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1 Introduction: The Assumptions, Aims and Contents of the Study

There is no doubt that, during the past decade, both the European Community institutions and Italian public administrations have continued to issue various provisions in favour of small and medium-sized enterprises (SMEs) operating in Italy. Moreover, recent years have seen publication in Italy of various surveys reporting, amongst other things, the results of industrial policies providing financial incentives (Ministero dello Sviluppo Economico, 2009), for SMEs in particular (Brancati, 2001; de Blasio and Lotti, 2008). As a consequence, now available is further information with which to update – although they have been conducted very recently – some previous studies by the present author on public policies towards SMEs, including crafts firms.Footnote 1

The study therefore has two purposes: firstly, to describe as succinctly as possible the numerous and differentiated interventions adopted for Italian SMEs during the past decade, seeking to show their critical aspects; secondly, to examine the problems evident in the ongoing phase of structural crisis in light not only of the scientific literature but also of the most recent official documentation, the purpose being to conduct a critical appraisal of public policies for Italian SMEs.

In pursuit of these aims, the study divides into two main parts. The first (Sects. 5.2, 5.3, and 5.4) seeks – also by drawing on such an authoritative international source as the OECD (Organisation for Economic Co-operation and Development) – to furnish a summary description of the industrial policy measures for SMEs adopted by both the central government and the regional and local administrations during the period considered. The second part (Sects. 5.5 and 5.6) deals mainly with the present state of progress of such measures. It dwells in particular on the provision denominated “Industria 2015”, in regard to which – owing to the difficulties encountered in determining the tax relief and benefits envisaged for SMEs – a quantitative estimate will be conducted of the amount of the various financial facilities foreseen by the normative provisions concerned exclusively with firms of this type.

Finally, the concluding section outlines the prospects for the near future that seemingly emerge from the provisions most recently adopted at national level for SMEs: a provision issued by the Italian government in regard to Urban Free Zones (UFZs), and a directive implementing the European Community Small Business Act (SBA).

In conclusion this introduction, it should be pointed out that this study does not directly examine the policies for SMEs adopted by the European Community, although they are closely linked with those of the Italian (central and decentralized) administrations. In fact, their numerousness, heterogeneity, and importance preclude their treatment together with those of a single member-country of the European Union (EU); instead, their separate discussion would be required. Hence, they are mentioned here only when they have been implemented jointly with Italian policies and cannot be sharply distinguished from them. Consequently, by analogy, no particular attention will be paid to analysis of the aid given to SMEs within national re-equilibrium policies targeted on the country’s late-developing southern regions.

2 The Main Provisions on Italian SMEs in the Past Ten Years

According to the OECD, which already in 2000 on the occasion of the first Ministerial Conference on SMEs drew up a document on policies concerning firms of such kind, Italy’s economic policy approach to small firms during the first half of the decade divided into three main strands: reduction and simplification of fiscal constraints in order to stimulate investments; reform of the labour market in order to increase its flexibility; and elimination of excessive bureaucracy (red tape) (OECD, 2005). Whilst it is true that the first two strands seek to remedy two of the main difficulties encountered by SMEs, it is also true that they do not exclusively concern such enterprises: they assume more general significance in that they work to the advantage of the productive system as a whole, and therefore also of large firms.

This observation can be extended to large part of the other measures considered by the last Outlook published on the subject by the OECD and concerning: the administrative simplification by creating “one-stop shops” for productive activities; access to infrastructures both basic (transport, etc.) and technological (broadband, computerization of the public administration, etc.); the development of an entrepreneurial society and culture, with particular regard to female entrepreneurship, through specific initiatives especially in training; easier access to financing for investments through the business angels networks proposed by the European Community; e-commerce as a form of organizational innovation through the computerization in this case of the enterprises themselves; and finally the consolidation of networks, clusters and partnerships among enterprises of various sizes, also through simplification of the concept of industrial district.Footnote 2

