Offshoring, Extent of the Shadow Economy and Firm Performance. Evidence from Italy

Vito Amendolagine (), Rosa Capolupo and Giovanni Ferri
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Vito Amendolagine: University of bari
Rosa Capolupo: University of bari

No 21, SERIES from Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro"

Abstract: Being the G-7 country with the largest shadow-economy share, we posit that Italy's manufacturing firms - to counter emerging economies' competition - could alternatively offshore or enter the shadow economy. Within this context, we investigate, in a sample of Italian firms, whether internationalised firms outperform purely domestic firms in terms of efficiency, innovativeness and skill composition. Using propensity-score-matching and difference-in-difference techniques we find evidence that: (i) offshoring impacts TFP negligibly but, (ii) labour cost relocation robustly causes offshoring; (iii) offshoring firms are more likely innovative and R&D-oriented; (iv) firms in high- shadow -economy provinces less likely offshore. It is also evidenced that the latter firms show lower TFP and R&D expenditure.

Keywords: trade integration; offshoring; empirics of global sourcing; shadow economy (search for similar items in EconPapers)
JEL-codes: E26 F13 F21 O19 (search for similar items in EconPapers)
Pages: 816
Date: 2008-03, Revised 2008-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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