International Openness and Foreign Direct Investment in Italy: Directions, Actors, and Policies

In the past, internationalization was often considered an option; in recent years, however, it has become a necessity. Companies are increasingly required to engage with international markets. This engagement can take various forms: some involve a low level of commitment and risk but offer limited control, such as export, while others require greater involvement and higher risk, such as international alliances and foreign direct investments (FDI). Beyond entering international markets, companies must also consolidate their presence abroad, which typically entails transferring part of their value chain to target foreign markets. This enables companies to establish operational activities overseas, either for commercial or production purposes. Such presence can be achieved through FDI, whether via greenfield investments or mergers and acquisitions (M&As).Italy demonstrates a significant degree of international openness, as it maintains a positive trade balance as one of the major exporters. Regarding investments, Italy is active both outwardly, by establishing its presence in foreign markets, and inwardly, as it remains an attractive destination for foreign investors. Foreign Direct Investments (FDI) act as one of the main drivers of internationalization and economic development. This research aims to understand the position of Italy in this dynamic context. The study focuses not only on the tendency of Italian companies to expand abroad (outward FDI) but also on the ability to attract foreign capital (inward FDI). In this framework, the study examines the impact of structural reforms and the institutional support system on the international growth and competitiveness of Italian companies and on Italy’s attractiveness for FDI inflows. The study adopts a multidisciplinary approach that combines a theoretical analysis of the main forms of firms’ internationalization and of the factors driving FDI with an empirical, quantitative study. It examines FDI flows and stocks using the latest national and international statistical data. The results show that Foreign Direct Investment (FDI) continues to play an important role in helping Italian companies expand abroad, strengthen global value chains, and improve their competitiveness. At the same time, there has been an increase in Italy’s attractiveness to foreign investors, that is driven by targeted policies, reforms, and the support of institutional and financial actors. The regulatory simplification and the structural reforms have acted as catalysts for the country’s attractiveness. This illustrates that Italy is significantly improving its position compared to the past; however, structural constraints still limit its full potential, so even with reforms and institutional support, more improvements are needed. It is thus possible to infer that Italy’s position depends not only on macroeconomic factors but also on its ability to provide an integrated ecosystem, where effective reforms and good governance turn capital flows into real growth. Only a system that balances the protection of strategic assets with operational simplification can consolidate Italy’s position in global value chains, while FDI continues to play a strategic role in the international expansion of Italian companies and in strengthening their competitiveness.