From Innovation to Growth: Supporting Entrepreneurs in the Italian Economy
Assistant Secretary, Bureau of Economic and Business Affairs
Thank you for that introduction, Massimo. This is my first visit to Italy as Assistant Secretary of State for Economic and Business Affairs – and the first by someone in this position for more than a decade.
So I am delighted to have the opportunity to speak here at LUISS University about a subject that is important to me as a former businessman, and that is innovation, and its direct link to economic growth.
I think it’s more than appropriate that I am in Rome where a great empire recognized the critical importance of direct and open roads around the world.
At the height of Rome’s power, there were 372 such roads connecting 113 provinces. Not only did these roads give its army the fastest access to every corner of the known world, they also opened up avenues of trade. Strength, security and prosperity were mutually reinforcing; part of the same thing.
All these centuries later, Italy has the opportunity to build powerful roads once again; roads that build on our military and strategic ties and open up a new era of economic growth and prosperity.
Italy is already a steadfast NATO and multilateral partner, working with the United States to foster democratic ideals and to provide peace and security around the world. And the warm and affectionate ties between our citizens, especially our Italian immigrant community, are longstanding. Between 5 and 6 million U.S. tourists visit Italy each year. And in 2014, nearly a million Italians visited the U.S., an increase of 15 percent from the year before.
If we are successful in passing the Transatlantic Trade and Investment Partnership, or T-TIP, we will strengthen those ties even more. We can open new roads of opportunity, so that startup companies from Italy can find investors abroad and collaborate more effectively with Silicon Valley. We can enhance the investment climate in Italy so that more American companies can do business here, providing jobs and economic growth. And we can build a foundation of mutual security and prosperity.
In my conversations with government officials and leaders in the private sector, I have been discussing ways to strengthen our resolve to support T-TIP and, in general, to further boost economic growth and create more jobs through trade and investment.
At the heart of virtually every conversation I am having here in Italy, innovation is a recurring subject.
There are reasons for this. Innovation is part of America’s DNA – and in fact, any successful economy. Without it, there can be no economic growth. There can be no competitiveness; no productivity; no creativity. And without a doubt, there will be very few successful entrepreneurs and small businesses. Their dependence on innovation is critical.
It is therefore crucial that – in every economic policy, initiative or trade deal we create – we try to ensure that innovation is not only promoted and nurtured but protected.
That is why I am also here to highlight the upcoming Global Entrepreneurship Summit to be held June the 22nd through the 24th at Stanford University in California.
This event, near and dear to President Obama himself, will showcase one thousand of the world’s most innovative entrepreneurs, investors, educators and business representatives.
Among them will be four Italian entrepreneurs, two of whom are women. And I’ll be talking about them in a few minutes.
GES will be working towards three outcomes: The first is building lasting relationships between entrepreneurs, investors, and mentors. The second is providing access to finance for entrepreneurs worldwide, and creating opportunities for U.S. businesses and investors. And finally, we will continue to establish GES as a primary platform for entrepreneurs to exchange best practices.
As I was flying over, I was thinking about Euro 2016 – a soccer tournament that millions of Italians will be watching this weekend and over the coming weeks.
I’m not an expert on soccer; I grew up with baseball. But I do know that, on Monday, when Italy faces Belgium, everyone will be rooting for Buffon to make saves; Chiellini to defend; De Rossi to pass; and Pelli to score.
It occurred to me that there is a great analogy here with entrepreneurs. Each soccer player is unique and creative in his own way. They provide the magic that we all love to see. But they would not be playing at this level without years of support, early development, and the right environment to grow their potential.
Entrepreneurs – men and women – are also the creators of magic in any economy because of their unique ideas and innovations. But to be successful, they need support. They need freedom. They need investors. And those investors need governments to create business-friendly investment climates.
They need strong rule of law, so that contracts are protected. They need their ideas protected from theft. And they need open, fair and transparent access to foreign markets – or they will take their business elsewhere.
But as we meet today, almost four out of ten young people across the country do not have a job. And Italy’s economy has yet to return to the levels of growth it enjoyed before the crisis. It is estimated that – at the present rate – Italy may not get there until 2029. And compared to other advanced economies, foreign investment remains low.
