Italy’s future: a neo-industrial renaissance in the making?

The meaning of innovation is at a crossroads in Italy

The question of which future this country chooses has long shaped my work: I’ve always thought of innovation not as the latest startup craze or a splash of buzzwords, but as Italy’s path forward. A decade ago, “startup culture” was all the rage; now military and trade tensions, plus the sudden mainstreaming of AI, have sharply raised the bar for what counts as cutting-edge. Technologies that seemed frontier just a few years back now feel almost quaint, quickly dwarfed by the transformative power of artificial intelligence. In this context, innovation means something deeper: a strategic reinvention of Italy’s economic model for a new era.

Belluno and the seeds of a neo-industrial revival

Just before flying to the United States, I stopped in Belluno – a postcard-pretty city tucked into the Dolomites and, more than anywhere else in Veneto, a place where advanced thinking about the future of Italian industry is taking shape. In a packed hall at the city’s public library, a network of young entrepreneurs gathered to hear my friend Giulio Buciuni, a sharp-minded economist from Northeastern Italy with a fresh, global perspective on his home region. Giulio urged the audience to escape what he called the post-industrial trap and to embrace a “neo-industrial renaissance.”

The phrase caught my attention. Like many, I’d grown used to describing Italy’s path as a move from industrial to post-industrial – the familiar story of factories giving way to services. But Giulio had a point: in Italy today, the old industrial tradition and the new pace of innovation run on radically different wavelengths. The Veneto’s celebrated network of small and mid-sized manufacturers has delivered prosperity for decades. Yet those same firms now face headlines filled with AI breakthroughs and digital platforms operating at a scale and speed unimaginable a generation ago. The result is a widening gap between Italy’s long-celebrated SME model and the frontier of technology reshaping global markets. As Giulio implied, the challenge isn’t simply catching up to Silicon Valley – it’s a ground-zero reinvention of the industrial playbook.

A perfect storm – and an opportunity

Paradoxically, Italy’s mounting challenges may also prove its best opportunity. The country’s status quo is under strain from every side: a shrinking, ageing population, institutions that creak under their own weight, and a politics largely blind to the future. Voter turnout — a rough barometer of public faith — has collapsed. In the north, attention is fixed on the succession drama around Veneto’s long-serving governor Luca Zaia; farther south, the Marche region, another manufacturing heartland in transition, has just been to the polls. Barely half of citizens voted, a drastic fall from the 75-plus per cent turnouts common at the turn of the century.

The message is clear: the usual agents of Italy’s democratic capitalism — citizens and firms — are weary of an ageing system that no longer delivers. Rather than wait for top-down direction, many are quietly bootstrapping a new game from the bottom up. When Il Foglio recently spoke with Massimo Mancini, the energetic founder of the artisan pasta maker Mancini Pastificio Agricolo, he described a reality in which entrepreneurs press ahead to keep their businesses thriving while the political establishment argues among itself. His remark could have come from any number of factory floors or design studios across the country: renewal is happening despite politics, not because of it. So what might that new path look like? One clue lies in Giulio Buciuni’s notion of neo-industrialism. Italy can’t simply copy Silicon Valley’s latest fashions, nor can it cling to heritage industries as if nothing has changed. The choice is not between nostalgia and imitation but between stagnation and reinvention — a neo-industrial strategy that builds on Italy’s strengths while embracing the realities of a 21st-century global economy.

The choice is not between nostalgia and imitation but between stagnation and reinvention.

Regionalized globalization – made by Italy, around the world

One defining trait of this new strategy is what I’d call “regionalized globalization.” This trend has been in motion for years (even before the trade wars of the late 2010s) and is now accelerating: companies are restructuring so they can design at home but build as close to their end customers as possible. The goal is to erase or massively reduce the distance from sourcing to final sale. We saw it in everything from 3D printing to digital marketing to automation and supply-chain resilience planning. All these innovations point in the same direction: a global market where core technology and design remain headquartered in hubs like Italy, but production and distribution happen nearby the consumer. According to a recent McKinsey survey, nearly two-thirds of companies worldwide are regionalizing their supply chains – up from 44% just a year earlier. In practice, that means more factories and facilities located in regional markets, not simply chasing cheap labor abroad as in the offshoring wave of the 2000s. It means using tools like additive manufacturing and AI-driven logistics to shorten supply lines. By doing so, firms can respond faster to demand, cut transport costs, and shield themselves from geopolitical shocks. In short, they become glocal: globally coordinated, locally delivered.

This shift holds particular promise for Italy and especially its industrious Northeast. We should set our sights on two complementary challenges – which double as opportunities:

• Become a local marketplace of global innovation. Organize our regions to host and facilitate critical phases of international value chains. In practice, Italy can invite global innovators to pilot their cutting-edge solutions here, embedding unique portions of their process on Italian soil. Whether it’s a research lab by a foreign AI firm in Bologna or a test production line by a green-tech startup in Belluno, Italy can be an endpoint where global technology finds local application. By being an early adopter and integrator, we’d not only benefit from new tech but also shape its development.
• Empower Italy’s firms as global design and innovation hubs. Help our own small and mid-sized champions scale up and go global in a smart way. That means encouraging Italian companies to establish a presence directly in key overseas markets – not through cost-driven outsourcing, but through value-driven expansion. An Italian luxury furniture maker, for instance, might set up a boutique production studio in New York or Shanghai to serve local tastes rapidly (leveraging Italian know-how and brand, but made on-site). Think of it as “Made by Italy” in global metropolitan areas. By localizing some production closer to the customer, our firms can capture new markets without losing their quality edge. Yes, it’s a break from the old “all-Italian, all at home” mentality, but in many sectors it’s fast becoming the way to go for sustained growth.

The beauty of treating our home turf as an endpoint for global innovation is that it could breathe new life into our cities and communities. An “appetible” place for new technology inventors – where they find eager businesses and civic partners ready to deploy innovations – is a place buzzing with optimism and purpose. It means that in a town like Belluno, a robotics demo from Boston or a sustainability solution from Stockholm isn’t seen as a threat, but as a tool to reinforce local industry. Over time, this mindset can ignite a virtuous cycle, turning Italian regions into living labs for the latest ideas. It’s not hard to imagine the effect on young talent: instead of leaving Italy to find the future, they might stay (or return) to build it right here.

Charting “what’s next” for Italy

None of this reinvention will be easy, but the wheels are already in motion. Across the country, forward-looking manufacturers are experimenting with advanced technology and closer-to-market strategies. And from our side, we’re ready to raise the bar as well. The history of social science is full of moments when the world’s leading thinkers turned their attention to Italy — using its factories, communities, and politics as laboratories for new ideas in management, economics, and governance. The Italia Innovation program sits within that tradition, calling on a new generation of field researchers to explore how Italy’s future might inform the world’s — and how the world’s might, in turn, reshape Italy.

As I pack my bags for the U.S., I’m keeping these insights close. This journey — and the encounters ahead — will feed into my ongoing research on how communities adapt, or fail to adapt, when technology and globalization rewrite the rules. In many ways, Italy is a perfect case study: a nation with immense creative and industrial heritage, now striving to author a new chapter in an age defined by AI and geopolitical flux. There’s a lot at stake, but also a rare sense of possibility. The neo-industrial renaissance unfolding in places like Belluno hints at what’s achievable when tradition meets ambition. If any of these ideas strike a chord, consider it an open invitation to stay tuned and take part in the conversation. After all, the future of Italy — and how we choose to build it — will be written one innovation at a time.

M.M. · 2025.10.08.