Without faster change, Italy is bound to fall further behind, becoming a potential drag on the already-depressed euro while former laggards such as Spain, Ireland, and Finland surge ahead. Instead, many midsize businesses, family-owned and lacking capital, have already saturated their small market niches globally and must move into more sophisticated products to grow. Others are racing to shift production of low-tech goods to eastern Europe and Asia. Geox, an Italian shoemaker with a patent on soles featuring a breathable lining, has outsourced manufacturing to Romania, Hungary, and other cheap locales. Yet even while traditional industry hollows itself out, Italy seems incapable of producing a new generation of startup companies in cutting-edge industries.
Rules governing startups remain hostile, and labor-market rigidities stifle investment.
Stock-option regulations have changed four times since the late 1990s. Even many Italians with capital tend to invest outside Italy. We'd rather invest in Switzerland. The fund has made only 5 of its 14 investments in Italy and is expanding an office in Geneva to be close to the researchers at CERN, the birthplace of the Worldwide Web. Many Italian tech grads and researchers flee to more hospitable countries.