Emerging Hubs in Central-Eastern Europe, Trade Blocs and Supply Chain Restructuring

Many European countries have faced the erosion of the competitive advantage in the international market with a mixed strategy of productivity increase at home and labour cost reduction abroad, through the international fragmentation of production and subcontracting in low wage countries. Italy in particular, has delocalized segments of its industrial production in Eastern Europe. The advantage of delocalization abroad – with particular reference to East European countries – is due to the low cost of labour, depends from the capability to transmit information efficiently and the availability of a complete supply-type blueprint in the receiving country.The paper discusses the prospects open to Italia apparel firms and presents a case study dealing with the development of outsourcing by the Benetton group in the last decades.Vertical Integration, Global Organization of Production, Macroeconomics

Choosing between foreign investment and subcontracting: Strategies of Italian firms in Romania

Vertical disintegration in most industries and the globalization of markets has led to significant changes in the pattern of international division of labour among manufacturing firms. At the same time increased competition from low cost producers, exchange rate constraints, the opening up of CEE countries have had huge consequences for the Italian industrial system. This paper deals with the Veneto footwear, furniture and refrigeraion industries and examines the effects of foreign direct investments and subcontracting in Romania. The reorganization of the division of labour, in the most dynamic suppliers induced a change in the “nature of subcontracting”, upgrading along the ladder of the value chain as more and more operations are offshored.Foreign direct investment; International subcontracting;

Emerging Hubs in Central-Eastern Europe, Trade Blocs and Financial Co-operation.

Many European countries have faced the erosion of the competitive advantage in the international market with a mixed strategy of productivity increase at home and labour cost reduction abroad, through the international fragmentation of production and subcontracting in low wage countries. Italy in particular, has delocalized segments of its industrial production in Eastern Europe. The advantage of delocalization abroad – with particular reference to East European countries – is due to the low cost of labour, depends from the capability to transmit information efficiently and the availability of a complete supply-type blueprint in the receiving country. The paper discusses the prospects open to Italia apparel firms and presents a case study dealing with the development of outsourcing by the Benetton group in the last decades.Vertical Integration, Global Organization of Production, Macroeconomics

Offshoring to China and India: Case Studies of Italian Small-Medium-sized Firms

This article discusses the prospects and problems facing Italian small and medium sized enterprises that have recently engaged in direct investment through the establishment of production facilities in China and India. Using data gathered from 15 interviews conducted in those countries in 2009, firms are grouped for analytical purposes into clusters according to the strategies that combine firms specific advantages with exploiting differences across national borders. Highlighted are important influences (such as key decisions, costs and constraints) that should be considered when analyzing the management of a small multinational firm in an international context. Motivations behind Italian parent companies’ decisions to create subsidiaries in China or India; relations between newly established production facilities and their local suppliers and markets; and the cultural and administrative difficulties the enterprises have encountered, and any subsequent organizational adaptations, are all taken into account. In the conclusions, the benefits to the participants in the delocalisation process are detailed, and possible future management strategies are discussed.Strategic management of multinational firms;International Business; Adaptation

The Internationalisation of Production Activities of Italian Industrial Districts

This paper studies the evolution of the Italia industrial districts in the era of globalization. Italian districts are no longer self-contained systems of small firms where firms' competitiveness is the result of physical proximity, connected to foreign markets at the initial and the final stage of the production and distribution activity. Internationalization is analysed in the three classical forms of trade flows, foreign direct investments and foreign subcontracting. The conclusion discusses the consequences of sourcing production abroad for industrial districts. The loss of productive competences and practical knowledge, the reduction of employment and the change in the social climate that characterize the district. As a result of internationalization the final firms make profits in far away territories and the firm’s profitability is no more linked to the workers well beingGlobalization, Industrial districts, Sub-contractiong, Direct Foreign Investments

Connections and Competences in the Governance of the Value Chain. How Industrial Countries Keep their Competitive Power

As European firms have faced strong competition from businesses in other industrial economies, in order to reduce production costs and keep prices competitive they have begun outsourcing their production to low wage countries. Although final firms have taken clear advantage from outsourcing abroad and their profit, after delocalization, have systematically increased, the question regarding the possible impoverishment of the outsourcing territory is nonetheless pertinent. The aim of the paper is to analyze the governance of the value chain operating in the traditional sectors of textile, clothing and shoe, pointing particularly to delocalization through sub-contracting. The case studied deals with Veneto firm relations with Romania. As the result of the analyses, the authors are in the opinion that a rapid outsourcing process has profoundly affected the structure of production in both territories in the last decade.

