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Offshoring, Extent of the Shadow Economy and Firm Performance. Evidence from Italy

Author

Listed:
  • Vito Amendolagine

    (University of bari)

  • Rosa Capolupo

    (University of bari)

  • Giovanni Ferri

    (University of bari)

Abstract

Being the G-7 country with the largest shadow-economy share, we posit that Italy's manufacturing firms - to counter emerging economies' competition - could alternatively offshore or enter the shadow economy. Within this context, we investigate, in a sample of Italian firms, whether internationalised firms outperform purely domestic firms in terms of efficiency, innovativeness and skill composition. Using propensity-score-matching and difference-in-difference techniques we find evidence that: (i) offshoring impacts TFP negligibly but, (ii) labour cost relocation robustly causes offshoring; (iii) offshoring firms are more likely innovative and R&D-oriented; (iv) firms in high- shadow -economy provinces less likely offshore. It is also evidenced that the latter firms show lower TFP and R&D expenditure.

Suggested Citation

  • Vito Amendolagine & Rosa Capolupo & Giovanni Ferri, 2008. "Offshoring, Extent of the Shadow Economy and Firm Performance. Evidence from Italy," SERIES 0021, Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro", revised Mar 2008.
    • Handle: RePEc:bai:series:economia-series21
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    References listed on IDEAS

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    Cited by:

    1. Ida D'Attoma & Silvia Pacei, 2014. "Offshoring and Firm Performance: Evidence from the Italian Manufacturing Industry," Review of Development Economics, Wiley Blackwell, vol. 18(1), pages 29-44, February.

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    More about this item

    Keywords

    trade integration; offshoring; empirics of global sourcing; shadow economy;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy

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