Country Profile | Italy

Name:Italy                                       

Capital: Rome

Government: Parliamentary Republic

Population: 60,483,973

Area: 301,340 km2

GDP per capita: €29,300                  

Currency: Euro (€)

Through a total of 75 national programmes, Italy has been allocated €44.7 billion from ESI funds for the duration of the 2014-2020 Multiannual Financial Framework; an additional national contribution of €30.46 billion take Italy’s total budget to €75.16 billion. This budget is designed to support Italy’s socio-economic development and is to be invested in:

  • Developing an innovation-friendly business environment to boost companies’ innovation and competitiveness, especially SMEs;
  • Increasing labour market participation and tackling youth unemployment through investments in education and training;
  • Promoting social inclusion, reducing poverty and improving education to labour needs;
  • Improving administrative capacity, the justice system and the management programmes;
  • Upgrading rail and maritime infrastructure;
  • Investing in low-carbon economy, renewable energy production and waste-water treatments;
  • Supporting young farmers through new and improved ICT systems;
  • Increasing the percentage of GDP invested in research and development;
  • Developing and improving the public administration apparatus.

Italy’s main theme of investment for the 2014-2020 financial framework is by far the improvement of the competitiveness of small and medium enterprises, thanks to an economic stimulus of more than €15 billion: particular attention is given to start-ups and tech companies, as one of the main goals is to develop an innovation-friendly environment for businesses. The European Agricultural Fund for Rural Development (EAFRD) allocated €8.7 billion, while the European Regional Development Fund and the European Maritime and Fisheries Fund allocated respectively €6.1 billion and €400 million. Another relevant matter for the Italian Republic is the increase of sustainable and quality jobs, for which the European Social Fund (ESF), the Youth Employment Initiative (YEI), the EMFF and the EAFRD are investing around €9.4 billion, as Chart 1 shows.

Environment protection and resource efficiency are extremely relevant for the Italian government, as the national environment is prone to both natural and ecological disasters. The ERDF, alongside the EAFRD and the EMFF have been allocating around €8.4 billion in order to secure areas at risk, and to further improve the resource efficiency of the country.

In order to understand thoroughly the composition of the EU funding budget of the Italian government, Chart 2 breaks down the amount of money that each Fund is giving to Italy, by showing their share in the €75.16 billion budget.

The EMFF and the YEI allocated €900 million and €2.2 billion each, reaching around 1.3% and 3% of the total budget. The ESF is investing around €17.5 billion, mainly to increase the number of jobs and improve the skills of the Italian youth. The EAFRD heavily contributes to the development of an innovation-friendly environment for businesses in Italy and for the improvement of the competitiveness of SMEs, with almost €21 billion, meaning a share of 27.8%. The highest contributor to the €75.16 billion budget is the ERDF with €33.5 billion and a share of 44.6%: in fact, this fund is involved in almost every theme of investments from the Italian agenda, especially the focus areas regarding companies and R&I.

In the matter of absorption rate, Italy is performing very poorly: in fact as of July 1st 2019, the country is 26th among the 28 member states in terms of spent funding from the ESIF with a 23% share and only €17.5 billion spent. With regards to allocated financial resources things are slightly better, with Italy being the 25th country of the Union at a rate of 62% – 3% below the EU average. Considering the fact that Italy is the second top receiver of all EU member states, the performances of the country are far from positive and the country is not taking advantage of the ESI Funds. The reasons behind these insufficient absorption rates are multiple and can be linked to some of Italy’s historical flaws: first, the mismanagement of funding at the regional level, which is common and spread especially in the south, that leads to blocked or even cancelled funding; second, the notorious Italian bureaucracy that slows down existing projects and discourages entrepreneurs or other actors to develop new ones; third, the insufficient promotion campaign of ESI Funds in Italy, resulting in a very low share of people knowing about the funding opportunities. 

Similarly to France, the results of the 2019 European Parliament Elections, in which the right-wing party League won with a staggering 34% (among the most voted parties across the continent), confirms a trend of protest towards the European Union, regardless of the immense opportunities that are provided to the country and its regions through the ESI Funds.