The Determining Factors of the Delocalization of Italian Companies to East European Countries

Klodian Muço and Emiljan Karma ()
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Klodian Muço: Research Centre on Economics of Transition Countries, Catholic University Our Lady of Good Counsel, 1000 Tiranë, Albania
Emiljan Karma: Research Centre on Economics of Transition Countries, Catholic University Our Lady of Good Counsel, 1000 Tiranë, Albania

Economies, 2023, vol. 11, issue 11, 1-16

Abstract: Reflections on the factors that influence the delocalization of Italian companies to other countries, arising from a rapidly changing world economy, offer invaluable insight into companies facing similar tough choices. Usually, this decision is attributed to economic, fiscal, and institutional factors. This article examines the process of delocalization of Italian enterprises and empirically verifies the main factors which influence the delocalization of Italian enterprises to East European Countries. The results suggest that “labor market regulation”, “business regulation”, and “size of government” or better said, the labor cost the host country, is the main incentive of Italian enterprises to delocalize their production. Empirical results also show that institutional factors such as “rule of law”, “control of corruption”, “political stability”, and “broadband infrastructure” have a positive and significant correlation with the delocalization of Italian enterprises to the East European Countries. The results in this case suggest that Italian companies are looking for an environment in which the state knows how to enforce their own rules, but also a state that is somewhat “corruptible”.

Keywords: delocalization; organization of production; East European Countries; Italian companies; offshoring; labor market regulation; instructional factors (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2023
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