The lack of innovation might be partially related to the small-size of firms, which continues to be a predominant feature of the Italian industrial system. In that regard the business environment continues to create obstacles to firm-size expansion and to the entry of new and more efficient firms, thus hampering productivity growth.
The costs of opening and closing a business as well as the time required to complete the legal processes involved in enforcing contracts remains well-above the euro area average4 [see Table 3]. These considerations bring me to my third and final point: structural rigidities have slowed European firms’ responses to structural changes in the production process.