Remarks by Ambassador Thorne at "Small and Medium Enterprises" workshop
Rome, July 12, 2012
Thank you for the opportunity to speak alongside Under Secretary Dassù, Commissioner Tajani, our own U.S. Trade Representative Miriam Sapiro and Confindustria President Squinzi as we open this workshop on Small and Medium Enterprises (SMEs) within the framework of the Transatlantic Economic Council. All four have worked hard to promote SMEs, and Italy is an ideal place to hold such a conference, as the economy is dominated by small, family-owned companies, and SMEs produce 70 percent of Italy’s GDP.
SMEs play an important role in the U.S. economy as well. As President Obama said during this year’s National Small Business Week in the U.S., “America’s progress has been driven by pioneers who think big, take risks, and work hard. Where their ideas take root, we find inventions that can change the way we live. And when their businesses take off, they fuel an engine of economic growth and job creation that moves America forward.”
Over the past 20 years, SMEs have accounted for almost 65 percent of new jobs created in the United States. Overall, SME’s account for half of all non-farm American jobs. During our recent economic recession, promoting small businesses became an even larger priority. Since taking office, President Obama signed the Small Business Jobs Act into law in September 2010. Among other things, it more than doubled the maximum loan size for the largest Small Business Administration programs, established a new $30 billion small business lending fund, initiated 8 new small business tax cuts and provided a new deduction of health insurance costs for the self-employed.
Italy’s economy, maybe more than other European economies, relies on SMEs. For example, there are approximately 65 SMEs per 1,000 inhabitants in Italy, which is well above the EU-27 average of 40 per 1,000 inhabitants. Much of this high ratio is due to microenterprises, defined by the EU as an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed €2 million.
Because SMEs are such a large part of the Italian economy, they have a large role to play in reviving Italian growth. While it is true that Italy has many world-class firms and brands, particularly in the areas of food, agriculture, fashion and cars in 2011, the World Bank ranked Italy 87th in the world in terms of ease of doing business. Some of the causes for this low ranking include rigid labor laws; excessive regulations; cumbersome bureaucratic processes; and a slow justice system.
Much like in the U.S., Prime Minister Monti’s Government has recognized the particular challenges facing SMEs during this time of economic hardship. The Italian Government has responded with similar measures, including an effort to increase access to credit through a €20 billion loan guarantee fund. Last month, the Monti administration also approved a plan to offer incentives to construction companies, as well as companies that hire young people and highly-educated workers, in an effort to counteract the so-called “brain drain” under way in Italy. We congratulate the Italian Government for supporting SMEs with these initiatives.
Two other factors will be important for Italy’s SME growth. The first is increased use of digital technologies, which are fundamental to the viability, competitiveness and growth of SMEs. Small companies that have an active online presence experience greater growth than offline companies or companies that have a minimal web presence. Italian companies are not yet taking full advantage of this shift in conducting business. Technologies such as cloud computing can reduce operating costs. Mobile ads and social media can help small companies market to a targeted audience of existing and potential clients at relatively low costs, while e-commerce can open up international markets to local companies. Recognizing its importance, Minister of Economic Development Corrado Passera has been a particularly outspoken advocate for increasing the use of digital technology in Italy.
The second factor that will strengthen the Italian economy is the increased participation of women in the Italian, particularly in the realm of SMEs. Italy has the lowest percentage of women in the workforce of any European country, and we have seen in recent decades that increasing the number of women in the workforce boosts countries’ economic growth rate. Prime Minister Monti and Labor Minister Elsa Fornero have been particularly active in undertaking reforms to include more women and youth, and they have been vocal about the need for women to play a greater role in the Italian economy. I congratulate them on their efforts.
Thank you for the opportunity to be here today at this SME Workshop, which provides a valuable platform for exchanging information and lessons learned. I wish you all a productive and fruitful discussion as you discuss access to finance, innovation and entrepreneurship, and access to international markets – concerns that are on the mind of ALL small- and medium-sized business owners. I look forward to hearing of all of the ideas that are generated throughout today and tomorrow.