Looking at the shorts, sun hats and flip-flops sported by passengers aboard the 19:55 flight from London to Florence, it would appear at least 80% of them were going on holiday to one of the world’s most beautiful cities. But the handful entering the aircraft sporting ties, suits and polished shoes also highlighted that there is a lot more to the city – and the wider Tuscany region – than fresco paintings, renaissance art and expensive bottles of chianti.

According to Invest in Tuscany, an arm of the regional economic promotion agency, Toscana Promozione, Tuscany’s economy is one of the most open in Italy to foreign markets. With 3.7 million people, representing a 6.2% slice of the country’s population, its exports of €26bn represent 7.3% of the Italy’s total, and compare well with its imports of €19bn.

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Concentrated effort

Tuscany covers an area of 23,000 square kilometres, in which 70% of the population and 75% of non-agricultural jobs are concentrated in just 30% of the territory, mainly in small towns and clusters of small and medium-sized enterprises (SMEs). In production terms, Tuscany’s GDP of more than €106bn euros (according to Eurostat) makes it the 25th most productive region in the EU. Meanwhile, its per capita GDP of €28,700 puts it above the EU average of €25,000.

“Tuscany is distinctive because it is an area where different traditional production industries, such as stone, goldsmiths, fashion and textile production and the paper industry, co-exist with technologically advanced sectors, such as life sciences, nautical science, mechanics, and information and communications technology,” says Enrico Rossi, the region’s president.

Invest in Tuscany says the region is one of the most developed in Italy, thanks to its integrated economy, social harmony and strategic location in the Mediterranean basin, which gives it easy access to national and European markets.

The area is dominated by SMEs. Just under 85% of local firms have fewer than 10 employees, which is slightly above the EU average of 83.8%, while 9.8% have fewer than 20 staff compared with the EU average of 9.2%. Large companies (with more than 250 employees) number just 189.

The Tuscan system is still heavily based on manufacturing: more than 325,000 people (27.2% of its total workforce) are involved in the industry. This sector is dominated by production: food and agriculture, goldsmiths, and, above all, fashion – where big names such as Gucci, Prada, Ferragamo, Celine and Dior form an employment cluster of more than 102,000.

Commerce and the hotel and restaurant sector employ 245,000 and 95,000 workers, respectively, while financial and insurance activities and business services employ 230,000.

Alongside traditional production sectors, the mechanics, leisure boat, automotive and rail transport sectors have a significant presence. There is also a booming high-tech sector where both leading-edge and bleeding-edge firms linked to ICT, optoelectronics (photonics), medical devices, pharmaceuticals and biotechnologies operate.

Filling the gap

“At the beginning of the legislature [in 2010], we noted a gap in our manufacturing sector compared with more advanced regions in Europe,” says Mr Rossi. “We then realised that a development based solely on ‘Toscana del cipresso’ [Tuscany and its cypress trees] does not guarantee prosperity in a region where life is sweet, but where we need to transform our knowledge into new economic activity, new entrepreneurship and employment. We’ve decided to slightly reduce the number of economic measures/incentives by concentrating the resources on some major calls for applications in R&D. Our 2010-11 call for applications saw €60m contributed for 120 million investments, while the 2011-12 call resulted in a €70m public funding for further industrial research with 300 applications still being assessed. In doing this, the regional government aims to reduce the fragmentation in the use of public money and increase the effectiveness of the measures.”

The Tuscan government’s focus reflects a trend that probably passes unnoticed by the majority of tourists to the region’s Unesco world heritage sites. But the area’s entrepreneurs point to the role that innovation has historically played in the region. “Art and culture are important, but we’ve always had a strong link with innovation and science,” says Giorgio Moretti, CEO of Dedalus Healthcare Systems Group. “Look at the big names that have a link to the region: Galileo Galilei, Antonio Meucci, Eugenio Barsanti, Leonardo da Vinci: people have always been inventing and innovating here.”

The region’s strong educational system, which includes ancient and prestigious universities such as the universities of Florence, Pisa and Siena as well as five higher education institutes, is the backbone of its R&D community. This in turn is feeding into a growing high-tech sector.

All three Tuscan universities and the Scuola Normale Superiore di Pisa are ranked in the top 500 league of institutions worldwide. These – and other research institutions, including Istituto di Chimica dei Composti Organometallici, which is part of the Consiglio Nazionale delle Ricerche; the European Laboratory for Non-Linear Spectroscopy; Laboratorio NEST: the National Enterprise for NanoScience and NanoTechnology; and the Magnetic Resonance Research Centre (Centro di Ricerca di Risonanze Magnetiche) – are driving innovations in areas as diverse as alternative energy and pharmaceuticals.

Tuscany’s research system is a key area of focus for Mr Rossi. “This is an asset that can be better capitalised by investors,” he says. “This is why we decided to encourage close co-operation between the rectors of universities and regional research centres, which is already beginning to bear fruit. To investors who can see beyond the mere cost of labour, we offer a coordinated system of incentives, settlement choices, and relations with local organisations handling urban issues and soft landing services.”

In the past, most of the foreign money coming into the region was mainly from the US and Europe. Businesses from these locations invested in a number of key sectors, such as engineering (for example, GE Oil & Gas), components (Continental and Pierburhg), pharmaceuticals (Eli Lilly, Baxter and Novartis), ICT (Thales), solar inverters (Power One) and appliances (Whirlpool).

“More recently we’ve been experiencing a growing interest from regions such as south-east Asia, especially for investments in R&D that could lead to production, such as [engine maker] Yanmar and some GE business lines. Japan is starting to show interest in Tuscany, even in traditional sectors such as clothing and leather goods,” says Mr Rossi.

The Tuscan government is also behind a series of initiatives to promote public-private partnerships. “On a regional level, we have created five technology groups – renewable energies, ICT, life sciences, cultural heritage and rail infrastructure. These are chaired by entrepreneurs and have technology-oriented committees made ​​up of representatives from universities and companies,” says Mr Rossi. “The aim is to create a system that enables the emergence of R&D projects with greater critical mass with the support of a network of 12 innovation centres with full technology transfer services.

“Furthermore, all of our calls for R&D applications encourage research organisations and companies to work together. We’ve also financed seven joint laboratories which bring together industry and a university plus collaborations with numerous local institutions.”