A Tale of Two Bazaar Economies: An Input-Output Analysis for Germany and Italy

35 Pages Posted: 4 May 2011

Date Written: December 10, 2010

Abstract

This paper evaluates the extent of internationalisation of production between 1995 and 2006 for Italy and Germany. The analysis is based on a large set of indicators of international outsourcing including a new one, the direct and indirect import content of production, which also takes into account the import content of domestic inputs. In 2006 the intensity of international off-shoring was quite similar in the two countries, although slightly higher for Italian firms when only manufacturing was considered. From a dynamic point of view, between 1995 and 2000 the growth in off-shoring was substantial in both economies but stronger in Germany, which at least in manufacturing had started from a lower level. During the first years of the past decade the off-shoring intensity of the two economies stagnated, but in the last period under study (2004-06) their growth resumed at a fast pace, especially in Italy. This seems to suggest a change in strategies and a reorganisation of production in Italian firms. The new challenges posed by globalisation, by the diffusion of information and communication technologies, and by the adoption of the euro have induced the most dynamic Italian firms to rethink their organisation, including their degree of vertical specialisation.

Keywords: International outsourcing, input-output tables

JEL Classification: F14, C67

Suggested Citation

Breda, Emanuele and Cappariello, Rita, A Tale of Two Bazaar Economies: An Input-Output Analysis for Germany and Italy (December 10, 2010). Bank of Italy Occasional Paper No. 79, Available at SSRN: https://ssrn.com/abstract=1825958 or http://dx.doi.org/10.2139/ssrn.1825958

Emanuele Breda

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Rita Cappariello (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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