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Italian Multinationals and De-localisation of Production

Giorgio Barba Navaretti (), Anna M. Falzoni and Alessandro Turrini ()
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Anna M. Falzoni: University of Bergamo, CESPRI, Centro Studi Luca d´Agliano

No 126, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: In this paper we test the firm-specific determinants of delocation to low-wage countries on the part of Italian firms. We collect data through a survey on 167 firms the in mechanics and textile industries. Our data show that in recent years there has been an upsurge in FDI activity by Italian firms, mostly directed to cheap labor countries. Our hypothesis is that investments to cheap labor countries are mainly cost-driven, and undertaken by firms that focus on a low-quality, low-cost strategy. We test this hypothesis through a probit analysis, finding that investments to cheap labor countries are more likely to be of a vertical type, being associated with low local sales abundant employment and high shares of intra-firma trade. For textile, there is also weak evidence that investments to low wage countries are associated with low shares of skilled employment in parent companies.

Keywords: foreign direct investments; production de-localisation; product differentiation (search for similar items in EconPapers)
JEL-codes: F23 L13 (search for similar items in EconPapers)
Date: 1999-06-01
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Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:126

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