At the roots of the Italian productivity decline: the role of R&D

Alessandro Sterlacchini, Polytechnic University of Marche
Francesco Venturini, Polytechnic University of Marche

Abstract

This paper discusses the role of R&D activities in explaining the weak performance of Italian productivity over the last two decades. We argue that the relatively scarce effort of Italian firms in knowledge-generating activities may be one of the key factors behind the severe fall in TFP growth experienced since the mid-Nineties, especially by the manufacturing sector. Compared to the US and the main EU partners, Italy is characterized by a downsized R&D intensity both in low- and high-tech industries; most importantly, its innovative effort has been stagnating from the beginning of the last decade. These aspects appear particularly worrisome as occurring when R&D inputs have become a key factor for sustaining the competitiveness of the industrialised economies, for which the advantages of imitating foreign innovation are increasingly smaller.