Think locally, act globally
Two changes seem to be necessary in Spain and Italy: reform and internationalisation. In both countries, these can be at the local, regional or state level, rather than the national level. Italy has a long tradition of robust local and regional administration, necessary in a state where political instability is the norm. The de facto federal nature of Spanish governance means that the states have extended powers in many sectors, including higher education.
Torino (Turin) provides one example. The current Mayor, Pierro Fassino, aims to transform the city into a university town (citta universitaria) to attract companies and foreign universities to set up operations there (link to the interview). Fassino claims that the crisis has forced his city 'to optimise the use of existing resources due to cuts in public spending' and that the project 'will go ahead... with the resources already available and perhaps through a more efficient use of them'. He notes that he expects the government to back his plan.
In Florence, the local authorities have brokered a deal with Ningbo University. The Chinese university will set up a branch campus in the city, apparently with a mainly Chinese student market in mind. In Spain, the autonomous government of Valencia (Generalitat Valenciana) has provided land and other means of support to Berklee College of Music to set up a branch campus in the city.
Is internationalisation the way forward?
Both Italy and Spain fare relatively well in terms of international student recruitment. According to OECD data, Italy had just under 66,000 foreign students in 2009 and Spain had 85,000 - both more than double the 2000 numbers. Both countries had a global market share of 1.2% in 2000, which increased to 1.8% for Italy and 2.3% for Spain in 2009 as shown in the graph below.