With the purpose of verifying the existence, and consequently the identity, of policies targeted – exclusively or predominantly – on SMEs, it is necessary to consider the set of legal-institutional instruments devised for their support and development, starting from the division between the state and the regional governments of powers regarding the industrial policies undertaken, not without difficulties, some years ago (Bernardi et al., 2008). In fact, despite the significant reforms enacted in the late 1990s and early 2000s, some years later, the demarcation line established by law among the roles assigned to the central authorities, the regional administrations, and local authorities in the field of industrial policy (which is a concurrent matter among them) is still not entirely clear. In fact, following the administrative devolution implemented towards the end of the 1990s (in application of the Bassanini Law), as well as the more radical institutional amendment made to Title V of the Italian Constitution – in accordance with the subsidiarity principle – one notes the existence, at least in abstract, of the following duality of competence in regard to industrial policies.

  1. (a)

    The state performs a coordinating and steering role, and assumes responsibility for higher-level actions (those concerning large-scale operators or sectors particularly important for development of the productive system). It also coordinates the actions of the other levels of government by defining rules intended to maximize the effectiveness of policies, preventing overlaps or, vice versa, the crowding-out of roles, as well as the waste of public resources.

  2. (b)

    The regional administrations and local authorities promote and manage, also in accordance with EC guidelines, interventions concerned mainly with SMEs and the development of local areas, as well as the marketing of local products.

This articulation of public intervention on several levels of governance seems to have increased the role of the Italian Regions in the field of industrial policies: indeed, since 2000 they have managed not only the instruments established by their specific legislations but also those devolved to them: that is, all the government facilitative instruments in being at the moment of their “delegation”.Footnote 3 The central administration has retained only a limited number of instruments, although they are important ones, such as the regulations on investment incentives for large industrial firms (law no. 488/1992) or those on the Fund for Technological Innovation (Fondo per l’Innovazione Tecnologica, FIT) and the Research Incentive Fund (Fondo Agevolazioni Ricerca, FAR).

However, this fundamental distinction has become less clear under recent legislatures, which have changed the logic of public intervention through adoption by the central government of a series of provisions, the most important of which are now described in chronological order:

  1. (i)

    the introduction of a support system for firms hinging on the role of the Interministerial Committee for Economic Planning (Comitato Interministeriale per la Programmazione Economica, CIPE), which, also through forms of shared planning with local public and private actors, has become a body working for the development of SMEs and industrial districts;

  2. (ii)

    the Action Plan for Economic, Social and Territorial Development (Piano di Azione per lo Sviluppo Economico, Sociale e Territoriale, introduced by law no. 80/2005, the so-called “law for competitiveness”), whose implementation has among other things led to reform of financial incentives with a view to superseding their “generalist” nature and to achieve closer accord between firms and banks on access to credit;

  3. (iii)

    the issue (in 2005) of regulations on the award of a “concentration bonus” to SMEs,Footnote 4

  4. (iv)

    the 2006 budget law which, amongst other things, provided for issue of a decree stating the criteria for defining the productive districts to which tax concessions and administrative simplifications were granted,Footnote 5

  5. (v)

    the 2006–2008 Triennial Plan, which redefined intervention policies, also foreseeing reform of facilities for so-called “under-utilized” areas;

  6. (vi)

    the identification – within a new industrial policy framework established by the 2007–2011 Economic and Financial Planning Document – of a series of interventions aimed in particular at strengthening material and non-material infrastructures in implementation of the EC strategy for growth and employment (defined in 2000 on the occasion of the European Council in Lisbon);

  7. (vii)

    the publication of a broad and systematic report entitled “Industria 2015”, which delegated powers to the government in regard to reorganization of the public funding system in the field of research and innovation;

  8. (viii)

    the inclusion in the 2007 budget law of large part of the so-called “Bersani bill”, with the creation of funds for the financing of various initiatives (for competitiveness, scientific and technological research, business finance, as well as the rescue and restructuring of firms in difficulties). In regard to this provision, which will be discussed in greater detail in the next section, to be mentioned here is that the implementation of projects involves all the public, national and local administrations, whose actions can contribute to fulfilment of those established at central level. The Regions can contribute on the basis of their productive inclinations, as well as their institutional competences, thereby contributing to projects of national importance. However, it appears evident that these industrial policy choices reverse the roles between State and Regions, in the sense that it is not the regions that expresses their requirements, with which the State conforms, but it is the State that decides, while the Regions merely adapt such decisions to the characteristics of their territory.

