Out of Florence, Europe's economic renaissance?
The young mayor of Florence who is tapped to be Italy's next prime minister brings hope to young people that they might start a business with less fear of failure. For the eurozone's third-largest economy, this may be a big spark for recovery.
Compared with young adults in the rest of the world, those in Europe have the greatest fear of failure in starting a new business. Only 17 percent see good prospects in becoming an entrepreneur, a 2013 survey discovered. One reason is Europe’s slow economic growth of about 1 percent. In Italy, the eurozone’s third largest economy, prospects are particularly bleak. Four of 10 young people are jobless – a record high.
Lifting that fear of failure is critical if Europe’s weakest states are to fully recover from the 2009 financial crisis. Start-up firms are the best job creators, despite their high failure rate. Between 2008 and 2013, the number of small, medium, or large companies in the European Union did not increase. Yet micro-companies, or those with fewer than 10 employees, grew about 2 percent, indicating the potential for growth.
This continent-wide picture helps explain the excitement over the likelihood of Matteo Renzi becoming prime minister of Italy in coming days. The 39-year-old mayor of Florence has already shaken up his center-left Democratic Party by challenging the old guard, the same way that Tony Blair and Bill Clinton did in their countries during the 1990s. Now Mr. Renzi, who often wears bluejeans and leather jackets, wants to shake up Italy’s labor rules, tax rates, corrupt bureaucracy, and even its political structure to make room for innovative individuals in business.
His nickname is Il Rottamatore (“The Scrapper”) because he wants to clean up Italian politics and bring hope to young people. He would be Italy’s youngest prime minister if he can patch together a ruling coalition in Parliament. Already the country’s most popular politician, he could break Italy’s sorry record of short-term prime ministers who accomplish little in the current political system.
His reforms would enable young people to take greater risks with ideas for new businesses, helping them to overcome and learn from their failures. One model is Finland, which has most of Europe’s fastest-growing companies. Finnish entrepreneurs not only have easy access to capital and support to launch new products and services but there is a cultural tolerance for initial failures. One example is Rovio, which tried 51 times to develop new software programs until it struck gold on the 52nd time with the game Angry Birds.
Europe’s future must be built on individual hopes for self-employment, with government and other institutions offering support. If Renzi can take Italy’s helm and tap young people’s desire to own a business with a new entrepreneur-friendly culture, he could use those “green shoots” to help make Italy competitive with Germany and other countries with advanced economies. Fear of failure didn’t stop his rise to the top, and he wants the same for all Italians.