effects on the economy merely for a few months or, at most, a few years, not taking, however, long-term growth into consideration. The EU now provides member states with the means to concentrate on long-term policies, which is the only way of maintaining sustainable growth and meeting requirements for the management of high public debt. Only long-term growth can empower a state to manage its large and growing public debt.

This is the first time in the EU’s history that its member states have obtained a funding system which could revert the foregoing tendency and favour investing in long-term growth. It is the result of the new EU programme, which showed an incredible willingness to react to the crisis by partially pooling the management of debt instruments. Therefore, we are at a fundamental and historic turning point and, if we are able to seize this opportunity offered by the EU, we have a great chance to stop this

short-sightedness which produced the results we all know. It is not a coincidence that Italy’s economy has not been growing—or that it has not been growing as fast as that of its EU partners—for the last twenty years.

I would say yes and, above all, I hope so. What I mean is that these countries now have the resources to do so. Of course, money in itself is not enough, and every member state needs a strategy that will allow it to make proper use of these funds. So, in the case of education, research, and innovation, we not only need a favourable economic context but also a favourable cultural one. When we look at Italy, we can see that the economic context is certainly there. The country has one of the largest production structures in Europe, and it is no coincidence that it is the second-largest manufacturing country in the continent. So the first element is present; innovation, however, does not come by itself, it must certainly be supported.

Unfortunately, it was this kind of support that has been a bit lacking in recent years. As for education and research, Italy needs to create a more meritocratic environment. Recently, this recognition has also started to take root here, but we should aim for it with greater determination. For example, it is a very good sign that one of the ministers of the current government is Roberto Cingolani, who was the scientific director at the Italian Institute of Technology from 2005 to 2019. Under his guidance, the institute was a very good example of the efficient and meritocratic management of research funds, and I am sure that he will also apply these criteria to his government activity. It is only when we have all the above-mentioned elements—production structure, meritocratic environment, and resources which are mostly granted by the European Union—that this relaunch can happen. As I said before, the recovery is highly desired because, otherwise, a country like Italy becomes stuck in a situation where productivity does not grow and public debt becomes unsustainable.

I would say that Italy has excellent capacities for R&D in almost all sectors. Just think of the Consiglio Nazionale delle Ricerche (National Research Council), which has remarkable performance ratings for its activities despite the persistent lack of funds, or the Italian pharmaceutical industry, which is the first in Europe for investment in research and production. Or just consider that Italy outclasses its competitors in various sectors such as the productivity of researchers and basic research. What I see as a weakness from this perspective is the partial inability to channel these research results into the business sector and those R&D-related activities that are more connected to the manufacturing sector.

These are, in my opinion, the areas where intervention would be needed, and these are also the sectors where, hopefully, the European funds of the Next Generation EU will be able to help reverse the current trend. To achieve its goals, however, Italy must undertake some crucial structural reforms that have so far been continuously postponed but have now become of absolute priority. From my point of view, there are two main issues to be solved: an institutional one and one that relates to the country’s production structure. Institutionally, we have an overly fragmented political system which renders continuity in government action impossible. Investing in innovation—and

even more in research—can only produce tangible outcomes in the long run, in ten or twenty years from now. That cannot, however, harmonise with Italian political mentality, since no government could benefit from the fruits of these significant investments in the short term.

The second fact is that Italy has a very “fragmented” production system, mostly made up of small and medium-sized companies. It is good that Italy has a high number of SMEs, much higher than its competitors, and many of these companies have proved to be very efficient, capable of innovating and exporting. Suffice to say that the Italian economy has in recent years resisted thanks to the presence of a large number of SMEs (around 200 or 250 thousand) that have shown great resilience and great export capacities. However, it is also true that many of them are not able to innovate due to, especially, their small dimensions. As a result, Italian production system also has a problem of scale, since it is a fact that, below a certain size, a company hardly has the capacity to invest in innovation. If we put these two elements together, we can understand why Italy lags a little bit in the ranking of the most innovative countries even if it remains a global industrial power. I would conclude by saying it is important that the NGEU funds will be directed to not only maintaining the sectors where Italy is already strong but also assisting companies that operate in sectors where there is less capacity for innovation.

Our institute has traditionally been very effective in seizing funding opportunities and exploiting EU funds. We have won various grants from the European Research Council, so I can assume we have a long tradition of successfully competing at a European level when it comes to accessing funds offered by the union. Now, we are also getting ready on an internal governance level to improve our competitiveness on the upcoming European tenders. We have been very active

in social sciences; therefore, we have a long tradition of competing in EU tenders.

This has been one of the biggest challenges facing the European Union since its first research-funding programme was launched at the beginning of the 1980s. Europeans were aware of the need to compete with other major international players, which, at the time, were mostly the United States and Japan. Accordingly, the goal was to create new research facilities in order to reach their rivals’ level. China has since also entered the race, and its institutes are very competitive on this front. However, European researchsupport programmes have emerged, too, with increasing vigour over the years.

At the beginning, the aim was to establish and finance connections between European research centres, so joint projects were supported. After that, the focus shifted to

individual projects and researchers in the belief that there would be a European added value to the extent that the competition could move from a national to a community level. Tenders, therefore, were launched at an EU level, encouraging greater competition, which eventually resulted in creating a truly European added value. Subsequently, networks between research centres also began to be financed, and, then, networks between universities and, later, technological platforms were created as well.

All of these actions can be considered very effective if we take into account the small budget the EU has at its disposal and compare it with that of its member states. It is also true that the European Union invests a lot more in sectors other than research. All the above help us conclude that, notwithstanding the limited means available, European institutions have been very effective and able to compete at an international level in most sectors. The EU has also maintained a production system that is one of the most competitive ones globally, and, in recent years, the European economy has shown signs of notable development.

