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Italy’s investments in the US outstrip American FDI in Italy for first time

by Laura Cavestri

Italy’s total foreign investments in the US, including in sectors such as ceramics, machinery and cars, have overtaken US investments in Italian territory for the first time, figures from the US Department of Commerce show.

In terms of stock of direct investments, in 12 years (from 2003 to 2015) the US has reduced theirs towards Italy by 2.6% (equal to $22.5 billion in 2015), while Italy has increased its investments toward the US, reaching $28.6 billion in 2015, an increase of 312% compared to 2003.

For the first time – according to the cabinet department’s Bureau of Economic Analysis – the stock of Italian foreign investments between Washington and Los Angeles has overtaken the US equivalent in Italy. Yesterday Italian Prime Minister Paolo Gentiloni met US President Donald Trump at the White House.

In the US “radar,” Italy is in 28th position at the global level for stock of dedicated investments and is 13th in the European Union. But in terms of flows, Italy is 12th for investments in the US (8th among EU countries) -- while the Americans are looking at Italy from more of a distance. For them, in 2015, Italy was the 38th destination in which to invest at the global level.

It is not surprising, therefore, that in 2015, compared to 2014, US flows toward Italy registered a substantial decline (-79.8%) while Italian investments across the Atlantic rose by 68.3%.

The picture is coherent with the trade balance of goods and services. If trade between Italy and the US overtook the “psychological level” of €50.8 billion in 2016, Italian exports came close to €37 billion. While Italy purchased less than €14 billion from the US.

Italy exports to the US above all machinery, machine tools, and automobiles – with the supply chains between the two poles of the auto industry, and sea going vessels. It buys pharmaceutical preparations, space vehicles and systems, fertilizers and plastic materials, but also precision instruments.

“A glass half full” according to consultancy firm AT Kearney, which yesterday released its Foreign Direct Investment Confidence Index, constructed based on assessments of a selected business community. This community seems to neglect the uncertainties linked to the policies of new US President Trump and the Brexit negotiations, to affirm to want to invest, in the medium term, both in the US (first among the preferences) as well as in Britain (fourth), Germany (second) and China (third). Or, places that present a business climate and opportunities.

And Italy? It rises just a little: from 16th position last year to 13th this year. The country’s efforts toward some structural reforms are recognized. But it is not enough.

“US operations in Italy are mainly operations of expansion and consolidation. Aside from Philip Morris and Amazon, there have not been greenfield operations,” said Simone Crolla, member of the American Chamber of Commerce in Milan. “These numbers are not at the height of our potential. What is weighing on us is political and fiscal unpredictability and the times of the justice system.”

Nevertheless, Crolla said “for a while as Amcham we have wanted to bring together for one day a year all the institutions from ICE-Italian Trade Agency to SACE to local development agencies, to be able to invite selected US companies interested in investing in Italy, and allow them to talk with everyone. In the US they have been doing it for years and traditionally the president inaugurates them. It is called ‘Select USA’. How good would it be for Italy to have a Select Italy?”