BlueSky Thinking Summary

Even though Italy is steeped in rich cultural heritage, it has not been able to cope with the resultant economic growth over the last three decades or so.

Nicola Persico, a Kellogg School professor, draws parallels between Italy's problems and possible future challenges facing the United States of America.

According to him, the reason for slow growth is high taxes, rising national debt, and greater regulation, all of which have inflated costs of business and hence retarded growth.

For example, it takes $200,000 to hire a $100,000 employee in Italy because of all the taxes, while it would cost an American company $130,000.

As the U.S.

national debt as a percentage of GDP has reached over 120 percent, Persico says similar factors impede American growth.

Greater federal regulations, though needed and even warranted, have grown significantly and also parallel many of Italy's bureaucratic barriers.

This is offset, however, by Persico's emphasis on the strength of the U.S.

in innovation and entrepreneurship being critical to maintaining future economic growth.

Will an innovation-driven economy be enough to offset these rising challenges to America?