While Italy is respectable in the World Economic Forum’s Competitiveness Index – it is 43rd out of 140 countries – it has other problems.
It is currently 45th on the World Bank’s Ease of Doing Business Index; and 23rd out of the 28 EU members. Italy is 137th in the world for paying taxes and last in the EU. And it is 111th in the world, and 24th in the EU for enforcing contracts.
While reforms are ongoing to reform the civil service, Italy’s public sector remains inefficient and costly.
Venture capital firms are active in Italy, overall, but this market has yet to see its best days. In fact, in 2014, Italy registered the lowest level of venture capital investments as a share of GDP (0.002 percent) of any major European economy.
If you’ll permit me to use a soccer analogy again, too many of Italy’s entrepreneurs are sitting on the bench. The only way that Italy is going to enjoy economic growth is by bringing them back into the field of play.
For that to happen, the support of investors is critical. So are the policies of the government that can create business friendly climates.
In my meetings with officials of the Renzi government, I have seen how committed they are to addressing some challenging issues. There is already much to build on.
Positive reforms like the Jobs Act and the Investment Compact are already bringing about increased labor flexibility, developing new jobs, and creating opportunities for investors. And other reforms have introduced alternative dispute resolutions to speed up court processes and increase transparency in bankruptcy proceedings.
But clearly, there is much to be done.
Thomas Friedman, the great American journalist of the New York Times, who writes about foreign affairs and global trade, once said: “Do you know what my favorite renewable fuel is? An ecosystem for innovation.”
He was right. Having the right ecosystem for entrepreneurs really is a kind of renewable fuel. That is because when entrepreneurs are successful, they don’t keep that success to themselves. They create jobs around them. They make their communities better. They contribute to economic growth.
We fundamentally believe that entrepreneurs – men and women – will be the drivers of Italy’s economic growth. And we also know that strong investment climates will allow U.S. companies to do their part in building those ecosystems.
Our embassy, here in Italy, has worked hard over the years to build public awareness and recognition for the importance of angel investors, venture capital, private equity and robust entrepreneurial ecosystems.
They have helped to create a network of innovative entrepreneurs called First Generation Network; and a network known as Italian Angel Investors. And one of the initiatives of which they are most proud is the BEST scholarship program.
Created in 2006, BEST was designed to immerse young Italians in the entrepreneurial spirit of Silicon Valley.
We have adjusted the program over the years, but the procedure is the same. They take courses in entrepreneurship and management at Santa Clara University, California, for a semester and then participate in a three-month long internship at a Silicon Valley company.
Since its creation, BEST has provided 77 scholarships. And alumni from this program have created 40 new companies in Italy, raising more than 50 million Euros from Italian and international investors, and forming a network of energized entrepreneurs. They have created more than 350 jobs.
With these and other efforts, we are doing our part to support and launch more entrepreneurs like Diva Tommei, Lisa Di Sevo, Luca Bona, and Giovanni Basso, the four remarkable young people who will be attending the Global Entrepreneurship Summit.
There isn’t time to describe all their projects, but Diva’s startup company particularly intrigues me. She created a company called Solenica, which uses solar energy and natural illumination to bring sunshine into the home. She has built a small moving robot called “Lucy,” which collects sunlight and reflects it into rooms everywhere.
As she describes her process, and I quote: “I start from ‘napkin ideas’ that become mockups, then prototypes, then clean code programs or beautiful physical products that lead to impactful businesses.”
There it is: the whole cycle of an idea into a profitable venture that makes a positive impact.
All these entrepreneurs like Diva, Lisa, Luca and Giovanni need is support.
The good news is, they have a government that has signaled its commitment to building the open roads they will need to take this economy forward.
In that network of support, you can count on the United States – not only as a government but through our private companies.
We stand ready to support Italy’s economic competitiveness and growth. And we will continue to strengthen our support for entrepreneurship, provide a strategic vision, and promote entrepreneurial ecosystems.
My good friend, U.S. Ambassador John Phillips, has had the opportunity to travel widely in Italy and meet many people. As he put it recently, one of the things that struck him most is – quote – “the high level of intellectual capital that exists in this country. There is just no other way to say it: Italy has talent. Lots of it.”
All we need to do is put that talent to work.
Thank you and I look forward to a robust discussion about these issues.