A situation substantially similar to the one just described is apparent on considering both internationalization policies (i.e. measures intended to foster foreign trade and to promote the presence of Italian firms on foreign markets) and those concerning innovations (in technology, organization and “product”). In the former case, also because the matter is confused and with overlaps, the practice is for the State to undertake the functions of coordinating and promoting production of national importance, while the decentralized authorities handle the promotion of local products. In the latter case, administrative devolution has transferred to the Regions functions pertaining to the promotion of programmes and projects for applied research and technological transfer, while basic research has remained the competence of the State.

At this point it is possible to provide a synopsis (Panel 5.1) which shows the relations effectively operating among the various forms of industrial policy. Two criteria have been used to compile the panel: level of government, and area of intervention.Footnote 6 In particular, Panel 5.1 summarizes the roles performed by the various administrations (central and local) in regard to the main types of policy for SMEs. Put extremely briefly, and as has been implied by the foregoing survey, in Italy there prevails an institutional system which is complex and uncoordinated because of the unclear allocation of competences among the various levels of government. This gives rise to interventions whose objectives at least partially overlap.Footnote 7

Panel 5.1 Competences for SMEs support and development
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3 The Measures for SMEs Envisaged by “Industria 2015”

As said, “Industria 2015” is a palling document that establishes the strategies for the development and competitiveness of the Italian productive system in the future. It is based on:

  • an analysis of the future economic-productive scenarios awaiting Italy in a medium-long period perspective;

  • a concept of industry extended to the new production chains that integrate manufacturing activity with advanced services and new technologies (http://www.industria2015.ipi.it).

The government’s strategy identifies firms’ networks, innovative finance, and especially the Industrial Innovation Projects (Progetti di Innovazione Industriale, PII), the new instruments with which to re-position the Italian industrial system within the now globalized world economy.

This is a strategy that seeks to identify the fundamental drivers of change with a view to innovation and, consequently, to orient economic policy choices. Implementation of the strategy pivots on the capacity to shift the productive system to arrangements compatible with the evolution of competitive scenarios. This capacity for orientation consists, on the one hand, in identification of productive technological areas and specific goals for industrial innovation, and on the other, in mobilization in pursuit of those of the central and local administrations, the universities, research centres, the business world, and the financial system.

Moreover, because the European Commission has approved and announced the new aid regime for research, development and innovation, this strategy represents not only a revolution in the system of incentives for firms, it is also a key factor in realization of the PIIs envisaged by “Industria 2015”. The new aid regime, in fact, allows firms to choose both the type and the form of financial support best suited to their needs in regard to activities ranging from industrial research, through experimental development, to the definition of prototypes and demonstration plants for the realization of new products and services able to compete on international markets.Footnote 8

The PIIs – which therefore constitute the main and most innovative instruments with which to relaunch Italian industrial policies – belong within a framework of public policies intended to strengthen the economic system’s competitiveness, also through the already ongoing liberalization of various sectors (energy, saving protection, telecommunications, service improvement, restructuring of professional orders), measures to simplify administrative procedures, and general support to the production system, mainly in the form of automatic incentives such as tax credits for investments in research and development. These are systematic intervention projects which, on the basis of technological-productive objectives set by the (central) government, seek to foster the development of specific types of highly-innovative products and services in areas considered strategic for the country’s development: energy efficiency, sustainable mobility, new life technologies, new technologies for “Made in Italy” products, innovative technologies for cultural goods.

The main novel features of the PIIs are the following: (a) a Project Manager designated for each Industrial Project; (b) re-design of the incentives offered to firms participating in the PIIs; (c) mobilization of a plurality of actors for achievement of the technological-productive objectives; and, therefore, (d) possibility to activate public-private partnerships.

