- By Roger Strukhoff (Originally published September 2007)

Those cute orange streetcars are still in use in Milan, Italy. And not just as a tourist curiosity, but as a viable system of 20 lines serving large numbers of residents throughout the city center. Classy, practical, and slightly anachronistic, the cars serve as an apt metaphor for the country as a whole.

"We have great traditions in design and the practical use of it," a printing industry executive told me on a recent visit to northern Italy. "The question is how do we turn this into technology innovation so that we can compete with the rest of the world?"

Good question, and one that cannot be answered quickly, if at all. Milan, long a fashion and design center on a par with Paris or New York, is also the main transportation center for the country and the unofficial capital of northern Italy. But it is losing much of its textile and clothing--and printing--business to China, so much so that the EU and China are negotiating at this very moment about what to do about it.

One problem lies in its approach to small-business development. As one business person with some experience in Italy told me, "you have to be very careful about all the important government deadlines when you're in business in Italy. If you forget just one, you'll receive a fine years later, which you must pay of the government can take whatever it wants. You need a full-time accountant just to keep up with those deadlines."

This person went on to tell me that the government works slowly (in the manner of most governments) and often in decrepit buildings with antiquated equipment. These complaints are voiced by business people all over the world, often very loudly. Certainly California, which provides the world benchmark for technology innovation, is contantly under fire from the business community for its expense, tax structure, and regulatory environment.

But Italy seems to be a place where these problems are truly acute. The labyrinth of procedure and regulation facing business has formed a Gordian knot that begs to be cut by a dynamic, reformist government. The business climate finds little relief from a population that is loathe to move around the country to find new opportunity, but rather remains close to home, comforted by local dialects and traditions. An inward-looking Italy, consumed by local politics and perceived regional differences, struggles to find its place at the world technology table.

Although a solid member of the world's G8 global economy club, with an overall economy larger than the UK's when measured certain ways, the country struggles with a typical, chronic, continental unemployment, has factions who doubt the value of its participation in the Euro currency, and is now facing immigration issues from which it thought it was previously immune.

"The immigration--from northern Africa, the Balkans, and Russia--could be a good thing," my source told me, "because as you know, even though we are a country of 57 millions, we have a very low birth rate. But again, how do we convert this energy into technology innovation. I think the answer is investment, but tell me, where will this investment come from?"