In this page: FDI in Figures | What to consider if you invest in Italy | Protection of Foreign Investment | Procedures Relative to Foreign Investment | Office Real Estate and Land Ownership | Investment Aid | Investment Opportunities | Sectors Where Investment Opportunities Are Fewer | Finding Assistance For Further Information
According to UNCTAD’s World Investment Report 2023, FDI inflows towards Italy gained pace in 2022 and stood at USD 19.9 billion, after recording negative flows in the last couple of years. Meanwhile, the stock of FDI totalled USD 448.5 billion, around 22.3% of the country’s GDP. Data from the Bank of Italy shows that the majority of FDI stock is held by the Netherlands (23.7%), Luxembourg (17.7%), France (17.6%), Germany (9.2%), the UK (7.6%), and Switzerland (6.1%). In terms of sectors, manufacturing holds 29.1% of the total FDI stock, followed by professional, scientific and technical activities (15%), information and communication (10.9%), financial and insurance activities (9.8%), and wholesale and retail trade (8.8% - data OECD). According to the Europe Attractiveness Survey 2023 published by EY, the number of investment projects in Italy has more than doubled compared to the pre-COVID situation: in 2022, 243 FDI projects were announced, representing a 17% increase from one year earlier. As per the latest figures from OECD, in the first half of 2023 total investments in Italy stood at USD 10.8 billion, down from USD 18.6 billion in the same period the previous year.
Among the reasons to invest in Italy, is the fact that the country has one of the biggest markets in the EU, it has a diversified economy and a skilled workforce, it is one of the main manufacturing countries in the world and has good infrastructures and a strategic position, at the crossroads between Europe, Northern Africa and the Middle East. The National Resilience and Recovery Plan (NRRP) of Italy, spanning from 2021 to 2026, leverages more than EUR 200 billion in EU funds. The plan aims to expedite the digital and green transitions while implementing comprehensive reforms to tackle longstanding impediments to growth in the Italian economy. Overall, foreign companies account for 18% of the Italian GDP and 14% of investments (data U.S. Department of State). Nevertheless, high procedural and tax costs slow administrative processes, labour costs, regional disparities, corruption and organised crime are still among the factors that hinder investments in the country. In order to foster Italy’s attractiveness, the government created “InvestItalia”, an agency dependent on the Prime Minister which coordinates Italy’s promotion activities to attract foreign direct investments. Finally, the country’s government amended the “Golden Power” law, which gives it authority to block foreign acquisitions of companies operating in strategic sectors (defence/national security, energy, transportation, telecommunications including 5G and cloud computing, critical infrastructure, sensitive technology, and nuclear and space technology). Italy ranks 41st out of 63 in the World Competitiveness Ranking. Furthermore, it ranks 26th among the 132 economies on the Global Innovation Index 2023 and 81st out of 184 countries on the 2023 Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
---|---|---|---|
FDI Inward Flow (million USD) | -23,622 | -8,956 | 19,947 |
FDI Stock (million USD) | 490,197 | 449,962 | 448,493 |
Number of Greenfield Investments* | 169 | 236 | 274 |
Value of Greenfield Investments (million USD) | 10,022 | 19,848 | 25,437 |
Source: UNCTAD, Latest data available.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Main Investing Countries | 2022, in % |
---|---|
France | 21.6 |
United States | 9.9 |
Germany | 9.5 |
United Kingdom | 6.4 |
Netherlands | 5.9 |
Switzerland | 5.2 |
Luxembourg | 5.0 |
Cayman Islands | 3.8 |
Main Invested Sectors | 2022, in % |
---|---|
Manufacturing | 29.4 |
Professional, scientific and technical activities | 14.7 |
Financial and insurance activities | 11.1 |
Information and communication | 9.6 |
Wholesale and retail trade; repair of motor vehicles and motorcycles | 9.2 |
Private real estate activities | 7.6 |
Administrative and support service activities | 4.4 |
Source: Banca d'Italia, Latest data available.
The strong points of Italy in terms of foreign investment include:
The key weak points of Italy in terms of foreign investment include :
The Italian Trade Agency's Invest in Italy website provides guidance on investing and setting up a business in the country.
Country Comparison For the Protection of Investors | Italy | OECD | United States | Germany |
---|---|---|---|---|
Index of Transaction Transparency* | 7.0 | 6.5 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 4.0 | 5.3 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 6.0 | 7.3 | 9.0 | 5.0 |
Source: The World Bank - Doing Business, Latest data available.
For further information, consult the ICE website.
The Reasoned Handbook on Incentives has been issued by the Ministry of Economic Development with the aim of helping entrepreneurs to find the right incentive for their needs, their territory or the size of their business.
In the automobile sector, Italy distinguishes itself in design, technology and skills, with avant-garde research centres. The automobile market is constantly expanding and is attractive to foreign manufacturers.
The Italian chemical industry is one of the country's most dynamic sectors (with a strong propensity for innovation, highly qualified human resources and large multinationals who have chosen the peninsula to set up their business). Italy is the third-largest European producer in the chemical sector and a prominent actor on the world stage. In a country where volumes of production and consumption of agri-food products and beverages are the largest in Europe, tradition and innovation create new opportunities to conquer new foreign markets. The country is characterised by a tradition of typical products, culinary dishes and wines well-known all over the world, and very high-level standards of quality and safety.
Italy has many investment opportunities in new technologies: nanotechnologies, biotechnologies, high tech products, etc. Italy also enjoys a favourable and stimulating environment to develop Life Science projects (competitive costs, simple standards, search for excellence). Italy is also a logistical platform for international trade, with new investments and the best transport and telecommunications infrastructures around the Mediterranean. Finally, Italy is the fourth most-popular tourist destination in the world, an industry worth around € 70 billion a year.
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Latest Update: July 2024