External relations, regional productivity, and exogenous shocks: lessons from the Italian experience

Abstract

This study provides novel insights into the debate concerning the external drivers of productivity at local (NUTS-3) level. In particular, it explores the role played by global production networks, measured through ownership ties among multinational firms and their subsidiaries abroad, in shaping patterns of productivity growth of local economies. Focusing on the Italian experience and using spatial econometrics techniques, the article demonstrates that external relations play a crucial role in sustaining the productivity of Italian provinces, even during periods of severe economic downturns, like the Great Recession. In detail, productivity growth is positively correlated with the Intensity of the networks established by multinational firms and their geographical dispersion.