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Message from an Italian bottleneck: inter-industry relationships and efficiency spillover

Stefano Costa () and Federico Sallusti ()
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Federico Sallusti: ISTAT

No 16128, Working Papers LuissLab from Dipartimento di Economia e Finanza, LUISS Guido Carli

Abstract: In 2015, Italian manufacturing grew at rates comparable to German manufacturing, while services performance was three times poorer. This paper investigates to what extent such gaps are also due to: a) differences in the structures of inter-industry relationships, b) the ability to convey the impulse coming from manufacturing, and c) the ability to transmit efficiency across the system. Our perspective is twofold. Firstly, by applying network analysis to WIOD tables, we compare Italian and German business structures and evaluate their different capacity of activation. Secondly, a firm-level estimation of technical efficiency, combined with spatial econometrics, is used to assess the role of the inter-industry relationships in activating efficiency spillovers. Our results show that in Italy relationships between manufacturing and services are less dense than in Germany, so that the capacity of stimulating business services is lower too. Moreover, we find that business services are on average more efficient than manufacturing, and the efficiency mainly flows from the supplier sector to the buyer one. In this context, a serious bottleneck emerges for the Italian economy, which weakens the capacity of business services to grow and has negative feedbacks on the efficiency of manufacturing.

Keywords: WIOD; network analysis; technical efficiency; business service; inter-industry relationships; spatial econometrics (search for similar items in EconPapers)
JEL-codes: C10 D24 D57 L60 L80 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cse
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