Another instrument for intervention is the Fund for Enterprise Financing (Fondo per la Finanza d’Impresa), whose purpose is to facilitate access to credit and risk capital by firms, especially those of medium and small size. For this purpose, the Fund participates in operations, proposed by banks and/or financial intermediaries, which envisage the adoption of new instruments of credit risk mitigation and private equity. In general, priority is given to “system” operations able to activate further public and private financial resources, as well as involving a plurality of firms in a “portfolio” logic (districts, networks, clusters, etc.).

Finally, Enterprise Networks (Reti di Impresa) are forms of contractual coordination among enterprises obviously intended in particular for SMEs wanting to increase their critical mass and to acquire greater market power, without being obliged to merge or unite under the control of a single subject. In this regard, “Industria 2015” foresees that the government may issue legislative decrees which:

  • define forms of stable contracted coordination among enterprises which, because they have distinct decision-making centres, are suitable for the creation of enterprise networks in joint or hierarchical form;

  • define the stability, coordination and direction requirements to be fulfilled by enterprise networks;

  • define the legal effects of enterprise networks in regard to consequences of an accountancy and taxation nature, if necessary coordinating and modifying the legislation on groups and consortia of enterprises;

  • introduce, with regards to networks comprising enterprises with legal offices in different countries, regulations on transnational networks, if necessary distinguishing between European and international networks;

  • provide that social enterprises and non-profit organizations may enter into network contracts.

As regards the present state of progress of “Industria 2015”, after a rather long gestation phase, PIIs are becoming fully operational with (i) the appointment of those responsible for drawing up the five project plans; (ii) the publication of the project plans relative to the areas of energy efficiency, sustainable mobility, new technologies for the “Made in Italy” sectors, and innovative technologies for cultural goods and tourism; (iii) approval by the State-Regions Conference of four inter-ministerial decrees which, in accordance with the system of the Regions, define the government’s strategy in the relative areas of technological intervention; (iv) the publication of three calls for tender (energy efficiency, sustainable mobility, new technologies for the “Made in Italy” sectors); (v) and, finally, the definition – jointly with the Ministry of Universities and Research and the Regions – of the guidelines for actions to boost the effects and the impacts of the projects, also with regard to geographical specificities, concentrating the use of the national and EC resources on the strategic objectives set by the PIIs.Footnote 9

4 A Synopsis by Levels of Government and Objectives

Panel 5.2 sets out the distribution by objectivesFootnote 10 of the measures adopted by each of the three levels of government in regard to SMEs. It shows quite clearly that what has been maintained from a strictly legal point of view on the basis of the institutional order in force does not correspond to the reality. In fact, the measures assumed in recent years by the central government, contrary to what might be expected in light of legislation during the late 1990s and early 2000s, which was characterized by a political endeavour to decentralize large part of the measures for SMEs, tend to pursue the entire range of intervention objectives, thus again assuming a decisive role. Consequently, the previously introduced division of powers among levels of government does not satisfactorily represent the actual ways in which the measures for SMEs have been implemented. In fact, as already pointed out, the lack of both a real division of competences and of coordination among levels of government (by the central level) has led to the overlapping of roles.

Panel 5.2 Distribution of SMEs support and development instruments among levels of government
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One also observes that the various measures adopted are often co-financed by two or more levels of government,Footnote 11 so that they are in fact conjoint, even when the individual provisions stem from the initiative or responsibility of a specific level of government. In particular, the majority of measures are addressed to enterprises in general, and only a certain number, as yet indefinite, are targeted exclusively on SMEs. Moreover, some measures are intended for groups or networks of enterprises or productive districts, although it is well-known that these organizational arrangements mainly concern SMEs.

Finally, also the recent “Industry 2015” national scheme tends to confirm both the involvement of the Regions in the financing of projects and, especially, the lack of provisions exclusively concerning the heterogeneous group of SMEs,Footnote 12 notwithstanding the priority that should be given to them according the political-economic directives issued by the EU.

