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Legal enforcement and Global Value Chains: micro-evidence from Italian manufacturing firms

Antonio Accetturo (), Andrea Linarello () and Andrea Petrella ()

No 397, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: In this paper we study the relationship between the quality of contract enforcement and firms' participation in Global Value Chains. Using new data on Italian manufacturing firms' supply of customized inputs to other firms and variations in law enforcement in courts across Italy, we find that firms located in courts with longer trial lengths are less likely to supply customized intermediate inputs to foreign firms. The effects are stronger for firms operating in contract-intensive industries. Our results are confirmed when we use a spatial regression discontinuity design that compares the probability of supplying customized inputs for firms that are located on different sides of a court border, and are therefore characterized by different trial lengths.

Keywords: Global Value Chain; Judiciary Efficiency; Italy (search for similar items in EconPapers)
JEL-codes: F10 F14 L14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-int and nep-law
Date: 2017-10
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_397_17

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