Metrics of Innovation: Measuring the Italian Gap

Abstract

The paper surveys the literature on the measurement of innovation activity and evaluates the position of Italy with respect to the other major European countries. As a complex and multidimensional phenomenon, innovation has been measured from different perspectives: the environment in which firms operate, firms' commitment, its outcome. A significant gap is found for Italy on most measures of innovation. Italy shows the largest gap for measures related to regulatory frameworks, ICT infrastructure and financial support for innovation expenditure. Italian firms stand out for the low level of inputs, especially the ratio of R&D expenditure and the presence of graduates. This feature is not just driven by firms' small average size: the analysis of expenditure by size shows that large Italian firms lag behind in the international comparison. A relatively large share of Italian firms claims however to innovate, even if their R&D expenditure is low. In defending intellectual property rights, firms rely more on industrial designs and trademarks than on patents. Overall, the survey confirms that innovation in Italy is more incremental than based on technology and R&D, therefore less able to increase firms' productivity and overall growth.