We publish the executive summary of the High-tech Sectors Monitor edited by the Intesa Sanpaolo Studies and Research Department
The economic crisis generated by the spread of the coronavirus and the consequent lockdown in the main world economies and in Italy will invest the various economic sectors in an asymmetrical way in 2020, including the high-tech sectors (pharmaceuticals, biomedicals, ICT and aerospace).
The pharmaceutical sector, as well as the biomedical sector, will show greater stability thanks to the demand for medicines (with more favorable prospects for vaccine manufacturers) and medical devices, necessary to face the health emergency. A less negative evolution will also be observed in some segments of the ICT world supported by the strong push towards digitization in the most diverse fields, from industry to health-care and educational services, which will in fact support the demand for products and services with a high technological content. .
The most recent events have also shown the limits and fragility of long global value chains, bringing out reflections on the risks associated with possible new unforeseen interruptions in supplies, which could lead to a shortening of supply chains. This could generate greater regionalization of trade, also defining new roles for multinationals typically present in these sectors. These factors, together with the growing rivalry between the United States and China for technological leadership, as also witnessed by the recent 5G affair, could help define a new role for Europe and Italy.
Among the high-tech sectors, the aerospace sector will be the one with the most difficult prospects, affected by the blocking of air traffic, and which will depress investments and the performance of the main players in the sector.
However, the scenario is characterized by multiple elements of uncertainty, which will impact the prospects of the high-tech sectors, both in 2020 and in future years, with also possible repercussions on their production structure. Our country's specialization in some of these high-tech productions, such as pharmaceuticals (with a strong specialization in vaccines), as well as in some production niches in the world of medical devices and / or electronics, could however represent an important opportunity to restart for our economy.
In light of these considerations, the objective of this new edition of the High-tech Sectors Monitor is to analyze the state of the art in the internationalization process of high-tech sectors, taking into account multiple points of view.
After analyzing the trade flows of the Italian high-tech sectors in 2019 and in the first 3 months of 2020 (chapter 1), a specific focus is dedicated to the world trade in anti-COVID products (disposable medical devices, clothing and protection, disinfection and sterilization, etc etc), which shows the Italian positioning in the global context for this particular category of goods (chapter 2). The high internationalization that characterizes these sectors is also evident from the weight that foreign investments have and the role of multinationals (foreign and Italian) present in our country and which are analyzed in chapter 3. Finally, to complete the picture on internationalization, Chapter 4 examines the topic of global value chains in the electronics sector.
In 2019 the exports of the Italian high-tech sectors grew by 13.2% compared to 2018 (change at current prices), confirming the positive trend observed in the last 10 years, and thus reaching 60.8 billion euros, record levels . Exports from these sectors represent 13.4% of Italian manufacturing exports, a weight that has been growing steadily over the last ten years. The pharmaceutical sector in particular contributed to supporting the performance of the high-tech sectors, showing an increase of more than 25%. Positive signs were also recorded for the biomedical sector (+ 6.4% accelerating compared to 2018) and aerospace (+ 3.1%), while a decrease was observed for the export of the ICT sector (-1, 5%).
65% of the exports of the high-tech sectors originate from the 24 technological poles identified and constantly monitored in our analyzes. 2019 closed with growth for 15 high-tech poles, with particularly brilliant results for the pharmaceutical clusters which all stood at record high export values. The scenario of the biomedical poles was also positive, with 4 out of 5 companies growing, and that of the aerospace poles. On the other hand, the context of the ICT poles was more heterogeneous, in which the good results of Catania, Trieste and Rome were contrasted by the decline in ICT exports from Milan and Monza, a leading player in the sector.
