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Choosing between foreign investment and subcontracting: Strategies of Italian firms in Romania

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  • Tattara, Giuseppe

Abstract

Vertical disintegration in most industries and the globalization of markets has led to significant changes in the pattern of international division of labour among manufacturing firms. At the same time increased competition from low cost producers, exchange rate constraints, the opening up of CEE countries have had huge consequences for the Italian industrial system. This paper deals with the Veneto footwear, furniture and refrigeraion industries and examines the effects of foreign direct investments and subcontracting in Romania. The reorganization of the division of labour, in the most dynamic suppliers induced a change in the “nature of subcontracting”, upgrading along the ladder of the value chain as more and more operations are offshored.

Suggested Citation

  • Tattara, Giuseppe, 2011. "Choosing between foreign investment and subcontracting: Strategies of Italian firms in Romania," MPRA Paper 29174, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:29174
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    References listed on IDEAS

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    1. Florentina Constantin & Giovanna Giusti & Giuseppe Tattara, 2010. "Strategies of Italian Firms in Romania: Evidence from Selected Case Studies," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 16(4), pages 829-847, February.
    2. Lawton Thomas C & McGuire Steven M, 2005. "Adjusting to Liberalization: Tracing the Impact of the WTO on the European Textiles and Chemicals Industries," Business and Politics, De Gruyter, vol. 7(2), pages 1-25, August.
    3. Giuseppe Tattara, 2005. "Emerging Hubs in Central-Eastern Europe, Trade Blocs and Financial Co-operation," Industrial Organization 0511013, University Library of Munich, Germany.
    4. Peter J. Buckley & Mark Casson, 1991. "The Future of the Multinational Enterprise," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-21204-0.
    5. Markusen, James R. & Venables, Anthony J., 1999. "Foreign direct investment as a catalyst for industrial development," European Economic Review, Elsevier, vol. 43(2), pages 335-356, February.
    6. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
    7. Graziani, Giovanni, 1998. "Globalization of Production in the Textile and Clothing Industries: The Case of Italian Foreign Direct Investment and Outward Processing in Eastern Europe," UCAIS Berkeley Roundtable on the International Economy, Working Paper Series qt5cr30690, UCAIS Berkeley Roundtable on the International Economy, UC Berkeley.
    8. Scott, Allen J., 2006. "The Changing Global Geography of Low-Technology, Labor-Intensive Industry: Clothing, Footwear, and Furniture," World Development, Elsevier, vol. 34(9), pages 1517-1536, September.
    9. Lawton, Thomas C. & McGuire, Steven M., 2005. "Adjusting to Liberalization: Tracing the Impact of the WTO on the European Textiles and Chemicals Industries," Business and Politics, Cambridge University Press, vol. 7(2), pages 1-23, August.
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    11. Rosa Forte & António Brandão, 2005. "Choosing between Foreign Direct Investment and International Subcontracting. A Model of a Multinational Firm's Decision in a Context of Moral Hazard," CEF.UP Working Papers 0506, Universidade do Porto, Faculdade de Economia do Porto.
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    Cited by:

    1. Tattara, Giuseppe, 2012. "From competitive advantage to dynamic capabilities: small and medium-sized multinationals in Asia," MPRA Paper 39364, University Library of Munich, Germany.

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    More about this item

    Keywords

    Foreign direct investment; International subcontracting;

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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