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Italian Multinationals and De-localisation of Production

Author

Listed:
  • G. Barba Navaretti

    (University of Ancona, Centro Studi Luca d´Agliano, Fondazione Eni Enrico Mattei)

  • Anna M. Falzoni

    (University of Bergamo, CESPRI, Centro Studi Luca d´Agliano)

  • A. Turrini

    (University of Bergamo, CESPRI, Centro Studi Luca d´Agliano)

Abstract

In this paper we test the firm-specific determinants of delocation to low-wage countries on the part of Italian firms. We collect data through a survey on 167 firms the in mechanics and textile industries. Our data show that in recent years there has been an upsurge in FDI activity by Italian firms, mostly directed to cheap labor countries. Our hypothesis is that investments to cheap labor countries are mainly cost-driven, and undertaken by firms that focus on a low-quality, low-cost strategy. We test this hypothesis through a probit analysis, finding that investments to cheap labor countries are more likely to be of a vertical type, being associated with low local sales abundant employment and high shares of intra-firma trade. For textile, there is also weak evidence that investments to low wage countries are associated with low shares of skilled employment in parent companies.

Suggested Citation

  • G. Barba Navaretti & Anna M. Falzoni & A. Turrini, 1999. "Italian Multinationals and De-localisation of Production," Development Working Papers 126, Centro Studi Luca d'Agliano, University of Milano.
  • Handle: RePEc:csl:devewp:126
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    File URL: https://www.dagliano.unimi.it/media/WP1999_126.pdf
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    Cited by:

    1. Giorgio Barba Navaretti & Anna Falzoni & Alessandro Turrini, 2001. "The decision to invest in a low-wage country: Evidence from Italian textiles and clothing multinationals," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(4), pages 451-470.

    More about this item

    Keywords

    foreign direct investments; production de-localisation; product differentiation;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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