According to the recent “Nation Brands 2015” annual report on the world’s most valuable national brands, conducted by “Brand Finance”, Italy ranks number nine by brand value. For this study, Brand Finance measured the strength and value of the brands of 100 leading countries.
As pointed out by fDi’s journalist Courtney Fingar:
“national brands play a key role in FDI (Foreign Direct Investment) just as much as they do in consumer industries. While it is hard to quantify the precise impact brand perceptions have on investment decisions, the results of a study on national brands suggest a match between the countries with the most highly regarded brands and those that attract the most FDI. In general, those countries with valuable or strong national brands are also the most successful at attracting FDI”.
“Arguably, when consumers shop for products, brand recognition weighs heavily on their choices. So too when companies shop around for their next expansion destinations”.
In one of our previous articles we argued that successful brands are built on solid foundations, they stand out and are able to develop a unique identity and offer products or services perceived by customers to be superior to those offered by others.
We identified seven key characteristics common to successful brands: audience knowledge, uniqueness, passion, consistency, competitiveness, exposure and leadership.
Expanding from this and “thinking about nation branding and how to leverage that to attract FDI, the best national brands are those that convey dynamism, energy, industriousness and respectability while also showing personality and a human touch. It is worth bearing in mind that investors tend to be market-seeking and in particular they chase growth. The search for talent is also universal and so considering people is fundamental when talking about brands’ strength”.
In light of all the above mentioned considerations one may argue that “something” doesn’t add up: How is it possible that Italy ranks 9th in the “Top 50 countries’ brand value” report when the latest OECD “How’s life in Italy 2015?” report paints a pretty gloomy picture on the state of the Italian economy and its working force?
In fact, the OECD report shows that the employment rate in Italy is one of the lowest in the OECD, and the long-term unemployment rate (7.8 per cent) is almost 3 times the OECD average.
Educational attainment has increased since 2009, but only 58.1 per cent of the adult working-age population have completed at least an upper secondary education compared to 77.2 per cent in the OECD on average.
The literacy and numeracy skills of Italian adults are also low on average compared to those of adults in other OECD countries. Surely this does not convey the idea of “energetic people doing interesting things in a fast-growing place”.
Moreover, even if in 2013, FDI influx to Italy recovered, reaching €12 billion, this still represents a 58 per cent decrease compared to the pre-crisis levels in 2007.
When considering the five largest EU economies, Italy is the country with the highest labour cost per capita and at the same time with the poorest valuations in the World Bank’s “Doing Business” report and the lowest competitiveness ranking compiled by the World Economic Forum.
This is an indication that the low inflow of investments may be linked to structural competitiveness deficits.
The overriding aim of this article is not to investigate the reasons why there seems to be a clash between the ranking (Top 50 countries’ brand value) and the current business climate and well-being in Italy.
It only wants to point out two key factors:
Firstly, it could be argued that Italy still has a significant margin for economic growth.
Secondly, it transpires that there seems to be a clear path to follow to close the gap between the “Actual state of the Italian economy” and “Potential state of the Italian economy”.
It could be argued that this potential could be unlocked by investing/changing the Italian education system and that, as pointed out by business analyst Stefan Vetter:
“there is no justification for specific policies aimed at attracting foreign firms. In fact, due to the already high degree of openness there is virtually no scope for the EU countries to increase FDI by removing discriminatory regulation. What is needed rather, is a better business climate and structural economic reforms (as opposed to “marginal” reform such as the labour law reforms) which would benefit Italian companies alike”.
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