Infrastructures for competitiveness

In order to renew its economy, a country must be able to make itself attractive and competitive: low cost and efficient production. But without a network system of infrastructures making areas reachable and connecting the users, attracting investments will continue to be illusory.

The major perspective that Italy needs to focus on to address the serious problems concerning unemployment (especially of youth), raising the standard of living, and improving the quality of life is to start growing again.
A country does not give any cause for hope to its citizens, especially the younger generation, if it does not offer everyone an opportunity to work, thereby resulting in income and consumption.
It is primarily businesses and entrepreneurship, widespread even at the individual level, that can offer these opportunities. Therefore, a developed economy, one which does not want to fall behind at a global level, has to boost the attractiveness of the country and its regions, to invest and produce, and have the competitiveness to do better than others.
Attractiveness and competitiveness are not the same thing, although there is often confusion regarding the two concepts and the two goals. Attractiveness is an ‘absolute’ advantage for a country, independently of the level of development achieved by other competing economic systems, whether national or regional. But attractiveness may not be enough, because – in the ‘global race’ for development – more ‘relative’ benefits must also be achieved, such as being competitive with other economies: to produce at lower costs and be more efficient, and thus able to export its goods and services. That is the only way a successful, cumulative process of growth can be set in motion.
Infrastructures are a key factor in ensuring the attractiveness and competitiveness of a country and its local production systems, fully performing the role of an ‘instrument’ for development (and not as the ultimate goal).
The ability of a country to attract investments – manufacturing, tertiary, or primary – depends primarily on the accessibility of its territory, which must be accessible for companies that want to locate there, for tourists who wish to visit and stay there, and for citizens who live and work there. Infrastructures for accessibility – to be useful – must be designed according to the purposes that are to be achieved in different areas, with the different cases in point. Depending on the various situations, convenience to the location of businesses’ production and distribution facilities will have to be created (by creating so-called external economies or by removing the external dis-economies, typical of congested urban and metropolitan areas). But in order to make an area attractive, these must also be of high quality design, secure, and characterized by continuous maintenance. Finally, they must be planned and executed “in the network”, to meet the needs of the increasingly extensive and diversified demand for mobility.
The requisites of attractiveness that infrastructures can offer different areas of the country are also necessary, even if insufficient, conditions for the competitiveness of production systems that have settled or would like to settle there. Infrastructures ensuring accessibility, fluidity of movement, quality, maintenance, and security allow companies to reduce their costs and they encourage innovation, enabling workers to increase their productivity and tourists to enjoy better services.
In the end, the network aspect of well-planned and well-made infrastructures allows the various categories of users to integrate their short and long distance mobility needs: the connection of roads, highways, and railways to ports and airports is the essential condition for a company to move its goods locally and then export them around the world, and for a tourist who has come from far away to then be able to move easily between different destinations. The infrastructures’ real contribution to the competitiveness of a country is ‘indirect’ but also structural, because they allow companies and consumers to adopt good behavior by providing the adequate conditions to foster this. Thus, they are able to generate those wider economic effects that associate competitiveness with the efficiency of a country’s system.
It might be useful to mention some “mechanisms” that generate this virtuous causal chain between infrastructures, opportunities, and the behavior of businesses and the competitiveness of the national system.
Firstly, an adequate infrastructural network allows companies to increase their opportunities in choosing the markets on which to sell (customers) its products or acquire their inputs (suppliers) as well as in selecting routes for moving people and goods. This reduces the costs of transport and logistics, in terms of both money and time. The absence of a wellconceived infrastructure network means that businesses will have to accept this as a constraint to their optimum operation, driving up price levels and therefore also to the detriment of final consumers. Secondly, a good infrastructure network will improve the mobility of factors, particularly the work factor, but also of capital, with an obvious effect on increasing productivity.
Thirdly, seeing as an infrastructure network – like any other network – is made up of nodes and routes of connection, an efficient network that allows access to the nodes (for example, urban and metropolitan areas, districts or productive clusters ...) promotes the localized agglomeration of production and work, allows the achievement of economies of scale (enterprise and system), reduces average costs, and facilitates knowledge spillovers, labor market pooling, and input sharing. Obviously, as a result of all this, the ‘structural’ impact of infrastructures on territorial development and competitiveness is unlikely to be uniform, precisely because it depends on the ability of “local” businesses and production systems to seize the opportunities of a better infrastructure in order to become more competitive and efficient (and this should be a warning of the risk of the diseconomies of congestion).
This suggests that infrastructure planning is targeted – and thus selective – depending on the type of specialized production (manufacturing, agricultural, or tertiary); the geographical location of the areas (more or less oriented to the flows and global markets – the so-called gateways of the system – such as ports and airports, or oriented to domestic markets only); and, finally, the structures and characteristics of production plants served: businesses with lower productivity, in fact, are always seeking localizations where competition is more limited, unlike the more technologically advanced and productive companies which seek locations that are more exposed to global competition.
The conclusion of these reflections on the role that infrastructures can play in the competitiveness of a country – not intrinsic to the culture of the country itself – is that planning infrastructures and selecting only those necessary is a decision-making process that is not independent of the knowledge and responsibility of developing local economies, which are so rich yet so diversified in Italy.


(Abstract from Autostrade per l'Italia's Magazine "Agorà")