Foreign Ownership: the case of Italy
After a prolonged postwar period of remarkable foreign ownership penetration, in the last two decades Italy lost its high position as a country of destination of worldwide inward FDI. At the beginning of the new millennium, Italy ranks about 13 th regarding the stock, and 21 st regarding the recent flows of inward FDI. The share of industrial employment belonging to foreign owned companies (18%) is much smaller than what we may observe in other major European countries except Germany, which partly reflects the impact of reunification. The recent flows of inward FDI have been mainly directed to smaller companies, as it appears from the growth of the number of foreign affiliates (far higher than the growth of the employment in the same foreign subsidiaries). Greenfield investment play only a minor role, as in most developed areas of destination. The sectoral composition is characterised by a low and decreasing share of FDI in high tech industries. The paper presents some results on the impact of foreign ownership on labour productivity and employment. To avoid the standard caveats concerning the interpretation of these comparisons, we perform a series of paired T-tests between samples of companies which were subject to a change in ownership, compared to an appropriate sample of companies that did not experience any change of ownership, controlling for firm size and sector. Compared to firms that were not subject to any ownership change, companies targeted by foreign investors marked an increase in both labour produc tivity and employment level a few years after the acquisition. This result holds especially if the target firm is a small firm and if the investor is a European multinational company.
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