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A Hundred-Year Stagnation? For Who?

The prospects for growth in the West may be dim, but that doesn’t mean Asia’s developing countries must settle for privation

The creation of the Asian Infrastructure Investment Bank (AIIB) is a necessary objective. Anyone who travels in the Far East finds confirmation of the desperate lack of efficient networks. With the exception of Japan and other developed economies, countries see their ambitions reduced by chronic underdevelopment.

How can we forcefully industrialize agrarian countries if the goods produced are not transported on paved roads, via trucks, for eventual export? Is it reasonable to use polluting energies to then spend the earnings cleaning the air and water after only a few years?

Two years ago, McKinsey published a report on Asia’s infrastructure necessities, and it was a milestone for analysts, engineers and governments. The needs and opportunities are impressive. Even in the depths of crisis, Asian countries seem inclined not to bend from the desire to grow. They can count on internal resources, acquired know-how and international cooperation.

And they are wheedling this more than in the past. Administrative rigidities have been softened – a frequent vehicle for not-so-transparent awards – and, in general, there is a climate of greater cooperation with multinationals.

The numbers are striking. The report says more than US$ 8 billion will be invested in Asian infrastructure over 10 years. The fraction reserved for foreign companies is incredibly tempting: US$ 1 billion. Clearly, infrastructure is considered an absolute priority: energy and transportation are not similar to any other exchanged good.

In Boston and Washington where I live and work, the intellectual debate goes beyond these sums. Perhaps US$ 8 billion over 10 years is not impressive on the other side of the world and cannot revise the pessimistic predictions of a “hundred-year stagnation.”

The quote belongs to Larry Summers, Harvard professor and Treasury Secretary under Bill Clinton, and director of the National Economic Council under Barack Obama. His prestige makes his predictions even more alarming. We’re probably heading toward a hundred-year stagnation, where the progresses of the past will be memories.

The very concept of growth is called into question. It’s not necessary and perhaps no longer achievable. We habitually read about economic concepts in the news: liquidity traps, recession and reluctance to invest. Summers argues that deflation cannot be cured with monetary maneuvers. No interest rate will be sufficiently low to stimulate investments.

The predictions are arresting, with the knowledge that prices will be lower with every passing day. The recovery of the last few years was faint (nonexistent in Europe), uncertain, fragile, not homogenous and short-lived.

Paul Krugman confirmed Summers’ analyses and pushes them toward political aspects. Governments, he says, should be more audacious and forget the inflationist phobias of monetarist schools of thought, otherwise Summers’ predictions will become a tragic, fateful reality.

The Nobel laureate writes: “In this situation, the normal laws of economics don’t apply; virtue becomes vice, prudence transforms into folly.” Therefore, we need to defeat savings with any type of spending. Summers and Krugman regretfully recognize that pre-crisis growth was due, more than anything, to bubbles that then burst. Now it’s too late, and the economy’s tailspin leaves little hope.

The two economic gurus’ arguments are beyond reproach. Their theoretical approach is solid. But are the consequences of their analyses acceptable in developing Asia? Can governments resign themselves to stagnation? Can citizens tolerate centuries more of privations because there are not enough finances for development?

McKinsey reminds us that wealth created overseas also creates income for multinationals. GDP created in Asia needs resources, and it’s not a given that they need to come from China necessarily. If stagnation is a real threat in the West, Asia does not automatically have to follow the same path.

Actually, a security valve capable of compensating for growth differences and breathing oxygen into the asphyxiating economy could be built. However, all of this entails a new definition of international assets that need courage and forward thinking.

As long as traditional institutions like the World Bank and Asian Development Bank finance Asian infrastructure, we will likely witness a slow decline. If, instead, the G8’s offices accept the birth of new players like the AIIB, China’s role will be less marginal and Asia’s future more promising.

Alberto Forchielli is the managing partner of Mandarin Capital Partners

Here’s why Italy should actually have the strongest economy in Europe

“Totalmente d’accordo. Se supera come si deve questo 2012, l’Italia rischia di tornare alla testa d’Europa e di diventarne l’economia principale nei prossimi 5-10 anni” Massimo
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Presently, Italy’s economy is the fourth biggest in Europe, according to the International Monetary fund.  Italy sits behind GermanyFrance and the United Kingdom

Really, Italy should be the biggest economy in Europe, and should be able to overtake Japan too which would make Italy the third biggest economy in the whole world.

To be honest, with its reputedly stagnant economy, Italy is not doing all that badly to be in fourth place in Europe and in eighth place in the world.  Just imagine where Italy would be if its economy started really motoring.

Powering past the world leaders, the USA and China would be hard seeing as Italy has neither the manpower nor the area to compete with the big two.  Eventually maybe, countries such as Russia or even India may overtake Italy in terms of economic horsepower, but growth in these two nations will be of benefit to Italy.

Now, why do I think Italy should be the biggest economy in Europe?  When you think about it, it’s not too difficult to understand.

Here are the areas in which Italy could really shine, and most probably will, if the current forward thinking Italian Prime Minister Mario Monti manages to overcome the many obstacles obstinate Italy is likely to throw in his path.

