"European companies no longer generate sufficient profits to fuel the social model – and to fund long-term research. It is no surprise that Europe has only very few tech companies"
So, the problem is the cost of the social model.
From the Financial Times. INDUSTRIAL MODERNISATION — OR LACK OF ITItaly’s economic model is very dependent on family-owned companies that are typically smaller and less productive than their equivalents elsewhere. This problem has grown worse in recent decades.
“In the 1970s and early 1980s, the Italian business model of small and medium-sized enterprises drove growth,” Silvia Ardagna, economist at Goldman Sachs, said. But, she added, many of those companies “did not invest in R&D and lacked the management capabilities and human capital to allow them to compete on a global scale”.
POOR EDUCATION SYSTEM The experts cited Italy’s dysfunctional educational system as second only to the problems with business culture and industrial modernisation. A large proportion of Italy's youth is neither in work or training. A low share of young Italians earned a university degree.
UNFRIENDLY BUSINESS ENVIRONMENT The country ranks 111th out of 190 countries globally for ease of enforcing contracts, according to the World Bank ease-of-doing-business index.Italy scores just as poorly on bureaucracy for resolving insolvencies, paying taxes and dealing with construction permits.
Italy scores poorly for its civil justice. Italy is a larger economy than Spain but has received less than half the level of foreign greenfield investment since 2003, according to fDi Markets.
Italy’s coalition government argues that its spending plans will help fuel growth. But many of the experts consulted by the FT argue the contrary: that high debt levels already crowd out growth by attracting funds for government paper that would otherwise go towards more productive investments.