To conclude, I would say that European research-funding programmes are basically a success story but they need to be sustained and reinforced because competition is growing fiercer. If we want to remain competitive and maintain an economy with high added value, we have to invest in research and innovation.

I would say yes, and that is what I hope, too. However, let us not forget that, in Europe, there are several sectors with a long tradition which are, nevertheless, connected to the so-called “data industry.” If you think of the automotive industry, that is particularly strong in countries such as Germany, Italy, and, to some extent, France, too. It represents one of the leading industrial sectors in the EU which requires increasingly sophisticated technologies to be deployed. However, a production structure cannot be changed overnight, and we should also take into account that even industries such as the automotive industry have very high-tech elements. Let us just consider all the new developments in mobility. In this context, European funds, which focus mainly on information technology and the environment, can also contribute to the establishment of a stronger tie among these industrial sectors and encourage ecological transition.

After European funds had been made available, all member states took their needs into account at not only national but also local levels. At the time when I served in the city council, the need for developing and supporting an alternative to the model of mass tourism became a priority in Florence. It is not that, before the introduction of the NGEU, we had not already been working to make it come true. Contrary to popular belief, widespread not only outside Italian territory, Florence is more of an industrial than a touristic city. The manufacturing industry accounts for 20% of the GDP in the metropolitan area, while tourism only accounts for 12%. For this reason, Florence’s industrial tradition must be protected and strengthened, and it is necessary to implement a development model that can ensure production based on greater added value. During my time as a counsellor, I supported an initiative called “Higher Education Florence” precisely to make it clear how this industrial structure can be maintained and made prosperous only by investing in education, research, and innovation in the years to come.

I would say that it is necessary to invest in all sectors, even in those that are not directly connected to the productive ones, and, most of all, in human capital at every level. Only by investing in the education and formation of younger generations is it possible to ensure an efficient economic system capable of sustainable growth in the long term. One of the reasons why Italy has grown less than its partners for the last twenty years is exactly this productivity gap. In order to close that, it is necessary to invest in the most productive factors, namely, capital and labour. Therefore, while, on the one hand, there is a need to make an effort to support investments in

infrastructure, on the other hand, the education of a workforce that is more prepared for new technologies is also needed.

No matter how you look at it, investment in human capital is essential to grow and to close the gap that has widened in recent years. Unfortunately, the Italian production system currently does not require a sufficiently high number of highly educated workforce, so many young people are forced to leave the country and to work abroad, generating wealth and knowledge there. This would not be a problem in itself if there were a higher inflow of foreigners, but, unfortunately, Italy is not good enough at attracting highly qualified people. This brain drain is precisely one of the structural problems that must be addressed if we want to close the gap between us and the most productive countries.

During the pandemic, the continuity of education, among other fields, has been ensured by the use of a series of technological tools. I refer to those computer systems that have made distance teaching or even the organisation of conferences or working activities possible. Despite the utility of these tools, I think that they represent a serious setback and they cannot substitute in any way the effectiveness of in-person teaching

or on-site activities. Being in contact with professors and other students is definitely a more formative experience than using an IT intermediary. Surely, these tools will keep being used in the future, since they are convenient when someone wants to hold a conference involving speakers from all over the world and to reach out to a growing audience. I think, however, that the personal factor is important, and I hope that we will find the right balance in the future, using perhaps hybrid formulas. Losing the factor of personal interaction would do massive anthropological damage.

It is difficult to express a unequivocal view. Globalisation has had many positive effects in terms of global growth, and it helped many areas of the planet grow much faster than the assistance and intervention by more developed countries did. Globalisation is, therefore, an extraordinary motor of growth and progress, but, like everything in this world, it also has negative effects that must be balanced out. The pandemic certainly represents a moment of pause in this process and has made us understand how, in some respects, globalisation has led to excesses that need to be revised. However, the globalisation process will continue—and we hope it will do—even if in a more temperate way, taking the experience of these years into account.

During my campaign for the city council elections, my motto was “fewer tourists in slippers and more students and researchers,” which is a folkloristic way to say that, even if tourism is an essential sector of its economy, the city cannot focus only on that. It was the year before the pandemic, so no one could have predicted what would happen one year later, Unfortunately, the pandemic showed us in a very unfriendly way that cities cannot rely on low-quality “hit-and-run” tourism—but, at least, we know that now. Of course, no one has the magic recipe for making tourism more “compatible” with the cities’ needs. It is certain, however, that past anomalies must be addressed and regulation is needed. For example, let us think of the phenomenon of short-term renting. It should not be demonised, because tourists using this service many times stay longer than those who go to hotels. However, it is important to achieve a balance and put this phenomenon in a wider context of how the city and the community can thrive.

The main focus should, anyway, be on quality tourism and on how to attract it. For example, touristic offerings should move more towards sectors with higher cultural or economic content. I am referring to strengthening the quality of cultural programmes, by, e.g., building a solid network of smaller museums and creating more opportunities for outdoor and sports tourism or strengthening slow tourism like walking or cycling. It is also important to aim at congress tourism because it has been shown that this type of tourism is generally of higher quality, with more spending and longer stays than the average. So we need to focus on these aspects which require more investment in infrastructure, such as cycle lanes, airports, or conference centres. All these things are slowly being done in Florence, and I hope that, over time, they would lead to a kind of tourism that is more attentive to the values this city is the bearer of and to the needs of the community itself.