Trade in Intermediate goods in the Italian manufacturing industries

Due to the emergence of global value chains, trade has increased in intermediates goods. The first objective of the paper is to provide a picture of Italian intermediate imports by industry and over time. Moreover, this paper attempts to study three possible factors than can influence the import of intermediate goods - global sourcing, outsourcing and MNE networks - using pooled cross-section data for the period 1985-2004 for Italian industries. The econometric results point to a different relationship for high and medium-high technology industries and medium-low and low technology industries relative to the role of inward and outward FDI in explaining the imported intermediate demand. The results suggest that outsourcing is important in explaining intermediate imports for medium-low and low technology industries. On the contrary, for high and medium-high technology industries the data give support to the global-sourcing hypothesis while the evidence for the MNE network hypothesis is weak.