5 Financial Incentives at National and Regional Level

5.1 Overall Assessment

The first assessment of the characteristics of the financial incentives system concerns the quantity of interventions, given that this is one of the most critical aspects of the overall system (national and regional). During the period 2003–2008, there were 91 interventions at national level, and 1,216 at the regional one (Ministero dello Sviluppo Economico, 2009). According to the Ministerial Report, these figures alone suffice to warrant careful reflection on the system of incentives to enterprises and on the possible evolution of public policies in support of the Italian productive system. The figures evidence redundancy in the system and suggest the overlapping and duplication of incentives, as well as a fragmentation of interventions obviously bound to determine diseconomies in the use of financial resources.

Although there is evidence of some simplification of the system during the period considered, there persist redundancies and criticalities, which concern – besides the large quantity of interventions – the still weak focus on objectives more closely correlated with the factors most decisive for the productive system’s competitiveness, such as innovation and research on the one hand, and internationalization on the other.

In other words, analysis of the data contained in the Ministerial Report, apart from the new interventions undertaken in 2008, does not show changes such to signal that the structural problems of the incentives system have been remedied. In general, the fundamental structural problems already stressed by previous reports still persist, and some recent positive results are certainly not enough for those problems to be considered overcome.

In effect, many of the incentive measures, both national and regional, have a high degree of generality, in the sense that they are addressed to a wide array of enterprises different in terms of both size and sector; but above all they often finance diverse types of investments with no particular limitations or conditions apart from the general ones imposed by EC regulations. In short, these are indiscriminate interventions which may therefore be termed “generalized”.Footnote 13 Another category comprises measures which are instead specifically targeted, in that they are characterized by the selectivity of investments, projects and incentives, and they are more narrowly intended to support development of enterprise competitiveness. These are the interventions that can be called “targeted”.Footnote 14

5.2 Measures by Level of Government and Objective

In relation to the different possible aspects of analysis, the overall data on the quantity of the interventions largely reflect the values recorded for the national component of the incentives system, which is the one that predominates. Nevertheless, the policies undertaken by the Regions firstly reinforce the general pattern whereby generalized interventions prevail in both geographical areas, and secondly confirm the differences between the two areas recorded for the national component. In fact, features indicative of differences in the organization of public action emerge: on the one hand, national policies appear more articulated and directed to more diversified objectives; on the other, regional policies are centred on a limited number of objectives, on which the limited available financial resources, much less substantial than national ones, are concentrated.

Examination of the amount of incentives granted confirms and accentuates the pattern described in regard to the numerousness of national and regional interventions. Again apparent is the concentration of regional resources on consolidation and development of the productive system (over 57% of the total), although the proportion concerning access to credit has increased in recent years, while there has been slight reduction for innovation, research and development. National resources are instead used mainly to reduce differentials in territorial development (44% of the total facilities granted), as well as for innovation, research and development, access to credit, and financial consolidation. The national schemes allocate a greater proportion of incentives to new entrepreneurship and the internationalization of firms, while the regional ones are obviously more concerned with environmental protection and services/infrastructures for enterprises, given that this latter industrial policy objective pertains only to regional interventions.

As regards the average value of investments, the figure is substantially larger for targeted interventions than for generalized ones. This difference is all the more significant if the national interventions are considered, in which case the average investment is more than twice the average one for generalized interventions. These results are largely confirmed by the finding for evaluative interventions: in fact, the national evaluative interventions are characterized by higher average investments, particularly in research and development programmes, which are mainly undertaken by medium- or large-sized firms. Regional evaluative interventions instead finance smaller-scale projects for the simple reason that they refer to SMEs, and, particularly, small firms.

To recapitulate, therefore, the numerous elements which emerge from the foregoing analysis furnish a series of insights and a reference framework which, in extreme synthesis, relate to certain structural characteristics of the incentives system. Firstly, it highlights the numerousness of interventions, particularly at regional level, even though this is mitigated by the fact that the majority of resources are concentrated on a limited number of incentive instruments: 10 interventions, in fact, absorb fully 80% of national resources. Again in regard to the numerousness of instruments, it has also emerged that generalized interventions outnumber targeted ones, as well as those of evaluative and automatic type, just as those that involve capital contributions outnumber those involving other types of incentive. The main recommendation that emerges this respect is logically that of reducing the number of, and the consequent overlaps among, the instruments used at the different levels of government, but preserving the specificities of the policies adopted.

