What attracts foreign investment to Italy

Foreign investment in Italy, latest trends

Ortona cathedral - Italy
Ortona cathedral – Italy

There are several factors that could have a positive effect on the attractiveness of Italy, but the necessary reforms must be carried out.
Italy is becoming less and less attractive to foreign investors. The country loses positions in international rankings, and the AIBE index, developed by Censis (the National Research Institute) with the Association of Foreign Banks, is down to 40.3, from 47.8 in 2016. Being given that 100 is the maximum value, Italy is therefore considered to be a country where investing is not very practical: among the main causes are the tax burden, the slow times of the civil and regulatory bureaucracy and the justice. The most attractive are China and Germany, followed by the United States and India.

Nevertheless, we can remain optimistic

However, there are several factors that could have a positive effect on the attractiveness of Italy, from the Industry Program 4.0. Even Brexit could favor Italy, while the Trump Presidency is seen as a negative factor, as well as domestic political instability. Strengths remain for fashion and luxury investors (91.3%), food (60.9%) and mechanics (60.9%). They are followed by tourism and pharmaceuticals. Among the internal factors, of great importance is the quality of human resources. The main mode of investment is indicated in the merger and acquisition, for the prestige of its brands, the quality of products and services and the acquisition price considered relatively low. It is hardly the case to note that even real estate prices are relatively cheap, especially in some areas. Residences on the sea front can be found around 1000 € per square meter, especially in the south of the peninsula.

In short, Censis concludes, Italy’s external perception is better for the country’s structural aspects such as human resources, infrastructure, the banking system and the flexibility of the labor market. While investors remain chilly in view of the aspects that involve the public administration.

What slows down investment may disappear in the long run

If we look at the last administrative elections in mid-June, the extremist parties lost ground. This could allow the governing parties to carry out the reforms that Italy needs.

On what Italy should bet to improve their “convenience framework”, as defined by the Censis survey? For the vast majority of respondents (who are entrepreneurs, managers, banks and foreign correspondents), it is essential to continue the reforms: 72% declare it. The reform of public administration, the simplification and certainty of a more effective fiscal policy, the reform of the civil justice, continue to return to the center of the concerns of the foreign investors.

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