Man has always moved around the territory in search of something better. The stories of our great merchants, such as Marco Polo and Benedetto Cotrugli from Venice, Francesco Datini from Prato and Paolo from Certaldo, confirm a great mobility in the perspective of enrichment. This human propensity leads tointegration of countries. Cesare Beccaria dictated in his lectures: the land of one nation feeds the industry of another, the industry of this one fertilizes the land of the other (1804). It is a "natural" tendency of man and therefore unstoppable and difficult to change. It can be sped up or slowed down, but not eliminated.
La globalization it presupposes knowledge, means of transport and technologies, all factors which have become accessible to increasingly numerous masses of entrepreneurs thanks to continuous technological progress. Statistically, we measure it with an indicator that is obtained by comparing the volume of international trade of a country (sum of imports and exports) to its GDP. A very crude indicator, but significant in its time course. Since 1970 this index has been growing on the thrust of liberal policies implemented in Europe since Margaret Thatcher and in America by Ronald Reagan (80s of the last century). The dissolution of the USSR, the formation of the Eurozone and the enlargement of the European Union then contributed to the expansion in the 90s up to the big news in 2001 of China's entry into the World Trade Organisation. The all-time high of 61,4% was in 2008. Subsequently the dynamics are uncertain, with a tendency towards a reduction caused, in order, by the great financial crisis and the Covid 19 pandemic, to which presumably the effect of the Russia/West war (Chart 1).
The main drivers were rich countries: Europe, United States e Japan. We have to ask ourselves whether globalization is an angel (bringing new perspectives and presumably riches) or a devil (exposing us to competition from dangerous foreign subjects). To understand its prevailing nature, instead of the sum we use the difference between cheap imports ed exports. If it is positive, the country mainly trades to acquire foreign materials and goods. For example because they are cheap. If the balance is negative, it means that the country mainly tends to export and therefore seeks larger market spaces.
The nature of globalization and the dominance of China
The eurozone uses globalization mainly to export and so does China. The opposite happens for USA e UK. In Europe, Germany, Italy e Spain (export-oriented) differ from France, oriented towards imports (Chart 2).
The undisputed protagonist of the phenomenon is China, which has assumed a dominant position in international trade (Chart 3).
Following the teachings of Sun Tsu (he who defeats the enemy without fighting is a skilled strategist), he did not wage wars, but simply waited for Western countries to set up factories attracted by low labor costs, quickly acquiring their technologies. There China it is also very important for Italy, which buys goods and intermediate products there. Other origins for us are in order Poland, Turkey, India, Czech Republic, Romania e Hungary (Chart 4).
For Italy, is globalization an angel or a demon?
The answer is in the graph. 5 and is positive. Our imports have increased, but at the same time we have increased and maintained a very positive manufacturing trade balance. This means that imports have contributed on the one hand to making our costs more competitive and on the other to opening up new markets for us. Therefore, for Italy, international openness is an advantage to be defended and pursued with industrial policy.
But which companies can be protagonists by exploiting this advantage? Italian industry, as a result of well-known historical events, has lost the large private groups, maintaining "smaller" (small and medium) sized enterprises. Therefore, the positions of quanta, for example, make little sense Bank of Italy and the Draghi Government in drafting the PNRR, consider the small size of our companies a bad thing. They are the result of a "natural" evolution and are therefore a "fact" which must be taken into account when designing policies. Above all because it is precisely the smaller companies (district and Fourth capitalism ones) that prove to be more competitive and therefore more capable of maintaining and sustaining our international openness (Chart 6).
The Bank of Italy itself now seems to have adjusted its diagnoses by pointing out medium-large enterprises as the most dynamic segment of our manufacturing in its latest report. Another step is needed, because the heart of the Fourth Capitalism also includes medium-sized companies that shine for their flexibility, a fundamental characteristic for surviving in the years to come.
How Italian manufacturing is changing
Large Italian companies (defined in the European style as those with more than 250 employees) highlight a natural change: while slightly increasing in number, they tend to progressively reduce their size (Chart 7). It is the effect of new technologies and of the continuous confrontation on the market.
An important aspect of the Fourth Capitalism is its financial resilience which assumes growing interest with the increase in the cost of money: this is measured in the share of capital contributed by risk investors. Based on the latest survey data Mediobanca-Unioncamere-Meat cutter this share is just under 50% while for the 8 major groups (the "bearing" groups of Italian industry) there is an evident need for recapitalisation. In fact, if we "clean up" the balance sheet data of intangible items, the share in question falls below 10%, with the exception of Eni and ST (both publicly controlled) and with the surprise of negative data (absence of tangible equity) for Leonardo, Tim ed Essilor/Luxottica (Chart 8).
I consider it the best industrial policy for smaller companies, it is that of indirect incentives. For example, the establishment and strengthening of a network of local centers suitable for providing support for research, technology transfer and worker training. But also coaching since every 10 start-ups 9 cease immediately. There is already a network of these centers, but the succession of governments has made it confusing and weak in results. It must be made effective and efficient by measuring its effects.
For the major companies, starting from those under public control, always subject to political infractions, I see a pressing need to rewrite the government codes, today aimed at maximizing the value for the shareholders and the top managers appointed by them. It is necessary to direct the company towards maximizing value for all stakeholders, therefore investors, workers, customers, suppliers, public administrations, the environment. And the acronym ESG (Environment Social Governance) must not serve as a convenient label without specified values, but as a measured and certified result of the way in which the company realizes its impact on the community that contains it.
[* Taken from a report held at the CISL in Florence on 6/2/2023 for the course on industrial policy experts]