5.3 The Guarantee Fund for SMEs

According to figures issued at the end of March 2009, the Guarantee Fund for the SMEs, active since December 2000, had guaranteed more than 60,000 operations and furnished financing to a total of 11.5 billion euros. As shown by Table 5.1, however, between 2003 and 2008 the Guarantee Fund progressively reduced its operations, although in the past 2 years – during which the economic-financial crisis has entailed the severe rationing of credit to enterprises – the amount of financing granted has increased considerably compared with previous years.

Table 5.1 Applications and funding granted by the guarantee fund in the period 2003–2008 (absolute values in millions of euros)
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Important novelties have been introduced by a provision adopted between 2008 and 2009: besides first re-financing up to 450 million euros, the Guarantee Fund has been extended to crafts firms, with the State as guarantor of last resort. Table 5.2 provides an overview of the time schedule of allocations by the Guarantee Fund following the changes introduced by the new regulations. It shows that refinancing the Guarantee Fund for SMEs will make a total of around 1.5 billion euros available, so that it will be able to guarantee bank loans amounting to 70–80 billion euros.

Table 5.2 Overall refinancing of the guarantee fund in the period 2008–2012 (absolute values in millions of euros)
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5.4 The Most Recent European Community Provisions

In order to boost firms’ competitiveness and to accelerate the growth of the European economic system as a whole, new EC regulations have been issued on state aid for innovation, research and development (Communication of European Commission, 2006/C 323/01). On the one hand, the regulations introduce new types of aid in the sector and, on the other, focus closely on the needs of SMEs, which are usually those hardest hit by market failures. The European Commission pays particular attention to SMEs, to the point that – as already mentioned – in June 2008 it adopted the SBA, this being a specific communication expressing the political intent to grant a central role to SMEs in the economies of both Europe and member-states. The distinctive feature of the SBA is its conviction that recognition by society of the role performed by small entrepreneurs is essential for the creation of an environment which encourages individuals to start up their own businesses, and which recognizes the crucial contribution made by SMEs to development of the economy.

This framework of particular attention to SMEs also comprises the new regulation on group exemption (Regulation no. 800 of 6.8.2008), which strengthens the role of member-states in supporting the SMEs through the various phases of their development. All categories of aid exempt from the obligation of notification, among which those for innovation, for the hiring of high-skilled personnel, for investments in machinery in the form of risk capital, can be granted to SMEs with the aim of making them more innovative and competitive in a context of increased international competition.

However, contrary to this position adopted by the EC authorities, the attention paid at formal level by the Italian government to SMEs has diminished in recent years, as evidenced by the fact that, in the most recent Ministerial Report on interventions to support business, specification is no longer made of the proportion allocated to incentives for SMEs. Moreover, interventions by the Regions are no longer distinguished between their own and those conferred.

6 An Evaluation of Interventions for SMEs Through Quantitative Estimation of Incentives

Recently published have been the findings of an international seminar on best practices in the evaluation of SMEs and entrepreneurship policies (OECD, 2007). It is evident from the report that the so-called “OECD Istanbul Position” – which emphasises the need to develop an evaluation (ex post) culture – has been implemented in Italy with only partly satisfactory results, notwithstanding the presence also in the past decade of a large body of scientific literature on the subject.

A brief survey of this literature on the evaluation of industrial policies shows that, of the various approaches followed, some differ from those adopted in the above-mentioned Ministerial Report, because they appear more directly targeted on the universe of reference for this study, namely SMEs.

A first approach is based on a distinction among fiscal, financial and credit incentives according to whether they are addressed to already existing and operating SMEs, with the purpose of improving their competitiveness, or whether they are targeted on the creation of new small businesses, so as to foster local economic development by increasing employment, etc.

