Four reasons not to halt internationalization
Gianmarco Ottaviano’s spoke at the second event in the 2025 “Ideas for Growth” series, in collaboration with Affari&Finanza by la Repubblica
Halting internationalization through “adventurous protectionist solutions” means shutting down a powerful engine of productivity growth for domestic firms, explained Gianmarco Ottaviano, Professor of Economics and Boroli Chair in European Studies at Bocconi University, during a talk in the “Idee per la Crescita” (Ideas for Growth) series organized by Affari&Finanza of la Repubblica and SDA Bocconi.
Exporting firms are, in fact, more productive, more innovative, and more profitable than others, because exposure to global competition helps reallocate productive resources toward more competitive activities.
“In today’s world, marked by new geopolitical tensions and increased discussions around economic self-sufficiency, the greatest risk is become insular and withdraw from competing on an international scale,” Ottaviano noted. “But globalization is not over—it is simply evolving. Strategic clarity is essential to navigate this transition with the right tools and a well-structured network of relationships.”
Professor Ottaviano outlined the four mechanisms that drive this increase in productivity—and the actions needed to make them work.
- The first mechanism is the reallocation of resources (capital and labor) toward sectors with a competitive advantage, leading to higher aggregate productivity. This requires eliminating distortions that trap labor and capital in low-productivity activities.
- The second mechanism is the reallocation of resources within individual sectors. National-level reforms are needed to boost competition and improve credit access for high-potential SMEs.
- The third mechanism is creative destruction, the process by which more innovative firms enter the market and replace incumbents. Lowering entry barriers for new firms and exit barriers for struggling ones is crucial.
- The fourth mechanism involves upgrading incumbent firms. In order to compete with new entrants, established businesses are pushed to innovate faster. Among the many policy actions that could help: improving digital infrastructure, modernizing school curricula, and fostering a competitive service sector.
The discussion, moderated by la Repubblica’s deputy editor and head of Affari&Finanza, Walter Galbiati, featured contributions from Davide Vellani, Staff Corporate & Investment Banking of BPER Banca, and Roberto Giovannini, Partner, Head of Consumer Industrial Markets of KPMG.
The full talk is available (in Italian) in streaming on the Repubblica website:
https://www.repubblica.it/dossier/economia/affari-e-finanza-idee-per-la-crescita/
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