Global supply chain bottlenecks and exporter performance: evidence from Italy

Using custom-level and survey data for Italian firms, this paper examines the performance of firms exposed to global value chain (GVC) bottlenecks in terms of exports, revenues, and hours worked. We find evidence that firms reporting greater difficulties in sourcing the desired amount of inputs experienced posted significantly higher growth on average. The magnitude of this result is larger for firms with more diversified suppliers and is unaffected by the geographical distance of suppliers. We disentangle the role of demand and supply factors in firms’ performance and the results suggest that, despite constraints on the supply side, problems in sourcing inputs mostly mirrored an increase in demand. These findings hold true when using alternative direct and indirect measures of firms’ exposure to bottlenecks, as well as when taking into account several firms’ characteristics and fixed effects. We also examine firms’ future GVC strategies through a survey. There is limited evidence of firms willing to retrench from GVCs through re-shoring or near-shoring, but there is strong evidence of firms aiming to increase GVCs’ resilience through greater diversification of suppliers and larger inventories.