I was born in Bologna, capital of Italy’s Emilia-Romagna region. When I go home during the Summer each year, people ask me to contextualize Emilia-Romagna’s economy and compare it to trends in the globalised world. Alright. In our region, we act like the cool kids because we think everyone is coming to invest in us. Ferrari and Technogym are going public, but our GDP growth is planted at 1% like a beach umbrella along the Adriatic coast’s beaches. You might say: but we innovate here! Yes, but it’s not enough because the true centers of innovation are elsewhere.
At the level of the global economy, we’re predicting an epochal stagnation. Not to mention geopolitical tensions and global warming. Before such a scenario, the only positive signal at a planetary level is, precisely, innovation. To be specific and avoid misunderstandings, I mean biotechnology and genomics, the internet of things, artificial intelligence, the shared economy like Uber and Airbnb, new composite materials, robotics, fintech, live streaming, big data, 3D printing, renewable energies, drones, and nano materials.
The real innovation centers are in Boston, Silicon Valley, Berlin, Tel Aviv, and Shenzhen in China where, for example, four guys became billionaires building drones. In these cities, the economy is going strong, wealth is disproportionate, and, especially, collective because investments in technology spur other components of traditional investments, from hospitality to services.
Innovation springs and develops from urban communities with big universities, research centers, and rich investors. It’s not chance that Silicon Valley was born close to Stanford and the University of California (with the support of Intel, HP, EA, and Tesla among many). And it’s not chance that Kendall Square in Cambridge, MA, has become a global center of the pharmaceutical and biotech industries just a few kilometers from MIT and Harvard Medical School (who also grew due to large investments from companies like Novartis).
These are known facts, but maybe you don’t know that innovation growth in China is insane, with the government recently announcing the creation of a new $30 billion venture capital fund, despite already supporting 780 VC funds totaling $330 billion.
We, from Piacenza to Rimini, still imagine China like the land of low-quality and low-cost manufacturing, but in reality, it has already become an innovation center. In 2014, businesses in Shenzhen invested $21 billion in research and development, 53% more compared to 2011. How much did Emilia-Romagna invest in R&D? Let’s not even talk about it, lest we start to cry.
Let’s talk about industry 4.0, the internet of manufacturing, but we’re already frighteningly late compared to the rest of the world. General Electric, for example, began the process of transforming its manufacturing software 15 years ago. It brought in $6 billion in revenue in 2015 and expects to arrive at $15 billion in 2020. I doubt that the best of our companies surpassed 50 million Euro. The delay in adopting the internet of industry, despite all our local chatter, is in danger of turning us into Japan’s electronics industry in 1995, when all its big brands were sold or failed and Samsung and LG emerged in South Korea as well as myriad other Chinese competitors.
But it’s not only a question of investments. It is more than anything a question of mentality. When you’re sitting at the dinner table in Boston or Shenzhen, people talk about the future. In Bologna, we talk about how much our weekend trips to the beach cost. We’re too provincial and sing our own praises without justification. Okay, things are better in our region than in other Italian provinces, but it’s not enough to compete at a global level. China, as the numbers attest, is kicking our ass.
Therefore, trust what I’m about to say: the difference between us and the rest of the world is evident even in dinner table conversations in Bologna, Boston, and Shenzhen. We can, however, console ourselves with one fact: at least we’re eating tortellini.