Foreign Direct Investment and Economic Complexity: Key Elements for a Targeted Industrial Policy in Italy

Foreign direct investments (fdis) are generally recognized as crucial factors of developmentand modernization with national economies. In the economic literature, there is a broad consensuson the positive impact of fdis on destination countries, both at the macroeconomic and employmentlevel. The concern about knowledge and know-how transfers that fdis can activate betweenbusinesses and territories is gaining momentum. Our article focuses on this topic, using,in particular, the approach to economic complexity as a tool to analyze the productive knowledgeendowment of the territory. In the introduction, we point out the fundamental elementsof the economic complexity and discuss the importance of a strategic approach to attract fdis.Our analysis follows the localization strategies of fdis in Italy and considers them in relation tothe different degree of economic complexity within the local systems. After this locally-focusedinterpretation, we present an analysis of the network of the international partners involved inthe fdis and the sectors where fdis in Italy are concentrated. Finally, the product space is discussedin more detail in order to highlight some of the areas where Italy could leverage fdis tostrengthen its pool of knowledge and increase the complexity of its production system.