Just look at what Italy has to offer on its home turf:


Italy is a holiday destination par excellence.  It has got absolutely everything any tourist can possibly desire:

  • A great climate – which lasts from mid-April all the way through to then end of October.  If you count winter sports, Italy’s climate can attract tourists to significant sections of the peninsula all year round.
  • Fabulous beaches – not all of which are too organized.
  • A fantastically rich cuisine.  Honestly, if you cannot find something you like in Italy, they you probably don’t like food.  The meat is good, the fish is lovely and the vegetables and various condiments are superb too.  And there is all that cheese!
  • Wine.  The world is starting, through no fault of its own, to discover the joys of Italian wines, both still and sparkling wines, such as my personal favorite: prosecco.  Enjoying Italian wines in Italy adds another, very positive, dimension to experiencing this incredible country.
  • Landscapes to die for.  Mountains, lakes, seascapes, city and townscapes, Italy has them all – in abundance, and then some!
  • Historic cities like Rome, Venice, Florence, Naples, Bologna, Turin, Palermo, Verona, Bergamo, Milan, Genoa -the list goes on and on.  Then there are all the magnificent churches, ruins, villas, monuments, villages and even charming castles everywhere.
  • Shopping.  Where can I start?  Fashion – clothes, men’s and women’s wear.  Footwear, accessories, jewelery, leather goods, and children’s wear.  Food and drink – not just wines, but also spirits such as grappa, and all those digestive and bitter drinks, as well as limoncello and liquorice liqueurs.
  • Sport.  Skiing, Formula One, football, rugby, golf, rallying and historic rallies.  Water sports: water skiing, yachting, jet skiing, and a few more – and Italy makes fabulous boats too!
  • Cruises.  Italy’s coastline is, generally, spectacular, so going on a cruise is something many will enjoy – and it adds yet another dimension to Italy.

Have I missed something?  Quite probably and will happily accept suggestions, even if the list is quite impressive as it is.


This is the real biggie and many of the items mentioned in the tourism section above can be exported.

Italy has so many brands with a world class reputation, it is difficult to remember them all, but here are a few to be going on with:

  • Ferrari 
  • Fiat
  • Maserati
  • Riva
  • Snam

Italian fashion brands: Gucci, Armani, Emilio Pucci, Valentino, Prada, Dolce & Gabbana, Ferragamo, Roberto Cavalli, Trussardi, Versace, Krizia, Etro, Miu Miu, Laura Biagiotti, Max Mara, Fendi, Moschino, Missoni, Bottega Veneta, Benetton and Brioni are but a few.  And there are many Italian accessory and jewelry brands, such as Luxottica, too.

Italian food brands: Nutella, Ferrero, Barilla, Napolina, Parmalat, and many more, including smaller brands making exclusive products for the luxury sector such as Baratti & Milano, Venchi, Bistefani and more.  Visit the Eataly Market to see reams and reams of Italian food brands.

Want more?  There are, plenty:

Italian furniture brands, and this is a mere glimpse of what Italy has to offer:

  • Alivar
  • Bonaldo
  • Casprini
  • Cattelan Italia
  • Draenert
  • Fasem
  • Gallotti e Radice
  • i4 Mariani
  • Kristalia
  • Lago
  • Lapalma
  • Magis Design
  • Morelato
  • Naos
  • Ozzio
  • Reflex
  • Team 7

Then there is Italian design, such as

  • Alessi

What about Italian motorbikes:

  • Ducati 
  • Moto Guzzi
  • Aprilia
  • Bimota
  • MV Agusta
The list goes on and on.

Italy seems to be good at just about everything it touches, and then some. 


Italy has lots of great brains, but has already, and blindly, let them export themselves away from the Boot, but many would come back and may well do so, when they deem the time is right.  I’m willing to bet that many Italian expats are watching what Mario Monti is getting up to with great interest.

What is also interesting is that Italy is not standing still, despite its problematic economy.

New companies are being formed all the time, such as South Garage Cafè, a creator of bespoke cafè racer motorcycles.  Unfortunately, Italy does not do much to nurture its baby businesses, but if the nation goes in the direction Mario Monti is pointing it, the world may well be graced by even more iconic Italian brands.

Obviously it is no good making products which nobody wants to buy, but this is not the case with Italy’s goods.  The problem is that many people outside of Italy simply do not know what Italy offers.

I’ve been told by a few Italians that Italy is not especially good at marketing itself – which is putting it very mildly indeed.  This is a pity because markets for Italian products abound.


Just about every country in the world is a market for made in Italy goods.

In some countries, such as the USA, UK, and a good few other nations, Italian brands are fairly well established; very well established, if you consider some of the big Italian fashion houses.

On top of the existing markets, which Italy could probably exploit better, there are the huge emerging markets – China, India and, eventually, Russia.

There is still plenty of space for Italy’s fine products almost everywhere.

Market, Market, Market

Italy only really needs to market its vast assortment of goods better.

If the Italian government actually starts functioning, one fine day, and with a little luck it will as a result of Mario Monti waving his technocratic wand, Italy stands to be an economy which dwarfs those of France, Germany and Great Britain.

Italy should be the number one economy in Europe.  I’m absolutely, utterly and totally convinced of this.

Go on Italy!  You can do it – if you want to.

This post originally appeared at Italy Chronicles

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