We wish to thank Minister for Foreign Affairs Giulio Terzi, a long-time diplomat with an exemplary curriculum vitae, for kindly agreeing to do this interview and with whom we reviewed the path our country has taken along with the other EU countries during a crisis that has literally changed economic and social models. The common commitment of citizens and the government to seek a return to economic growth has certainly been strongly underpinned by the internationalization undertaken by the business community and by the banking system’s new-found role.
But if the foreign ministry has had a decisive role in improving our country’s business climate, Italian businesses must be the first to look beyond the confines of an increasingly global market where “dimensionality” becomes as crucial as trade and investment strategies in meeting the challenges of international competitiveness.
1. The aim is to get beyond the crisis, but one inevitably looks back at the economic and social impact of this crisis; do you think that the Italian growth model, and the more general European one, have undergone substantial changes? And how constructive can those be as we look to the future?
European societies have managed to achieve the proper balance between profit and equality, but the social conditions of recent years are unfortunately in contrast with the results achieved over the past 60 years. Europeans have been accepting income and social spending cuts since 2009. The high debt of many countries makes markets jittery and often irrational. European leaders today should see that their citizens, already tried by this long-term crisis, accept rigorous measures, reassure markets and confront persistent competitiveness problems.
What is certain is that Europe must stimulate growth, otherwise the European lifestyle and the role of Europe itself will be at risk.
I continue to believe very much in the European model. Many countries admire and seek to imitate this model, which needs to be improved, not discarded. It is necessary to stimulate competition among businesses and free up capacities for innovation and growth in order to meet the challenges posed by global competition, without failing to maintain internal cohesion. These transformations require a collective effort at European level, capable of ensuring greater job flexibility and mobility, the more efficient management of capital flows and a new balance between economic freedom and social security. It is a difficult undertaking, but one we are capable of.
2. If internationalisation is the ticket for Italian businesses, do you think that incentives to exports will lead to strengthening midsized Italian firms along the lines of the German model, with the introduction of organised supply chains, evolving out of the approach employed thus far by those SMEs that are most vulnerable to crisis?
Globalisation is producing increasingly integrated and competitive economies in which SMEs are being forced to confront new scenarios. I am referring to the reduction or elimination of customs barriers, the shortening of product lifecycles and the impossibility of controlling or influencing the price of raw or semi-processed materials from global suppliers, along with very intense competition. Various forms of international cooperation can allow small and midsized enterprises to be competitive on increasingly fierce markets.
That is why the foreign ministry, through its embassies and consulates, is an essential component to growth diplomacy, encouraging joint ventures, promoting business contacts by supporting trade fairs, identifying the potential benefits of various markets and offering SMEs every possible assistance in forming international partnerships.
3. What role could the banking system play in internationalization; what in your opinion has already been done and what could be implemented?
The Italian banking system is crucial to our Italy’s internationalisation, since it contributes to promoting Italian economic interests abroad and to sustaining our exports, not least through the dissemination and improvement of Italian banking and financial services.
A presence abroad today is no longer considered merely accessory to Italian activities, but represents the penetration of new markets that must flank the Italian market. The trend is to increase international operational capacity.
Within a framework of growth diplomacy the Ministry of Foreign Affairs has developed forms of collaboration with ABI [Italian banking association] and the foreign network of Italian banks in order to enrich a component crucial to assisting our businesses and also to broadening the business opportunity horizons of our own banking system.
4. The business world is very attentive to these changes under way, also because our stock exchange appears highly concentrated on a limited number of business groups and it would be important for some of the higher end Corporates to be quoted or for new ones already operating abroad to engage in our market, thereby allowing for the attraction of international capital.
What measures do you consider necessary to make that happen, more tax breaks or less bureaucracy?
In the first place, it is important to attract foreign investment in Italy, which would create jobs and contribute both to the formation of human capital and to research and development. Foreign investments are essential to boosting our country’s overall competitiveness and to stimulating entrepreneurial growth, since they encourage different models of specialized production.
Institutions must also follow through, and efficiency in the public administration, as in the legal system and defence of property rights as well, are key to increasing foreign investment in Italy.
A demonstration of our commitment on this front is the “Command Centre for Internationalisation” set up in June by the Foreign Ministry in the Ministry of Economic Development, which has proposed setting up an Investors Desk; a map of the principal opportunities for investment in Italy will be distributed by our embassies in the countries where the investors most interested in Italy are located.
The foreign ministry’s network abroad plays a key role also in raising the international business community’s awareness of ongoing efforts to improve our country’s business climate.
5. To conclude, what do you hope for Italian exports and what are the areas in the Mediterranean or the Horn of Africa where it will be possible to regain a stable and productive Italian presence, or do Asia and China represent the best attractions for Italy’s business?
Exports account for one-quarter of Italy’s GDP and are fundamental to the continuing growth of our economy. Although the European Union absorbs over half of those, the largest increases over the past year have been toward the major emerging countries: Russia, China, Turkey and Brazil – major market outlets thanks also to the growing purchasing power of a broad segment of those countries’ middle classes.
The Arab Spring has opened up new opportunities for our presence in the “Greater Mediterranean”, where the data are already astonishing: exports in 2011 to this area were up 11%, and total trade amounted to €80 billion. A total of 3,300 Italian firms are operating in the region, 500 in Egypt alone.
Support for exports to the markets with the highest potential, and for increased Italian investments abroad, are two of growth diplomacy’s priorities. The foreign ministry – with the help of the main internationalisation actors, the Ministry of Economic Development, ICE, Confindustria and other trade associations – is preparing a series of targeted initiatives to be carried out within the year: business forums, country presentations and road shows on countries such as Angola, South Africa, Mozambique, Libya and the ASEAN countries. Some major institutional encounters will include joint commissions with Iraq and Palestine and bilateral summits with Egypt and Algeria, with the participation of the business sector, which will be an important moment in the consolidation of bilateral relations with nations we consider strategic.