The Italian Economic Decline and the Proposal of the State as Innovator of First Resort

Guglielmo Forges Davanzati - Salento University and Cambridge Department of Land Economics
This paper deals with the Italian economic decline, proponing a massive State intervention for public investment aiming at promoting innovation. The recent history of the Italian economy shows that our firms have always tried to become more competitive in international markets by keeping wages low or by taking advantage of the devaluation of the lira. The direction of economic policy in Italy today seems to be a rehash of the old idea that “small is beautiful” – linked to the belief that small artisanal businesses are more efficient – combined essentially with the failure to position our firms in the high segments of the global value chain and thus promote innovation.