Firm exit, technology and trade: A sectoral perspective

Massimo Del Gatto and Mattia Peracchia

International Economics, 2025, vol. 183, issue C

Abstract: We document the presence of wide differences in firm exit (through insolvency proceedings) rates across Italian manufacturing industries shedding light on the role played by technological and trade factors, with particular emphasis on sectoral dependence on imported inputs. Less productive (TFP) and less innovating (patent intensity) sectors, as well as sectors featuring a TFP distribution skewed towards low productivity firms, display higher exit rates. Notably, dependence on foreign inputs, especially technological inputs sourced from EU and China, is associated with lower exit rates, suggesting a resilience channel linked to GVC integration. In contrast, input reliance on Asian Tigers correlates with higher exit rates, possibly due to supply chain complexity and hyper-specialization. The input dependence effect persists when considered together with the technology variables and is mostly at work for firms under the median TFP level.

Keywords: Firm crisis; Exit rates; Productivity; Innovation; Trade; Input dependence (search for similar items in EconPapers)
JEL-codes: F1 L1 O3 O4 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:183:y:2025:i:c:s2110701725000496

DOI: 10.1016/j.inteco.2025.100626

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