Italy Wants to Take Its Special Economic Zone Model Nationwide

FTZ News: After years of relying on special economic zones to narrow the persistent gap between northern and southern Italy, Prime Minister Giorgia Meloni is considering a more ambitious experiment: extending the administrative simplifications of the Single Special Economic Zone, known as ZES Unica, across the entire country. The proposal arrives wrapped in an impressive figure — roughly €60 billion in business activity attributed to the program — yet it also raises a more difficult question about what that number actually measures and how much of the recent improvement in the south can fairly be credited to the ZES framework itself.

Meloni has described the ZES system as a success that has generated approximately €60 billion in economic activity and contributed to growth and employment in southern Italy, according to remarks reported by ANSA. The figure is striking, but it requires careful interpretation. It does not represent €60 billion in direct government spending, private capital investment, or foreign direct investment. Instead, it reflects a broader estimate of business activity associated with the program. By mid-2026, projects approved under the ZES framework accounted for more than €9 billion in direct investment and roughly 25,000 direct jobs. The two numbers measure different things, and the difference is consequential for anyone trying to assess the policy’s real impact.

Southern Italy has, in fact, shown encouraging signs of recovery. Between 2019 and 2025, GDP in the south rose by about 8.3 percent, compared with 6.3 percent for Italy as a whole. In 2025, southern GDP grew by 0.6 percent while the center and north expanded by 0.5 percent. Employment in the south increased by 1.5 percent that year, outpacing the national rate of 1.1 percent. These figures do not erase the structural disadvantages that still weigh on the region — lower productivity, weaker infrastructure, thinner export networks, and persistent gaps in human capital. They do, however, suggest that the long-standing narrative of southern decline is no longer the only story.

A closer look at the composition of ZES projects offers additional insight. Roughly 45 percent of approved projects involve the creation of new production facilities. Those projects account for about 65 percent of total investment and 55 percent of projected employment effects. Expansions of existing facilities make up approximately 38 percent of projects, 25 percent of investment, and 32 percent of employment. In other words, a meaningful share of the capital is flowing into new productive capacity rather than simply enlarging what already exists. At the same time, the sectoral mix remains concentrated in agriculture and food processing, traditional manufacturing, automotive, information technology, and tourism. More advanced industries such as aerospace and biotechnology still represent a relatively small share of the total.

Italy has extended the ZES investment tax credit through 2028, with spending ceilings of roughly €2.3 billion in 2026, €1 billion in 2027, and €750 million in 2028 — a total of about €4.05 billion over three years. The scale is significant. It also creates a practical test. Policymakers will eventually need to demonstrate what taxpayers received in return: additional factories, higher exports, more durable jobs, measurable gains in productivity, or investment that would largely have occurred regardless of the incentive.

The more interesting shift may lie less in the tax credits than in the administrative simplifications that Meloni now proposes to spread nationwide. The original logic of special economic zones was geographic: weaker regions required preferential treatment to close the gap with stronger ones. The emerging argument is different. If faster permitting and lighter bureaucracy have proven valuable in the south, why should companies in the rest of the country continue to face slower processes simply because of their location?

Administrative efficiency is not the same as a fiscal subsidy. A quicker authorization does not necessarily cost the state billions of euros. It does, however, demand something governments often find more difficult to deliver: consistent institutional discipline. That question — whether the most useful element of the ZES experiment can be scaled beyond the regions it was designed to help — may ultimately prove more consequential than the precise size of the investment figures attached to the program.