Investing in Data and Software (D&S) is a necessary condition for firms to enhance AI adoption and applications. D&S may enhance the productivity of other types of intangible investments (Bontadini et al., 2026). In our research, we focus on R&D and argue that firms investing in D&S benefit from lower market uncertainty and might ‘afford’ the intrinsic uncertainty of investments in basic and applied research, the innovation input par excellence. Our evidence on Italian firms supports this conjecture and points to complementarity between D&S expenditures and R&D: firms that invest in both have higher labour productivity (Mohades and Savona, 2025). This paper discusses policy instruments that magnify the productivity effects of R&D by jointly supporting R&D and D&S investments.

In what follows, we first briefly compare Italy’s intangible investment with that of other European economies and across sectors. We then present our firm-level evidence and discuss its implications for innovation policy.

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