Growth seems to have disappeared from the Italian horizon by now, not only in the short term, afflicted by a recession with no end in sight, but also for those wishing to look a little further into the medium and long term. What can be the growth factors for a country like Italy? How to activate them? For a mature country, growth cannot trivially derive from greater consumption or investment in quantitative terms. This is the path to development in emerging countries, where the population has access to specific levels of consumption for the first time, such as cars, household appliances, homes, etc.
For a mature country like Italy, growth is quality, which also generates quantity, understood as a greater volume of Gross Domestic Product. We don't need so much new houses to give shelter to new families. We need to modernize our building stock to adapt it to our needs and to improve its quality in terms of energy conservation, availability of telematic services, aesthetics, etc. A similar reasoning can be made for the purchase of each durable good: we don't buy a new car to add it to the one we already have, but to replace it with one that gives better performance, in terms of comfort, safety, energy consumption. The same goes for household appliances, for our clothes, but also for services, such as catering, transport, personal health care, and more. A similar reasoning is done by companies, which change production lines and machinery to replace them with others that are more performing.
If this is true, then we must ask ourselves: what will allow us to have higher quality consumption and investments, in order to be able to grow in a world where quantities have become the prerogative of emerging countries? The way to quality is called innovation, which in turn requires research and its application. We live in an era of great innovations and it is up to us to know how to seize opportunities.
For businesses, seizing opportunities implies being sufficiently large and organized, both to give birth to new innovative activities and to give existing ones that dimension of capital, organization and people, capable of allowing them a profitable relationship with the processes innovative. Let's be clear: even many small businesses are capable of innovating and integrating into new technological processes. But it is certain that the dimension of capital and organization plays a determining role in the assimilation of innovative processes, as demonstrated by our competing countries in Europe and outside the Old Continent.
And here also lies the role of modern finance, such as Private Equity and Venture Capital funds. It is a role that has already given our country a significant contribution. Over the past few years, the funds have activated many start-ups, also fostering a closer relationship with universities, and have supported many innovative businesses. Italian Venture Capital is becoming increasingly large, even if it remains small compared to other countries. This is the capital that allows the realization of new ideas and generates innovative processes that then permeate the entire business system.
But equally important is the role of Private Equity in increasing the size of companies. Our operators enter companies in which they see opportunities for growth; they bring in that capital which the credit system cannot supply today; finance reorganizations and expansions; they favor the introduction of new technologies; they give the resources for acquisitions that allow mergers and dimensional growth; they push companies to internationalize and position themselves in new outlet markets.
In other words, Private Equity is a growth and innovation factor for companies. Of course, there have also been mistakes and questionable operations over the years by financial operators, as in all sectors. But overall their action was positive. Private equity players have adapted to our market conditions. The size of the transactions fell in line with the average size of Italian firms. Leverage has been reduced in this phase of debt distress. The duration of the investment has increased to allow companies to take longer to restructure and relaunch.
The growth and modernization of the Italian economy need operators who know how to see the future and who know how to raise the financial resources necessary to support the development, mergers, acquisitions and introduction of new technologies. This is the role that private equity is already playing in our country and which will help restore confidence in long-term trends for a country, like ours, which must find the driving force behind its quantitative growth in quality.
