The latest data provided by Istat on the quarterly trend of the gross domestic product are not encouraging: after the timid recovery in the fourth quarter of 2013 which gave rise to hopes of a trend reversal, the minus sign is back. In the first quarter of this year, the Italian economy contracted by 0,1 percent. To find such a low value, it is necessary to go back to 2000. This demonstrates that the problem of growth in Italy has distant roots and, above all, is not solely the result of the current economic crisis.
But why doesn't Italy grow? The list of factors hindering development is long and well known. Among these, there is certainly the lack of attractiveness of our country for foreign investments. The data reported by the Unctad's World Investment Report indicate that, from 2011 to 2012, foreign investments decreased from 35 billion dollars to 10 billion dollars; in the same period, investments in Spain increased by one billion, from 27 to 28 billion dollars, despite the fact that the Spanish economy has gone through a much deeper crisis than ours.
The reason for such different dynamics is easy to understand. The government in Madrid, thanks to a stable political majority, has put in place a package of reforms which has made the labor market more flexible and simplified public administration. In Italy, despite the many announcements, these rigidities still exist and add up to a long-term civil and administrative justice system with uncertain outcomes; a lawsuit can last over a thousand days, more than double the European average. It should therefore come as no surprise that legal uncertainty, according to the classification drawn up annually by the World Bank, represents the strongest disincentive for foreign investment in our country.
However, a new factor of uncertainty that has been emerging in recent months could soon be added to the above ranking: the eventual exit from the euro area. Unlike the other countries of the Union, in Italy the electoral debate for the renewal of the European Parliament has developed on the question "euro yes, euro no". A significant part of the political forces has chosen to focus the entire campaign on "how" to leave the euro, "when" to do it and "with whom" to do it, leaving little room for issues far more pertinent to the vote in question such as the institutional future of Europe, the process of economic integration etc…
Choice that proved to be successful, given that, according to the survey carried out by the Pew Research Center last April, Italy is the only country in which the percentage of those in favor of the European project decreases (46% in 2014 against 56% in 2013 , while, in the same period, pro-Europeans in Germany increased by 6% and in Spain by 4%). Even more against the trend is the figure relating to the exit from the euro: only half of the Italian sample wants to remain in the monetary union against 72% of the Germans, 69% of the Spaniards and 68% of the Greeks.
But if this is the Italian political picture, who could possibly have an incentive to invest in a country where uncertainty also concerns the currency to be adopted in the future? It is clear that from an investor's point of view, the most rational attitude would be to wait in order not to suffer capital account losses deriving from the devaluation, a choice which would cause a contraction in flows from abroad. Once the new currency is introduced, however, the attractiveness of the country could further decline. The data in this regard speak for themselves.
The 2013 Ernst and Young report (European Attractiveness Survey) shows that among the possible changes that would make Europe more attractive, foreign investors place greater economic and political integration in first place (39%), in second place the reduction of red tape (36%) and the third completion of the single market (28%). In essence, investors consider the strengthening of the monetary union to be a strong development factor for Europe and, other things being equal, they prefer to invest in the economies that are part of it.
Those who consider leaving the eurozone as "the solution" to Italy's problems underestimate the uncertainty that this proposal creates among international investors and the negative repercussions on economic growth. This is why it is hoped that the "euro yes, euro no" debate will end with the European elections and from 26 May we will return to seriously discussing how to make the country more competitive.
