«Recondisering Italy» as a Late Comer in the European Development: Some Observations on the Structure and Recent Performance of the Manufacturing Sector

Italy, a late-comer in development in comparison with the leading industrialised countries, is among the most successful countries in the manufacturing sector, and its export performance is resilient, while its level of productivity is relatively low and declining. Value added per employee is below the euro area average and shows a significant reduction, compared with the other countries, in the ten years preceding the crisis. Labour cost per head are comparatively low and partially compensate the effect of low productivity on margins. This is true in aggregate terms, but the breakdown by companies size shows that these characteristics belong just to the extremes, with both the larger and smaller Italian companies suffering from low productivity and low margins. On the contrary, the mid-sized companies, which are the key of the Italian manufacturing model, and decisive for the export performance, are comparatively well positioned in terms of both productivity and margins, with labor cost in line with competitors. The Italian case shows that without large companies - where in average the levels of productivity and factor remuneration are higher - competition is possible, but harder. Thanks to the competitive situation of mid sized companies the Italian position in the world arena can be defended, but the long term future of the Italian manufacturing depends on the difficult start of a process of structural change, towards a more concentrated structure.