When Too Much Is Too Little: Evaluating the Italian Startup Act

Abstract

Public policies aimed at incentivizing the birth and growth of startup ecosystems in developed countries have so far produced mixed results, and the vast majority have resulted in wasting taxpayers' money. This failure is the result of mechanically importing policies that have worked in other countries without understanding (1) the real economic goal of startup policies and (2) how to adopt strategies that have worked elsewhere to the local context. Countries should promote startups not because they are a "nice to have" but because, if done right, startups can boost the innovation content of an economy and spur economic growth. Governments indeed have a role to play but must target innovation, or they are wasteful. Applying this framework to the Italian 2012 Startup Act, we find the effort has not yet produced good results and propose some solutions.