Updated on

Italy’s struggle to rank within the top echelons of the global innovation ecosystem is evident in its 19th position out of 22 countries, as detailed in the recent Innotech Report by The European House – Ambrosetti. Despite recent record-breaking startup funding, the country lags behind the tech innovation titans – Israel, the USA, and the UK.

Italy’s position in the Ambrosetti Innosystem Index 2023 remains stagnant, with a small improvement in score to 4 on a 1 to 10 scale, trailing behind Israel (6.1), USA (5.8), and UK (5.7). According to Valerio De Molli, CEO of The European House – Ambrosetti, Italy’s difficulty lies in creating an appealing investment environment and nurturing talent.

While Italy shows promise in efficiency within its innovation ecosystem, ranking 10th, and a notable surge in Venture Capital (VC) investments by 101% to 1.8 billion euros in 2022, these strides are somewhat overshadowed. The country still only contributes 1% of total European VC investments, and struggles to transform its notable academic research into tangible economic and industrial value.

Moreover, the persistent “brain drain” from Italy, resulting in an 18th rank in net student mobility, compounds the problem. This, coupled with the country’s lack of STEM graduates and patent applications, emphasizes the necessity for strategic investment in Research and Development, and in creating favorable conditions for the growth of startups.

Lastly, Italy’s regional disparity in innovation is stark. Its northern regions, including Lombardy, Emilia-Romagna, and Piedmont, score below the European average, while the southern regions like Campania, Puglia, Sicily, and Calabria, rank among the lowest in Europe. This further highlights the need for unified governance of the research system, entrepreneurial reforms, and venture capital financing to stimulate a supportive ecosystem for innovative growth.

Author note — This article on Catching Up in the Innovation Race: Italy’s Potential Amidst Global Tech Titans is part of an ongoing series for executives, board members and M&A teams who want to understand the strategic dynamics behind transactions, regulation and corporate finance. Read more about my multi-level approach on the about page and real cases on the projects page.

Related insights