Rome, Jan. 24, 2023. Rome Business School has published the research “Nation Branding: the impact of a country’s image on the economy,” edited by Aldo Pigoli, an expert in geopolitics and competitive intelligence, and Valerio Mancini, director of Rome Business School’s Research Center. The study highlights how Italy is perceived today: a nation that exports luxury, gastronomy and culture, but not a place to invest, do business and grow.
In a world characterized by globality, interconnectedness and greater visibility of social, economic and political phenomena, a country’s image strongly determines its power to influence the rest of the world. This is where marketing strategies come into play that aim to make the country a recognizable brand, respected and admired by the international community.
Today Italy ranks 4th in the Anholt-Ipsos Nation Brands Index, an index that annually analyzes the brand image of 60 countries in six different categories: tourism, exports, governance, investment and immigration, cultural heritage and human capital. Despite its excellent ranking, excessive bureaucracy and difficulties in starting a business drive away investors. Can the newly transformed “Ministry of Business and Made in Italy” boost Italy’s reputation and make the country more attractive?
One of the main indicators used to assess the degree of openness and reliability of international economic systems is the World Bank’s “Ease of Doing Business Index.” This index measures the ease of opening and developing a business by assessing, among others, access to credit, tax payments and customs aspects. In the top places are New Zealand, Singapore and Hong Kong (2022), Italy ranks 58th in 2022.
Specifically, in the “Starting a Business” indicator, which takes into account the time and cost of starting a business, Italy ranks 98th. Similar is the positioning regarding bureaucracy concerning building permits (97th place), while for the item concerning access to credit, Italy is relegated even to 119th place. Of completely opposite magnitude, Italy is 1 out of 190 countries analyzed for ease of handling customs aspects.
On the other hand, studying the Heritage Foundation’s “Index of Economic Freedom” – which analyzes in 184 countries specific categories of activities or factors that have a significant impact on the development of entrepreneurial activities, such as rule of law, governance and regulatory efficiency – in the European context, Italy even ranks 33rd out of the 45 countries analyzed. At the top of the ranking: Singapore, Switzerland and Ireland, 57th Italy.
Another index to consider when analyzing a country’s image internationally is the country’s contribution to the world and society. Doing so is the Good Country Index, which surveys 169 countries based on the social impact they have, and places Italy in 24th position: 5th among the G7 countries, with better results than Japan (34th) and the U.S. (44th). We rank better in the items Health and Welfare (21st) and Prosperity and Equality (16th), but we lag behind in the items International Peace and Security (64th) and Planet and Climate (56th).
Italy also ranks among the top countries in Brand Finance’s “Global Soft Power Index 2022,” where 120 nations are analyzed. We rank last among the G7 countries (10th): the lowest rankings are in the categories “Education & Science” (23rd) and “Governance” (22nd), and the highest rankings are “Culture & Heritage” (2nd) and “People & Values” (4th). In addition, the Best Countries Report 2022 (U.S. News, BAV Group and University of Pennsylvania) puts Italy in 14th place out of a ranking of 85 countries (up 2 places from the previous year). Italy would hold 1st place for both cultural influence and prestige and 2nd place for tourist attractiveness.
There are other important indexes that analyze countries’ economies. The Global Attractiveness Index (GAI), developed by Ambrosetti – The European House, compares 148 economies globally and finds Germany (100 points), the United States (99.9 points) and Hong Kong (87.6) at the top. In 19th place is Italy with a score of 56.1. It should be noted the significant gap in terms of score, with respect to the countries with which Italy has to compare itself most from the point of view of internationalization processes and development of trade relations: the Italian score is slightly higher than that of Spain but significantly lower than that of France (70.0) and, above all, Germany, towards which the gap is almost double (100.0).
Turning instead to national brand valuation, Brand Finance Nation Brands places Italy in 9th place (2021). In 2022, the value of Italy’s brand is estimated to be around 1,819 billion euros (+8.6 percent over 2021, surpassing 2019 levels). Their analysis shows that there are some Italian companies that are very good at exploiting the Italian image and others that benefit less from the country image: with the exception of specific sectors such as luxury, fashion, design and food, Made in Italy seems to have a less strong image than Made in Germany, the US and France.
