Innovation, the decisive challenge for Europe and Italy

In this context, the EU risks remaining a bystander. The issue is not only the quantity of resources, but the ability to use them well, avoiding fragmentation and overlapping that too often penalise public action.

The Draghi Report on European competitiveness and the Letta Report on the single market have played a key role in shaping the Commission's new vision more towards a strategy that can reconcile decarbonisation, innovation and competitiveness and complete the never-quite-completed European Union process.

One figure above all illustrates the problem: the EU contributes 20% to global scientific production, but only 10% to international patents. And even less to technological scale-ups.

There is a Europe that does excellent research, and another that struggles to turn it into products, jobs, markets. In between, there is that 'valley of death' - as insiders call it - where many good ideas are lost for lack of funds, tools or connections.

In the last fifty years, the European Union has failed to generate any company with a market capitalisation of more than EUR 100 billion. In the same time span, however,

All six of the big tech companies that now exceed a trillion euro valuation were born in the United States: Apple, Microsoft, Alphabet, Amazon, Nvidia and Tesla. This gap is not accidental, but reflects a structural weakness in Europe: insufficient investment in research and innovation - which in 2023 stopped at 2.22% of GDP, still far from the minimum target of 3% - and a strong difficulty in attracting private capital, with European funds raising just 5% of global venture capital, compared to 52% in the United States.

This industrial fragility has implications that go far beyond the economy. Greater technological and manufacturing competitiveness is in fact the necessary condition for building a credible European defence, capable of facing the challenges of the new geopolitical context. If Europe really wants to equip itself with a true Defence Union, it will have to learn to invest more, invest better and do so in a coordinated manner, pooling resources, expertise and strategic vision.

The remedy cannot only be more budget. What is needed is a coherent innovation chain, in which every stage - from scientific discovery to production on a scale - is supported. At first, stable funds are needed for universities, research institutions, programmes such as Horizon Europe. Then come 'blended' tools, such as the EIC Accelerator, that help move from the laboratory to the prototype. And when the project is ready to scale, you need patient capital, managerial support, access to markets.

It is often forgotten that the demand side also needs to be accompanied. Innovations need a first market, otherwise they do not take off. This is where innovative public procurement, European standards and incentives to get SMEs to adopt new technologies also come into play. These are mechanisms that already exist, but must be made more effective and easier to use.

Innovation is by nature a multi-handed game. Multi-level governance is needed: Brussels can provide the framework and financial support; the Member States must draw up coherent national strategies; the regions must adapt and implement them on the ground. But equally crucial is the operational role of entities with public participation, and the indispensable contribution of universities, research centres, start-ups, SMEs and large enterprises.

Italy, on paper, does not start at a disadvantage. It has excellent scientific production, strong manufacturing, districts of excellence. But it pays for a chronic disconnect between the world of research and the industrial system. Venture capital is still weak (albeit growing), STEM skills need strengthening, bureaucracy is still critical, and public-private partnerships are not yet developing their full potential. The risk is that the country will lag behind, despite a strong capacity to innovate and a solid competitive base in its entrepreneurial and territorial fabric.

A change of pace requires action on several levels. On the institutional front, policy coordination must be improved. On the operational level, access to instruments must be simplified. And on the cultural level, we need to build platforms to support investment and research that involve the various stakeholders and are able to share the risk on the

basis of different institutional mandates. France, with its agency Bpifrance, which integrates finance, export and innovation under one roof, offers an interesting model to observe.

Today, innovation is not just about economics. It is a matter of strategic autonomy, quality of work, and resilience of industrial systems. For Europe, as for Italy, investing in innovation means investing in one's own future through a strategic vision that focuses on building a truly integrated innovation economy along the entire supply chain, from the creation of the idea to its industrialisation/commercialisation.

Valerio Francola - Industrial policy expert. Opinions expressed do not bind the institution to which they belong.