Connections and Competences in the Governance of the Value Chain. How Industrial Countries Maintain their Competitive Advantage.

The aim of our paper is to analyse the governance of value chains operating in the traditional sectors of clothing and footwear, focusing particularly on production de-localization from the Italian region of Veneto to the nearby country of Rumania After describing and ‘quantifying’ the internationalization process between Veneto and Rumania we turn to discuss the possible consequences of this process, both for the region of origin and the recipient area. We highlight, through the concepts of linkages and competences how the production internationalization process may determine a progressive weakening of the network of linkages that characterize the home region, and discuss the main obstacles to a successful transfer of know-how and technologies to the host system. From this discussion emerges the vision of some policy measures to amplify possible positive effects and counter negative consequences of the fragmentation of production, both in the home and in the host country.Internationalisation, Industrial districts, Delocalisation, Organization of Production

Can employment subsidies and greater labour market flexibility increase job opportunities for youth? Revisiting the Italian On-the-job Training Program

The CFL (On-the-job Training) programme was introduced in Italy in 1985 with the aim of reducing youth unemployment. The new programme offered employers two main advantages: it exempted them almost completely from payment of payroll taxes and it provided them with virtually the only opportunity to employ people on a basis of fixed term contracts. The paper looks at the employment impact of the programme among a subgroup of eligible workers and finds that firms taking part increased employment more than non-participating firms by almost 5%. Employers had a strong positive reaction to the tax subsidies and to the softening of the rigid employment code. The overall effect of the programme on youth employment was however limited, registering only a 1% increase, mainly because about 80% of firms never participated.Labour Policy Evaluation, Youth Unemployment, Occupation and Intergenerational Mobility, Unemployment

Job flows, worker flows and mismatching in Veneto manufacturing. 1982-1996

This research exploits a large employer-level panel dataset in order to analyse employment and worker flows for all establishments in a highly industrialized region in the North- East of Italy, the Veneto. Our results have relevance for models of job creation, job destruction and labour excess reallocation. The relation between separations from and accessions to existing jobs and between worker flows and job flows is scrutinized. Excess reallocation, the difference between worker flows and job flows at the plant level, is substantial. Mortality for new job matches is quite high and many new accessions are mismatched and lead to separations. Worker flows are very high for young workers to reduce drastically for workers after 35 years of age. The time series behaviour of worker flows and job excess reallocation from 1982 to 1996 is examined; worker level heterogeneity and employer level heterogeneity are discussed in determining the cyclical pattern of such flows and their rapid increment in more recent years. On this the paper makes progress in respect to the previous literature where turnover and excess reallocation are examined mainly in a static framework.Regional Labour Markets; Job Flows; Worker Flows; Reallocation; Matched employer-employee panel data.

Una fiera senza luogo. Was Bisenzone an offshore capital market in sixteenth-century Italy?

This paper discusses how Genoese bankers collected money at exchange fairs. This money was then lent to the King of Spain - through the asientos - from the mid-sixteenth to the early seventeenth centuries. Genoese bankers raised capital at the exchange fairs , which were typical short-term credit mechanism, where foreign bills of exchange were discounted over a three-month period. The Genoese funded long-term obligations by means of short term loans which meant they were able to enforce payment to the King and at the same time successfully manage the supply of finance from a large number of easily substitutable markets, located in different states. The Bisenzone fair of exchange was the forerunner to an efficient, widely integrated international capital market where Genoese pre-eminence was firmly established and which the Genoese kept firmly under their control. The success of the Bisenzone fairs of exchange directly challenges the theory which suggests that the laws against usury restrained the development of capital markets in early modern Italy.Financial markets, market integration, financial institutions