In the former case, the most recent study (D’Aurizio and de Blasio, 2008) evaluating the effectiveness of provisions such as law no. 488Footnote 15 argues that the stimulation effect of additional investments has been modest, because it has induced mainly inter-temporal substitution effects in entrepreneurial decisions. Apparently more effective has been law no. 388/2000 (budget law for 2001), also because of its different system for the granting of incentives (an automatic mechanism rather than a competitive procedure). Nevertheless, also in this case the additionality of incentives for investment has been scant.

To be cited in regard to policies for new firm creation are the main national provision on the matter (law no. 44/1986, discussed by di Nola and Giacomelli, 2001) and the most recent regional laws for the promotion of new enterprises in Italy. In regard to the latter, it has been shown that they are not particularly effective in promoting the birth of new firms in the various sectors, with the exception of construction, where the policies has had a positive impact on the development of new entrepreneurship (Piergiovanni et al., 2008).

Other approaches, though of lesser interest, are those that distinguish by geographical area on the basis of the distinction introduced for EC cohesion policies between Objective 1 regions (Mancino et al., 2005) and Objective 2 ones (Bondonio and Greenbaum, 2006); or evaluations restricted to incentives of a specific type, such as those for R&D activity in SMEs (Merito et al. 2008) or comparative evaluations of the different types of aid (Bondonio, 2008), which reach conclusions useful mainly for the purpose of defining public interventions for SMEs.

Finally, even more specific studies have been conducted, such as those concerned with strictly technical aspects of the various kinds of incentives (Gai and Rossi, 2009), or those that furnish indications regarding the financial instruments preferable for SMEs, such as private equity, and at the same time deemed more consistent with “Basel 2 Accord” (Ascani, 2007).

A critical feature shared by all these studies, however, is the partiality of their field of inquiry, in the sense that none of them considers the entire range of the numerous and heterogeneous instruments used in favour of SMEs, so that they fail to fill the gap previously mentioned in regard to the Ministerial Report. To remedy this shortcoming at least to some extent, one may estimate the relative amount of aid furnished to Italian SMEs in the period 2003–2008, considering the national incentives reserved to enterprises of this kind (Table 5.3), as well as the regional measures that, by definition, are restricted to SMEs. The amount thus obtained is then compared against the total value of public interventions, obtaining results of a certain significance (Table 5.4).

Table 5.3 Incentives granted and disbursed to SMEs, as well as investments facilitated on the basis of national measures in the period 2003–2008 (composition %)
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Table 5.4 Incidence of national incentives to SMEs and of regional measures in the total of public measures in the period 2003–08 (absolute values in millions of euros)
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The first result is that the facilities intended for SMEs in the period considered exceeded 41% of the total, while in terms of actual disbursement the proportion diminished to only just over 35%.Footnote 16 When evaluating the relatively limited role of SME financing, one should bear in mind that this is also the result of the existence of two sources of facilities for SMEs deriving from the distinction between general laws applying to all enterprises and specific ones which only concern SMEs. In fact, this double financing mechanism, besides being usually considered a duplication, also tends to assume the features of a bias towards large firms, since these are able to prevail over smaller ones in obtaining the facilities provided by the general laws.

A more interesting aspect, however, is the incidence of incentives on facilitated investments: insofar as this is slightly higher than the other two, it confirms that SMEs require a larger amount of financing for their investments than do larger firms, which can obviously rely on other sources of financing.

Finally, on considering national interventions alone, it emerges that almost two-thirds of the total of incentives disbursed concern self-employment, while almost half of facilitated investments relate to the Guarantee Fund, thereby confirming the latter’s presumed capacity to generate a “multiplier effect” in a relatively brief period of time.

It is therefore desirable that the resources foreseen for this instrument in the years subsequent to 2008 should be allocated, so that the positive role currently performed by SMEs in the Italian productive system can be further enhanced.

7 Conclusions

As anticipated in the introduction, this study concludes with a description of the two provisions for SMEs most recently enacted by the Italian government.

The first consists in the signing by the Minister of Economic Development of the special contracts with the mayors of the towns comprised in the UFZs. The latter have been inspired by a scheme launched in France in 1997, and they represent an innovative example of taxation in favour of underdeveloped areas. This measure, in fact, introduces tax and contributions relief for the creation of new productive activities and new employment in the sectors of micro and small business in municipal areas of a pre-established size.

