A Bacon of Hope? Another Look at the Italian Textile Industry
Despite increasing competition from newly industrializing countries, Italy’s textile industry has continued to be an important contributor to the domestic economy. Many observers attribute this resilience to the industry’s focus on quality. Here, we take note of that view but also examine production and cost relationships to explore the existence of returns to scale and the interrelationships among inputs to gain additional insights about the future prospects for this industry. The findings are consistent with constant returns to scale and a substitute relationship between all input pairs except for domestic capital and foreign intermediate goods. While the estimated cross elasticity values for the latter input pair suggested complementarity, they were not statistically significant. The results also suggested some increasing flexibility in the labor market, perhaps including informal sector arrangements, greater responsiveness of labor demand to the price of capital, and more international production sharing arrangements. An increasing elasticity over time of the demands for domestic capital and domestic intermediate goods with respect to the price of foreign substitutes was also observed. Maintaining the Italian textile industry’s reputation for outstanding quality may be an important survival strategy for some products; international production sharing may be necessary to maintain competitiveness for others.
|Date of creation:|
|Date of revision:|
|Contact details of provider:|| Postal: 6900 North Loop 1604 West, San Antonio, TX 78249-0631|
Web page: http://business.utsa.edu/wps
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:tsa:wpaper:0060. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Eddie Salinas)
If references are entirely missing, you can add them using this form.