Regional activity and participation in national and international value chains: evidence for Italy

This work sets out the participation of Italian regions in the international economy using indicators proposed in the empirical intercountry input-output literature. First, it examines how foreign demand contributes to regional value added through direct and indirect trade (via other regions or countries) in goods and services. It shows that the relative importance of direct and indirect 'pathways' in bilateral value-added exports is associated with regional and destination countries' features. Indirect 'pathways' through other regions are proportionally more important for the South, smaller regions and destination countries, and direct ones for territories of larger size and large and contiguous countries. Secondly, it evaluates the types of regional participation in international value chains and their possible common traits. It finds that regions that participate by supplying a higher proportion of domestic value added, compared with foreign, are those for which, in addition to the manufacturing sector, advanced services and innovative activities are significant in their productive structures. They are mainly the major central and northern regions and a few southern ones.