In the first quarter of 2020, exports of high-tech products recorded an increase of about 12%, 1.5 billion more than in the same quarter of 2019. Supporting the export of high-tech industry in the first 3 months of he year was once again contributed by the pharmaceutical sector (+ 24%), which also in March recorded a double-digit increase (+ 32.5%), supported by sales of medicines and pharmaceutical preparations. While in the ICT sector the cumulative figure for the first 3 months was positive, the March evidence marked a sharp slowdown for all components, except for audio and video consumer electronics products, which may have benefited from the growing demand for some types of electronic goods related to the need to use PCs and tablet tools to work and / or study from home. There was also a decline in exports from the aerospace and biomedical sectors.
As regards the biomedical sector, a more in-depth analysis on the world trade in medical devices was made starting from a broader and more detailed classification of the products that allowed us to define, starting from our previous analyzes and integrating them with the material made available by the World Customs Organization jointly with the World Health Organization, a list of anti-COVID-19 goods spanning multiple sectors (textiles, clothing, electronics, chemicals). The emergency caused by the pandemic linked to COVID-19 has in fact significantly increased, in Italy as in other industrialized countries, the demand for personal protection and disinfection systems (disinfectants, masks, disposable gowns, sheets, masks, etc. .), of products for diagnosis (kits, reagents, machinery for analyzes, radiographs etc.), of goods for monitoring and care (from oximeters to respirators etc.).
In 2018, the set of anti-COVID-19 products generated an international trade flow of over 760 billion dollars, almost half attributable to the disinfection and sterilization sector. The electromedical sector and that of disposable medical devices follow with amounts of around 120 billion dollars. Clothing and protective products resulted in global exports of just over 60 billion, while diagnostics and other products recorded global exports of 47 and 39 billion respectively. The flows of other products and the world of vehicles are less significant (8 billion).
As far as these products are concerned, the role of Germany stands out with a share of world trade of 13.4%, followed by the United States (12.1%) and China (10.1%). Italy, with a share of 3.7%, occupies the ninth place among the top 10 world exporters, with a better positioning in the sectors of disinfection and sterilization, clothing and protection systems and in the production of vehicles. The analysis in terms of the normalized balance reveals, on the whole, a good positioning of Italy which is in fifth place, after Ireland, China, Switzerland and Germany.
Istat data relating to the foreign trade of anti-COVID products allow us to give a first evidence of what happened during the pandemic, at least as regards its beginnings. In the month of March, Italy has imported, compared to the same month of 2019, almost 200 million additional euros of medical and health products related to the emergency. The additional flows of disinfection and sterilization products arriving from Ireland (+83.5 million euros), Belgium (+74.2 million euros), and the jump in purchases from China of protective clothing, with 71.4 million euros more than in March 2019. It should be noted that Italian exports relating to these products also increased significantly (especially disinfection and sterilization products to the United States, France and Belgium) helping to increase the trade balance by 250 million in March alone.
The high internationalization of the high-tech sectors, which emerged from the analysis on trade flows, is also confirmed by the analysis on incoming foreign investments (FDI IN). If Italy is characterized by a limited presence of foreign investments and lower than the European average, in the high-tech sectors the weight of FDI IN is almost double that of the economy data, highlighting an ability to attract foreign capital more similar to that of the main European competitors.
The pharmaceutical sector is the one that highlights the importance of FDI IN the most important: about 60% of the turnover and 50% of the employed in the sector originate from foreign multinationals. The TLC sector follows the importance of foreign capital in the sector, with a weight of FDI IN in terms of turnover of 44% (23% of employment). The electronics sectors (22% in terms of turnover and 17% on employment) and the software sector (22% on turnover and 13% on employment) show a lower weight of FDI IN.
The high-tech sectors in Italy are characterized by a lower geographical diversification of FDI IN origin than in other European countries. More than a quarter of investments in high tech sectors in Italy are of US origin: the USA is the main country of origin of FDI for the electronics, pharmaceuticals and software sectors. Investments from the UK, Switzerland and France follow. China (excluding Hong Kong) occupies the thirteenth position highlighting a still limited role as an investor in the hi-tech sectors in Italy.
