Economy

A circular economy keeps the value of resources in the economy for longer, extends the useful lifespan of products and reduces waste, thereby reducing environmental and climatic pressures and increasing domestic competitiveness. Italy is among the leading European actors in transitioning to a circular economy. Its adoption of the National Strategy for the Circular Economy in 2022 reinforced the country’s ambition to rapidly shift from linear to circular modes of production and consumption. Among the envisioned measures, the national strategy calls for a stronger use of economic instruments to achieve a more coherent and effective policy mix. This report identifies opportunities for the enhanced use of economic instruments to support the circular economy in Italy. Part I of this report takes stock of the Italian policy landscape, compares it to international practices and recommends seven policy reforms for further consideration. Part II contains an in-depth analysis of three policy instruments that could reduce demand for virgin materials and promote a shift to secondary materials. These instruments include a virgin materials tax on construction minerals, a reduced VAT rate for products with recycled content and corporate tax credits to promote the use of secondary materials.

In today's knowledge-driven societies, universities play a crucial role in fostering innovation and sustainable growth within their ecosystems. Improving knowledge exchange and collaboration (KEC) activities within the Italian university system is essential for societal progress, well-being, and enhancing the productivity of firms of different sizes and stages of development and generate value for society. This document offers a reform roadmap proposal for policies to enhance the knowledge exchange and collaboration system between universities and society in Italy.

The impacts of the war in Ukraine will be felt severely within OECD economies, especially in border regions on the front-line of the humanitarian refugee crisis. The economic impacts, in particular those driven by rising energy prices, will also be spatially differentiated, affecting some regions more than others. Italy is no exception, with gas-intensive industries concentrated in northern regions, and wheat-based food and farming prevailing in southern regions and islands. While, overall, Russia accounted for a minor share of Italian exports, some regions and industries are more vulnerable than others to falls in bilateral trade, including destinations popular with high per-capita expenditure Russian tourists.

The impacts of the war in Ukraine will be felt severely within OECD economies, especially in border regions on the front-line of the humanitarian refugee crisis. The economic impacts, in particular those driven by rising energy prices, will also be spatially differentiated, affecting some regions more than others. Italy is no exception, with gas-intensive industries concentrated in northern regions, and wheat-based food and farming prevailing in southern regions and islands. While, overall, Russia accounted for a minor share of Italian exports, some regions and industries are more vulnerable than others to falls in bilateral trade, including destinations popular with high per-capita expenditure Russian tourists.

The study identifies the main factors that affect the diffusion of digital technologies and their returns among Italian firms, highlighting the crucial role of public policies. It uses a unique data infrastructure that integrates information on digital technology adoption, firm performance, and workers’ and managers’ skills. The analysis shows that the low digitalisation of Italian firms, especially of SMEs, can be traced back to the low levels of three factors: i) workers’ skills, ii) management capabilities, and iii) accumulation of intangible assets. These factors are also crucial to maximise the effectiveness of public policies supporting firm digitalisation, such as the deployment of broadband infrastructure and fiscal incentives to investments in digital technologies. Finally, the analysis shows that the COVID-19 crisis contributed to further widening the digital gap between Italian firms, favouring ex-ante more digitalised companies, suggesting that public policies play a crucial role for the post-COVID-19 recovery.

Raising the effectiveness of Italy’s public sector is more urgent than ever. It will be key to revive investment and productivity and improve access to quality public services for the most vulnerable. The quality of public goods and services is variable, weakening Italy’s resilience to shocks like the COVID-19 crisis and the ability to secure a more sustained and inclusive recovery. Excessive regulations and their onerous enforcement add to businesses’ operating costs. Trust in public institutions and public service delivery is one of the lowest across OECD countries. In the coming years Italy will have a unique opportunity to improve the effectiveness of its public sector, through the Recovery and Resilience Plan, the renewal of the public sector workforce, and the potential of technological innovations. This paper proposes options to strengthen public sector effectiveness by looking at what interventions the public sector makes in the economy, how the public sector mobilises its workforce, procures goods and services, and leverages the benefits of digitalisation, and who acts across levels of government and between the public and private sector. It concludes that recruiting and developing the necessary skills in the workforce, monitoring performance, as well as encouraging coordination will be key to better budget allocations, regulatory environment, and delivering quality public goods and services.

This paper investigates whether and how worker composition, ownership and management affect the productivity of firms. To this aim, we use a dataset obtained by integrating the micro-data drawn from Rilevazione su Imprese e Lavoro (RIL), a survey conducted by Inapp in 2010 and 2015 on a representative sample of Italian limited liability and partnership firms, with the AIDA archive containing comprehensive information on the balance sheets of almost all the Italian corporations. We apply different regression models and the findings reveal that a higher share of skilled workers within firms and more experienced managers are associated with higher productivity levels. In addition, firms run by managers with higher education are more likely to introduce innovation. Finally, family ownership and the coincidence of management with ownership are negatively related with firm productivity.

Governments around the world have adopted unprecedented policies to deal with COVID-19. This paper zooms in on business shutdowns and investigates their effectiveness in reducing mortality. We leverage highly granular death registry data for almost 5,000 Italian municipalities in a diff-in-diff approach that allows us to mitigate endogeneity concerns credibly. Our results, which are robust to controlling for a host of co-factors, offer strong evidence that business shutdowns are very effective in reducing mortality. We calculate that the death toll from the first wave of COVID-19 in Italy may have been about twice as high in their absence. Our findings also highlight that timeliness is key – by acting one week earlier, the death toll may have been reduced by up to an additional 25%. Finally, shutdowns should be targeted. Closing service activities with a high degree of interpersonal contact saves the most lives. Shutting down production activities – while substantially reducing mobility – only has mild effects on mortality.

The COVID-19 crisis has had a profound impact on SME access to finance. In particular, the sudden drop in revenues created acute liquidity shortages, threatening the survival of many viable businesses. The report documents an increase in demand for bank lending in the first half of 2020, and a steady supply of credit thanks to government interventions. On the other hand, other sources of finance declined, in particular early-stage equity. This paper, a special edition of Financing SMEs and Entrepreneurs, focuses on the impacts of COVID-19 on SME access to finance, along with government policy responses. It reveals that the pre-crisis financing environment was broadly favourable for SMEs and entrepreneurs, who benefited from low interest rates, loose credit standards and an increasingly diverse offer of financing instruments. It documents the unprecedented scope and scale of the policy responses undertaken by governments world-wide, and details their key characteristics, and outlines the principal issues and policy challenges for the next phases of the pandemic, such as the over-indebtedness of SMEs and the need to continue to foster a diverse range of financing instruments for SMEs.