Compared to its European neighbors, Italy attracts little foreign direct investment (FDI) but nevertheless ranks 14th among global investors (UNCTAD, World Investment Report 2013).
FDI flows are highly volatile and fall and rise in reaction to the opportunities created by the crises of the Italian economy. After recovering in 2011, they have now again fallen sharply. A recovery of the FDIs is expected in 2014 if the country becomes more politically and economically stable.
A privatization program implemented by the government and the energy sector and telecommunication markets liberalization offer interesting opportunities to investors. Italian investment abroad exceeds foreign investment in Italy. In spite of the recent reforms, various interest groups including organized crime are still heavily involved in the country's economic life. The taxation system is also an obstacle to FDI. Nevertheless, Italy is considered a very transparent country with a favorable business climate.
|Index of Transaction Transparency*||7.0||6.0||7.0||5.0|
|Index of Manager’s Responsibility**||4.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||7.0||9.0||5.0|
|Index of Investor Protection****||6.0||6.1||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||34,324||93||16,508|
|FDI Stock (million USD)||355,126||363,624||403,747|
|Performance Index*, Ranking on 181 Economies||97||-||-|
|Potential Index**, Ranking on 177 Economies||12||-||-|
|Number of Greenfield Investments***||147||120||113|
|FDI Inwards (in % of GFCF****)||8.1||0.0||4.4|
|FDI Stock (in % of GDP)||16.2||18.1||19.5|
Source: UNCTAD - Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
Red tape and financial scandals do not encourage investments. In some regions, infrastructures are poor, especially in the south of the country.
Weak enforcement of Intellectual Property Rights is still a problem.
The presence of corruption and organised crime in some regions is an obstacle to investments.
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Last Updates: November 2014