The idea of experimenting with this new instrument in Italy was first proposed in 2006 by a joint document issued by Confindustria, the trade unions and the Presidents of the Regions of the Mezzogiorno, and it was implemented by the Budget Law of 2008. After a period of inactivity, the Ministry of Economic Development initiated the process of creating the UZFs, first by selecting the areas jointly with the Regions, and with the financial allocation presented to the CIPE, and then with notification to the European Commission, from which important and not automatic authorization was obtained.

The European Commission, in fact, considers the renewal of degraded urban districts to be an initiative fulfilling the EC objective of economic and social cohesion. In consideration of both the level of socio-economic difficulties, and the fact that the geographical coverage of the measures anticipated was extremely limited (only 0.58% of the population), the Commission deemed the measures necessary for, and proportionate to, attainment of the objective of urban revitalization, without provoking a distortion of competition contrary to the common interest. The Commission has agreed that the effects on trade would be minor because the measures were essentially intended to combat social exclusion in particularly difficult districts; the regime was exclusively addressed to small and micro enterprises; and the districts had been selected according to objective criteria such as the unemployment and employment rates, the proportion of the population aged under 24, and the schooling rate.

The aim of UFZs is therefore to foster the economic and social development of weaker urban districts but which have potential for development. The provision identified 22 such districts in urban areas with an average population of 14,000 inhabitants. The areas were located on the territories of 23 municipalities distributed among 11 regions: 3 in the Centre-North and 8 in the Mezzogiorno; the population concerned amounted to around 310,000 inhabitants. As said, the selection was made by applying a method never previously employed in Italy. The “target areas” within the municipalities were identified by means of objective social and occupational parameters. Besides making it possible to concentrate the intervention on 22 areas selected from among the 70 municipalities that had submitted applications, out of a total of 180 eligible municipalities, the rigour, solidity and transparency of the criteria adopted were important factors in obtaining the European Commission’s authorization.

The financial endowment allocated to the start-up of the UFZs by the 2007 budget law amounted to 100 million euros. On the initiative of the Ministry of Economic Development, a “Development Law” (law no. 99/2009) identified further areas and increased the funding for the creation of UFZs by a further 50 million euros a year. Hence, since 1 January 2010, small firms have been able to benefit from tax and contributions relief for a period of up to 14 years.

The second provision consists in the approval by the Council of Ministers of a draft directive transposing the SBA adopted by the European Commission in June 2008 with a view to enhancing the economic role of small medium-sized firms, thereby remedy a discrepancy with respect to the United States, where a similar provision had been in force since 1953. The European institutions showed strong interest in protecting small European firms as regards regulation and, partly, also public contract procurement, by establishing a new economic approach that member-states should adopt.Footnote 17

The main actions identified in the document approved by the Council of Ministers are the following: institution of an annual law on SMEs; simplification of administrative procedures so as significantly to reduce the administrative burdens on firms; one-stop shops and online management of relations with the public administration; strengthening the Guarantee Fund and creating new financial instruments for small firm credit and capitalization; programmes to support innovation and internationalization; regulations to encourage participation by SMEs in government and regional incentive schemes through use of the “Network Contract” introduced by the Development Law; evaluation of the economic impact of laws and rules on SMEs, also through specific consultations with sectoral associations; measures to favour access by SMEs to public contracts. The Italian directive, which will involve around 6 million firms, companies, cooperatives and single-owner businesses employing around 9 million people, will be examined by the Joint State-Regions-Local Authorities Conference, and then pass for definitive approval to the Council of Ministers.

It is evident that these are once again provisions adopted by the central government, which thus seems determined, for the near future as well, to assign the leading role in regard to public policies for SMEs to Regions and local authorities, although primary competence for these should attach to the decentralized levels of government. Moreover, provisions similar to the newly-enacted ones are already in force and are managed by such levels of government. Thus reproduced are the negative phenomena of numerousness, duplication and inefficiency already emphasised in regard to the general system of facilities currently enjoyed by Italian SMEs.