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Productivity and foreign competition

Author

Listed:
  • Matteo Bugamelli

    () (Banca d�Italia)

  • Alfonso Rosolia

    () (Banca d�Italia)

Abstract

The debate in Italy on the recent disappointing performance of GDP growth has focused on the increasing competitive pressure exerted by firms located in the developing countries and specialized in key product sectors of Italian manufacturing. This paper contributes by explicitly quantifying the effects of this competition on the efficiency of Italian manufacturing firms and sectors. The exercise exploits the exogenous nature of the entry into international markets of competing firms located in developing countries, largely attributable to trade liberalization policies and the initial forms of industrial development. The relation between the developing countries� market shares and sectoral productivity in Italy, both disaggregated according to the 3-digit Ateco91 classification, is found to be empirically positive. The effect is largely due to a process of creative destruction in which the least efficient firms exit the market and new firms of above-average efficiency enter.

Suggested Citation

  • Matteo Bugamelli & Alfonso Rosolia, 2006. "Productivity and foreign competition," Temi di discussione (Economic working papers) 578, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_578_06
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    File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/2006/2006-0578/tema_578.pdf
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    References listed on IDEAS

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    Cited by:

    1. Daniela Maggioni, 2013. "Productivity Dispersion and its Determinants: The Role of Import Penetration," Journal of Industry, Competition and Trade, Springer, vol. 13(4), pages 537-561, December.

    More about this item

    Keywords

    concorrenza estera; produttivita' del lavoro; quote di mercato;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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