From the analysis on a sample of 9,479 companies in the high-tech sectors, of which 795 foreign multinationals (representing a turnover of around 54 billion euros), it emerges that these companies are on average larger than Italian multinationals (and Italian companies) , and mainly located in Lombardy. Foreign investment activity has grown over time: around half of all inbound investments in high-tech sectors occurred in the last decade.
The growth performances of foreign multinationals in 2018 show a less brilliant trend than the Italian players, and lower profitability indicators, presumably conditioned
from transfer price policies with the parent company. The bond that the foreign multinational has with the parent company is also reflected in the adoption of some strategic levers (patents, trademarks, environmental and quality certifications) which are less widespread than Italian multinationals and companies.
To complete the picture on the phenomenon of internationalization, in the last chapter the issue of global value chains was addressed, focusing attention on electronics.
The next few years will see the electronics sector becoming increasingly crucial for the transformation of the productive fabric. With the acceleration on the front of the 4.0 revolution and automation, there will most likely be an increase in the weight of electronic inputs in manufacturing production, even in sectors with a low technological content, currently less impacted by transformation. All the more so after the experience lived during the most critical phase of the COVID-19 pandemic, when the benefit of a non-traditional management of production plants was experienced.
The analysis, carried out starting from the World Input-Output Database (release 2016), first of all highlighted the profound transformation process of the global electronic supply chain, highlighting the shift of the production center of gravity from the United States to China. If in 2000 Chinese electronics production accounted for 7.4% of world production, in 2014 this share rose to 33.7%. Conversely, the US weight went from 27% to 14.8%. Also in terms of GVC income (a synthetic indicator of positioning in global value chains), Chinese growth (from 6.1% in 2000 to 29.4% in 2014) mirrors the decline in the United States (where the indicator passes from 29.2% in 2000 to 16.4% in 2014). This is due not only to the growth of the Chinese domestic electronics market, and to the high domestic contribution to the supply chain, but also to the leading role played by Chinese intermediate inputs (electronic and non-electronic) that flow into the final electronics products assembled elsewhere: this is 53.2 billion dollars, against 37.3 billion in the United States. Specifically, if we isolate only the intermediate electronic inputs that reach the various electronic supply chains in the world from China (14 billion dollars), and compare them with the American ones (11.8 billion), we observe a clear Chinese predominance in all areas of the world, except for NAFTA.
In a competitive context that is anything but favorable, influenced by the China-US dispute to maintain technological supremacy, the European electronics supply chains have also profoundly transformed: European countries as a whole have experienced a reduction in their weight on world production (from 19.5% in 2000 to 12.2% in 2014).
A more detailed analysis actually highlights a patchy situation, with a contraction in the production levels of the French (-43.3%, again in the period 2000-14), English (-35.5% ) and, to a lesser extent, Spanish and Swedish. On the other hand, the German (+ 25.9%) and Italian (+ 31.6%) sectors are growing.
Some characteristic features emerge from the breakdown of the Italian electronic chain. The production chain is more open to the contribution of foreign added value than those of European partners. In terms of geographical macro-areas, the preponderant share of intermediate inputs comes from the mature countries of the European Union. In addition, between 2000 and 2014 there was an increase in the weight of the countries of Eastern Europe and Asia (this is 5.1% of the total inputs that flow into the production of final electronic goods in Italy, compared to 3% in 2000). On the other hand, inputs from NAFTA decreased (1.9%, compared to 4.9% in 2000). An even more detailed analysis for individual supplier countries and sectors that contribute to the GVC of Electronics in Italy, highlights a role of Germany that is more relevant than that of China: the contribution of German added value amounts to 6.2%, against 3.2% of Chinese added value. German inputs predominate over Chinese ones not only in the overall manufacturing sectors (with a weight of 3.7%, against 1.7% of Chinese inputs) that contribute to the final electronics goods, but also if we consider some sectors key, from electronic to chemical and electrotechnical intermediates, from the world of metals to mechanics, to research and development services.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/come-vanno-i-settori-ad-alta-tecnologia-in-italia-report-intesa/ on Wed, 19 Aug 2020 09:52:42 +0000.