By increasing the average efficiency of firms, especially in technology and business organization, the component of productivity that economists refer to as Total Factor Productivity (TFP). From 1997 to the present day, that component has remained flat in Italy, while it has boosted annual average economic growth by half a percentage point in Germany and France and by 0.2 of a point in Spain.
Italy’s production system has shown itself to be too fragile and fragmented overall to be able to aim for technological and organizational efficiency, and has become less competitive at international level. Some firms, mainly medium-sized ones, have now emerged from the financial crisis with a renewed capacity to compete and are sustaining Italian exports, but the other firms are still weak.