Naples Outpaces Milan as Southern Italy Drives Economic Growth

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Sectors such as AI, cybersecurity and renewable energy may offer southern Italy an advantage because they rely more on talent, research and university ecosystems than on the industrial clusters that historically favored northern Europe.

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With a student body of around 80,000 students across a broad range of disciplines, Naples’ Federico II university offers just that ecosystem. Founded in the 13th century, it is one of the world’s oldest institutions of higher learning and rector Matteo Lorito believes partnering with global companies to train workers and develop new technologies has been a game changer.

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“The academies and collaborations are just a part of what we do, but they’ve helped create a virtuous circle not just for our students but for the city,” Lorito said. 

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In addition to its collaboration with Apple, the university has also contributed to cleaning up areas like Scampia, a notorious slum made infamous by the movie and TV series Gomorrah. The neighborhood now houses the university’s new medical campus and has become one of the symbols of the city’s rebirth.

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The Naples region currently ranks second only to Milan for startups, according to a 2025 report by the city, which identified 1,515 such companies, or 12.5% of the national total. About 21% is active in areas such as artificial intelligence, blockchain and data science, while 65% invest in research and development, and 23% own patents and registered software.

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Another boost has come from €25 billion in EU cash spent on infrastructure, in particular a new high-speed train line cutting across the Apennine mountains to the southern city of Bari, which is already reducing travel times and will join the two cities in just two hours by 2028. That’s in addition to the already existing Naples-Rome high-speed line, which takes just one hour.

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The actual and virtual connections are paying off for business people like Letizia Magaldi, whose family runs an engineering company in Salerno, near Naples, specializing in high-temperature industrial materials and green energy. About half of its 230 employees are engineers, and she has been able to recruit throughout the country and lure back Neapolitan engineers, something rare in the South, which has suffered brain drain for decades. 

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“Rome-Naples-Salerno has become one large metropolitan area,” says Magaldi, who lives in Rome with her husband and kids but commutes to Salerno a few times a week. She says she’s able to leave her house at 8:30 a.m. and be at her desk by 10:15 a.m. 

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“We have excellent minds right here at our doorstep so the aim is to keep them and bring them back,” says Magaldi.

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While real estate prices are climbing, they’re still low enough to attract young professionals. A 180-square meter (1,937 square feet) apartment in the upscale Posillipo neighborhood, with views of the sea and Mount Vesuvius, is listed for around €900.000 on real estate website immobiliare.it, compared to prices of €1.5 million or more in a similar Rome or Milan home.

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The economic expansion extends beyond Naples. Bari has benefited from growth in real estate, energy and tourism, according to Bank of Italy data. Its province of Puglia has seen a surge in luxury travelers, particularly after Prime Minister Giorgia Meloni hosted a G7 there in 2024.

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The third growth hub is Catania in Sicily, whose economy has also been boosted by its strong university presence and decades of investments in tech by STMicroelectronics. Yet Naples, historically the capital of the South, remains the main driver.