CESifo Economic Studies Advance Access originally published online on July 11, 2008
CESifo Economic Studies 2008 54(3):414-450; doi:10.1093/cesifo/ifn019
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Off-shoring and Productivity Growth in the Italian Manufacturing Industries

*Università di Parma and IGIER, e-mail: francesco.daveri{at}unibocconi.it
Italian Institute of Statistics (ISTAT) and LUISS University of Rome – Guido Carli, e-mail:jonalasi@istat.it ISTAT and LUISS
We study the relation between the off-shoring of intermediates and services and productivity growth in the Italian manufacturing industries in 1995–2003. Our results indicate that the off-shoring of intermediates within the same industry ("narrow off-shoring") is beneficial for productivity growth, while the off-shoring of services is not. We also find that the way in which off-shoring is measured may matter considerably. The positive relation between off-shoring of intermediates and productivity growth is there with our direct measures based on input–output data but disappears when either a broad measure or the Feenstra–Hanson off-shoring measure employed in other studies are used instead. (JEL codes: F16, F23, 04)
We are very thankful to Massimiliano Iommi and Antonio Affuso, who shared with us the burden of preparing the data set for this project. Massimiliano is a component of our research team in a broader project on the use of input–output tables to measure the productivity counterpart of off-shoring in European countries. We also thank Giuseppe Bertola, Rosario Crinò, Paolo Epifani and the participants in the CESifo Munich Productivity and Growth Conference for their insightful comments on an earlier draft. Francesco Daveri gratefully acknowledges research funding from the University of Parma and Italy's Ministry of the University and Research.