Positive signals on Italy's attractiveness. The growth trend continues: increasing foreign direct investment. With 207 projects in 2021, our country marks +83%, which is higher than in all other European countries. However, with a market share of 3.5% (up 1.5 points), Italy still ranks far behind the main attractors of foreign direct investment (Ide) in Europe, France (21%), the United Kingdom (17%) and Germany (14%).

This is the finding of the EY Europe Attractiveness Survey 2022, annual research on foreign direct investment and perceptions of international players. The aim of the study is to investigate the level of attractiveness of each country and identify the main drivers of future investment.

"Italy climbs positions in terms of attracting foreign investment, ranking in 2021, for the first time in a long time, among the top 10 European countries in terms of number of Ide projects," comments Massimo Antonelli, CEO EY Italy and Chief Operating Officer EY Europe West. "After the increase in investments recorded in the difficult pandemic year, 2021 confirms the growth trend, with a positive sign of confidence in the prospects for strengthening the Italian economy, also linked to the multi-year reform plan pursued by the Draghi government."

Further growth will require action on regulatory uncertainty, bureaucracy and justice times, according to Antonelli. "We are on the right track, but it is essential that the government, companies and people continue to work in synergy to maintain the country's confidence and credibility, also thanks to PNRR funds," he adds.

The most attractive sectors

Most foreign investments in Italy in 2021 were in the software and IT services sector (15% of the total), transportation and logistics (14%) and B2B services (12%). Growing compared to 2020 were initiatives in agribusiness and consumer goods (+214% number of Ide) and machinery and equipment (+233%). Declining is the attractiveness of electronics (-25%) and telecommunications (-57%).

As in 2020, investments in Italy in the last year come mainly from the United States (28% of the total), followed by Germany (17%), which surpasses France (12%) and the United Kingdom (7%). Those coming from China decrease by 50 %.

Most investments are in the North of the country (21% and 54%, between East and West), 15% of projects in the Center, 10% in the South (up from 4% in 2020).

Obstacles and drivers for the future

The main obstacle, noted by 69% of respondents, is regulatory uncertainty (up 11% from 2020), followed by 65% by excessive litigation risk for businesses (up 23%) and red tape for business, felt by 56 % of the sample (in line with the 2020 figure).

What would make Italy more attractive? According to investors, cutting the tax wedge (70%), reducing labor costs (32%). And then incentives for innovation (22 %), aid to struggling sectors (21%) and support for SMEs (20%).

"The investors contacted place Italy fourth among European countries that will be able to attract increasing shares of foreign investment from 2022 and in the coming years," explains Marco Daviddi, Strategy & Transactions Markets Leader Europe West and Italy at EY.

Digital and human capital

"Among the sectors that will enable Italy to attract new investment in the future, digital economy (41%), energy and ecological transition (40%), retail and agrifood (31%) stand out in importance."

Also relevant were technical know-how and the quality of human capital, which drove many of the 2021 projects. "We need to continue to focus on these assets in order to enhance national excellence in higher value-added areas," Daviddi concludes.