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Choosing between foreign investment and subcontracting: Strategies of Italian firms

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  • Giuseppe Tattara

Abstract

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.

Suggested Citation

  • Giuseppe Tattara, 2010. "Choosing between foreign investment and subcontracting: Strategies of Italian firms," EERI Research Paper Series EERI_RP_2010_09, Economics and Econometrics Research Institute (EERI), Brussels.
    • Handle: RePEc:eei:rpaper:eeri_rp_2010_09
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    File URL: http://www.eeri.eu/documents/wp/EERI_RP_2010_09.pdf
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    References listed on IDEAS

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    1. John Humphrey & Hubert Schmitz, 2002. "How does insertion in global value chains affect upgrading in industrial clusters?," Regional Studies, Taylor & Francis Journals, vol. 36(9), pages 1017-1027.
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    More about this item

    Keywords

    Foreign direct investment; International subcontracting.;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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