Detecting vulnerability to foreign demand and supply: firm-level evidence from italy

Stefano Costa, Federico Sallusti, Claudio Vicarelli and Davide Zurlo

MPRA Paper from University Library of Munich, Germany

Abstract: Adopting a firm-level perspective, this paper delves into the dependence and vulnerability of Italian production system to foreign demand and supply. It introduces a novel, dual indicator of vulnerability, both to imports and exports, identifying the most vulnerable production segments, the specific countries, the relevant products and sectors involved. Consistently with the current literature, this paper evaluates vulnerability focusing on the degree of (product and geographical) concentration of firms' international transactions and their level of engagement in international trade, measured by export propensity (firm’s export-to-turnover ratio) and incidence (firm’s import-to-intermediate costs ratio). Regarding import vulnerability, also the type of imported products, identifying "Foreign Dependent Products" (FDPs), is considered. Finally, some estimates measure the relative role of these components in determining firm vulnerability, by sector and country of destination and origin. Our findings show that in 2022, a relatively small number of Italian firms were vulnerable to foreign demand, although they accounted for a significant share of value added and total exports. They are smaller and more export-oriented than their non-vulnerable counterparts, focusing on fewer products but exporting to a more diversified range of countries. Sectoral analysis highlights specific manufacturing industries with a higher incidence of export-vulnerable firms. United States and Germany emerge as the countries towards whose demand the largest number of Italian firms are vulnerable. On the import side, while the number of import-vulnerable firms is considerably lower than export-vulnerable ones, they are typically larger, more productive, and often part of multinational groups, accounting for a substantial portion of total imports. The primary origin countries for FDPs imports for the Italian production system are identified, with Germany being the leading supplier. Notably, the geographical distribution of FDPs imports has shown a trend towards greater concentration within EU countries.

Keywords: Trade vulnerability; Foreign dependent products; HH index (search for similar items in EconPapers)
JEL-codes: D22 F14 F61 (search for similar items in EconPapers)
Date: 2025-07-27
References: Add references at CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/125911/1/MPRA_paper_125911.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:125911

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().