The weakness of the Italian brand would mainly depend on the difficulty of doing business, too much bureaucracy and deficiencies in terms of the judicial system, the management of public affairs and the quality of communication of individuals and companies. While Italy has multiple brands that communicate quality, internationalization, craftsmanship and tradition, there are just as many businesses that are backward from a digital and managerial point of view.
For Aldo Pigoli, among the authors of the research, “the excessive dependence on the classic ‘3 Fs,’ namely Food, Fashion and Supplies, has led to the prevalence, both domestically and internationally, of an image of a country that is uncompetitive, unattractive and, even, mired in its past and incapable of evolving and innovating.”
Major Italian brands are perceived as a guarantee of quality, authenticity and style (Kantar, 2022), but they are not among the most prestigious in the world. Brand Finance’s report, aimed at assessing the brands with the most value in the world, reveals that the brands with the most value in 2022 are Apple, Amazon and Google. The first Italian brand is Gucci, at position number 108, then there are Enel (144) and Eni (193). Putting all the brands monitored by Brand Finance together, Italy is not even among the top nine nations in the world by total value.
Despite the climate of economic and political uncertainty, Italy’s most valuable brands continue to grow. The 30 most valuable Italian brands in 2022 generated a combined value of about $128.7 billion, according to KANTAR’s analysis. Despite systemic changes in consumer behavior, an 8.9 percent decline in the country’s GDP, and severe disruptions in supply chains, travel, retail, and hospitality, these brands have managed not only to survive, but to thrive (up 12 percent from 2021).
The Top 30 Best Italian Brands according to Kantar brings together a wide variety of sectors: fashion, food & beverages, telecommunications, automotive and energy. The best positioned companies are Gucci, Enel and Kinder. The best performing category is luxury with 7 brands accounting for 42% of the total value ($48 billion, +16% year-on-year): Gucci ($33.8 bn), Prada ($3.9 bn) and Fendi ($3.1 bn).
On the other hand, Italian agribusiness continues to represent a backbone sector of the Italian economy and is a fundamental pillar of the national brand. In this context, regional performance in the area of Geographical Indications is particularly interesting. Italy leads the world in the number of certified products with 841 PDOs, PGIs, TSGs that have a representative value of 19 percent of the total turnover of Italian agribusiness. These are also a solid driver for the Italian economy and exports with an estimated 9.5 billion euros in revenue, accounting for 20 percent of national exports in the sector in 2020 (Sustainability and Corporate Social Responsibility in Italy, Rome Business School Research Center, 2022).
Italy is trying to make up for lost space and time compared to the various players on the international stage who have already been working for years to improve its competitiveness.
“But any marketing practice of a country is in vain if it is not accompanied by other elements, such as a cutting-edge domestic policy, a certain tourism appeal of the nation or a well-developed industrial and commercial sector,” says Valerio Mancini, one of the authors of the research.
Therefore, concrete actions are needed to curb some critical issues that undermine the efficiency and image of the Italy brand abroad: corruption, evasion, low level of digital literacy, excessive bureaucratization, and slow justice. Specifically, among the recommendations of the Global Attractiveness Index Advisory Board: implement a reform of the education and professionalization system as soon as possible; a reduction in the tax burden on wages; and an intervention on bureaucracy aimed at reducing the time it takes to authorize projects and investments aimed at the ecological transition.
Although Made in Italy is associated with positive perceptions of quality, exclusivity, refinement, and in general Italy is perceived as an exporter of a lifestyle, according to Valerio Mancini, “there is a lack of serious planning of a branding strategy that refers to the nation tout court and not only to its industrial products, tourism, or culture, which in themselves enjoy an excellent reputation outside national borders.”
Aldo Pigoli states that “for a long time there has been a deficit of an organic, coordinated and unified strategy capable of enabling Italy to be perceived even more favorably in the international context. In the last decade The Italian Country System, starting with its institutions, has become aware of the relevance of defining, strengthening and protecting the national brand in the international scenario. This strategy should be continued and accompanied by a market intelligence activity, useful for monitoring the progress achieved by nation branding for Italy in foreign markets.”