The author is a professor at the University of Chicago Booth School of Business

Under the watchful eyes of the Draghi government, the US private equity group KKR is bidding for Telecom Italia, one of the last big companies in the hands of Italy.Italy Eighth largest In the world economy, only six companies are Fortune Global 500, Three of which are controlled by the state.This is the same as seven Spain’s economy ranks 14th in the world in terms of GDP, and France is 26th and seventh.

Some have accused successive Italian governments of not boycotting foreign acquisitions.They pointed out that the outgoing German Chancellor Angela Merkel prevented Fiat from buying Opel in 2009, while French President Emmanuel Macron delayed it. Fincantieri acquires STX In 2017.

Others see this latest offer as a sign of the final victory of the European single market. But I see that the Italian economy cannot enter the 21st century.

The problem is not that foreign companies acquire Italian companies. It is Italian entrepreneurs who seem unable to build companies that can compete in the global economy.

why is it like this? First, Italian entrepreneur Addicted to control. In order to retain majority control of the companies they discovered, they established a fragile pyramid structure that made them bear debts and ultimately would not expand too much outside Italy, because doing so would require the use of equity to pay for the acquisition.

This obsession with control is not just a psychological problem. In Italy, corporate control is very valuable, because whoever owns it can easily take advantage of minority shareholders without fear of legal retaliation. Anticipating this risk, depositors are reluctant to invest in the stock market and provide funds for the expansion of Italian companies.

The second reason for the poor performance is the parasitic relationship between large domestic companies and the Italian government.For decades, Fiat has been strictly protected from competition in Japan, and in the 1990s Olivetti was awarded A second mobile phone license issued by a sympathetic government.

This parasitic relationship peaked when Silvio Berlusconi came to power, first in the mid-1990s and then in the early 2000s.Nationwide Telecom strategy Subject to the private interests of the billionaire prime minister. Due to political ties, Italian companies are accustomed to making quick profits domestically and therefore are unwilling to take the risks necessary to succeed in the global market.

The belief that “small is beautiful” also helps prevent Italian companies from achieving the economies of scale needed for global success. For example, Italy invented pizza, but there are still no large pizza chains. The concept of coffee bar originated in Italy, but the country is not an important coffee chain. The country is one of the largest tourist destinations in the world, but it does not have large chain hotels.Although Italy is one of the world’s fashion capitals, Italy’s largest fashion company Only ranked 17th in the world By market value.

Finally, consider the failure of creating a world-class university. The success of Montecatini and Olivetti in the 1960s was driven by technology developed by Italian universities. But who remembers the last Italian company that thrived on technology developed by domestic researchers?inside 2021 Shanghai World University Rankings, There are no Italian colleges in the top 150.

Many of these issues have been brewing for decades. However, efforts to solve these problems are limited.Accelerate reform Civil trial It is popular, but it has an unfortunate flaw, that is, it shortens the statute of limitations for criminal offenses and helps corrupt entrepreneurs to escape punishment for crimes.

And not only Torrent of money The promotion of the parasitic relationship between business and government provided by the Next Generation EU Recovery Plan, the cash payment method consolidates the cycle of dependence.Approximately 11 billion euros are earmarked for the promotion of university research, but this is far less than 1% of GDP, not even including Annual gap Research and development between Italy and other European countries. As far as I know, there are no serious attempts to help Italian companies develop economies of scale to compete in the global market.

To win the challenge of global competition in the 21st century, Italy must not stand in the process of creative destruction. Rather, it should promote the development of new giants capable of conquering the world. If the next-generation EU recovery fund is not used to help this process, the Italian economy will miss a huge opportunity.