DBRS Morningstar: Italy’s stimulus package should improve human capital


MADRID–(COMMERCIAL THREAD) – The emphasis placed by the Italian government on promoting investment in research and development (R&D), improving the education system and strengthening the employability of workers through its national recovery and development plan. resilience (NRRP1), should have a positive impact on the development of human capital in the long term. Strengthening human capital is one of the key factors in improving Italy’s economic prospects. DBRS Morningstar calculates that the Italian government has planned to deploy funds of around 77 billion euros (4.3% of GDP), out of a total envelope of 235.1 billion euros, the majority of which must be spent on ‘by 2026. These expenditures, including related reforms, are likely to have a direct and indirect impact on the demand and supply of human capital. This is expected to help more than double potential economic growth from 0.6% to 1.4% by 2026 according to government estimates.

To achieve optimal results, great efforts are needed to overcome low spending capacity, which tends to be constrained by bureaucracy, and to improve coordination between public entities. In addition, the continuity of policies to work through general internal resistance, including administrative bureaucracy and additional reforms, such as encouraging growth in the size of enterprises and increasing school autonomy, will be necessary to achieve the desired results.


  • Investments in R&D are expected to increase, supporting the demand for skilled workers.

  • Better coordination between companies and universities should have a positive effect on human capital.

  • Reforms could face internal resistance and weak coordination, requiring more time and continuity of government policies.

“Beyond important reforms, including public administration and the judiciary, we must consider the impact that the Italian NRRP could have on human capital. This is a key element in our opinion, as it could positively affect both labor productivity and labor supply in the medium and long term. However, much of the NRRP’s resources are ad hoc and additional funding may be required in the future. In addition, it is difficult to get things done in Italy, so we will monitor the effectiveness of the legislative implementation process and whether internal opposition to the reforms hinders the success of the plan ”, said Carlo Capuano, vice-president of the Global Sovereign Ratings group.

To view the full report, click here: https://www.dbrsmorningstar.com/research/386243/italys-recovery-plan-expected-to-improve-human-capital

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