The pillars of the italian economy

Marco Fortis
Editor

The Pillars
of the Italian
Economy
Manufacturing,
Food & Wine, Tourism


The Pillars of the Italian Economy


Marco Fortis
Editor

The Pillars of the Italian
Economy
Manufacturing, Food & Wine, Tourism

123


Editor
Marco Fortis
Department of International Economics,
Institutions and Development
Università Cattolica del Sacro Cuore
Milan
Italy

ISBN 978-3-319-40185-0
DOI 10.1007/978-3-319-40186-7

ISBN 978-3-319-40186-7

(eBook)

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Preface

A comprehensive description of the main characteristics and strengths and most

relevant aspects of the Italian production system are provided in this work, which
aims to fill a “gap” in the existing economic literature on Italy’s international
competitiveness in an attempt to clarify misinterpretations and avoid common
errors.
This book–through a rigorous analysis developed on the basis of data from Istat,
Eutostat, UN Comtrade, WTO, and International Trade Center–provides data which
show the strengths of the main Italian sectors of specialization. It offers the necessary evidence to prove that Italy remains a major competitive country internationally, contrary to those who claim it is inexorably declining, and ascribe
erroneously the cause to a high manufacturing concentration in the more traditional
sectors.
The book is divided into seven chapters; the first three are more general while
the last four provide detailed analyses of specific sectors. The first chapter describes
the top Italian manufacturing products in world trade. The second chapter outlines
the fundamental role of the industrial district model for Italian industry in terms of
employment, added value, exports, and foreign trade balance. A broad overview
of the mechanical engineering sector is provided in the third chapter. It depicts the
sector’s impressive growth, and how over the past 20 years it has gained increasing
shares of both domestic and foreign markets. The last four chapters provide a
thorough assessment of the sectors that are becoming increasingly pertinent to the
Italian economy like mechanical engineering, more specifically wrapping and
packaging machinery; pharmaceuticals; food and wine; and tourism.
Chapter 1 analyzes Italy’s international competitiveness and introduces a new
analytical tool, the Fortis–Corradini Index (FCI), named after the authors who
developed it on behalf of the Fondazione Edison. This index is used to highlight
Italy’s strengths in international trade. It differs from the Trade Performance Index
(TPI) developed by International Trade Center (UNCTAD/WTO). The Fortis–
Corradini Index provides a high degree of detail at the sectoral level through the
5,117 products under the international classification HS96—available in the UN
Comtrade database with a six-digit breakdown—in which world trade is
v

vi

Preface

subdivided. The FCI shows how Italy is one of the most competitive countries in
the world and that it holds important leadership positions in international trade.
With reference to 2012, Italy in fact ranked first, second or third in the trade balance
of 932 products for a total worth of $177 billion. Moreover, there were more than
1,200 Italian products that had a trade surplus greater than the same German product (assuming Germany as international performance benchmark). Only China
performed better than Italy with a trade surplus of around 2,200 products which did
better than the German products. The chapter concludes with an appendix of
detailed statistics describing the 235 first positions, the 376 second positions, and
the 321 third positions obtained by Italy in international commerce in terms of trade
surplus, as well as the 1,235 products where the Italian trade surplus was greater
than German one.
Chapter 2 describes the Italian Industrial District (ID) phenomenon, which has
grown to become unequaled by other advanced nations. It clearly describes the role
and importance, at both the national and international level, of Italian Industrial
Districts and presents a “map” of the main “Made in Italy” district specializations.
More specifically, an in-depth analysis is provided of the links between Italian
Industrial Districts and production specializations. The main classifications of an
Industrial District proposed by various Italian sources (Istat, MediobancaUnioncamere, Fondazione Edison, Banca d’Italia) are listed. The relevance of
IDs is described in terms of employment and production dynamics. The role of IDs
in domestic and international markets is clearly depicted. The factors which continue to ensure the success of Industrial Districts are expounded in the conclusion.
Chapter 3—after an initial section delineating the historical framework of the
main phases of Italian industrialization and economic growth (both domestic and
foreign), from its unification to the present—analyzes the dominant production
specializations from WWII onwards. The Fondazione Edison has coined the term
4Fs (Fashion and cosmetics; Furniture and ceramic tiles; Fabricated metal products,

machinery and transport equipment; Food and wine) to describe the main sectors of
“Made in Italy” specializations. A case study is provided of mechanical engineering
which, over time, has become the leading motor of the 4Fs. This chapter in particular expounds Italy’s ability to maintain its world export quotas in manufacturing
notwithstanding the rise of China over the last years. This has been possible, in part,
due to the shift in production specializations. The general contraction of market
segments in the fashion and furniture sectors—which nonetheless continue to
maintain a relevant share of production—is counterbalanced by a significant production increase in mechanical engineering (in particular non-electronic machinery,
i.e. metal products, industrial machinery and domestic appliances, but also some
electronical equipment) and means of transport other than cars (luxury yachts,
cruise ships, helicopters). In fact, today, the mechanical engineering sector, in terms
of machines and mechanical equipment (excluding metal products), has an export
quota which is almost double that of fashion. Italy ranks second in both electric and
non-electric mechanical engineering products, according to the UNCTAD/WTO
Trade Performance Index for international competitiveness. When considering the
633 products specific to machinery, equipment and metal products found in the


Preface

vii

Fortis–Corradini Index, Italy places first, second, and third for world trade surplus
in 285 of these, for a total value of $66 billion. It, furthermore, has a higher trade
surplus than Germany in 179 of these products. The chapter also proves that Italy is
not at all in “decline” when it comes to international trade. While it must certainly
strengthen its production system, possibly through an aggregation process of
pooling smaller-sized Italian companies and encouraging greater growth among
medium-large and large companies, englobed by the term quarto capitalismo
(fourth capitalism), it has reacted positively to challenges, by shifting its manufacturing, which has provided further opportunities to conquer new global leadership positions.
Chapter 4—after a general description of Italian Industrial Districts (Chap. 2),

and a broad overview of the main development phases of Italian mechanical
engineering (Chap. 3)—provides details of Industrial Districts in the field of
mechanical engineering. Automated machines for wrapping and packaging in
Emilia-Romagna existed already since the 1920s, but the industry experienced
vigorous growth only after World War II. The chapter first describes the evolution
of the mechanical engineering industry in Bologna where, during the last decades
of the twentieth century, the automated machines sector experienced fabulous
growth in wrapping and packaging machinery, which in fact became a central pillar
of the Italian mechanical engineering industry. The section which follows is dedicated to the history of the Emilia district, highlighting the success factors, and
providing a comparison of the more recent dynamics with its direct German
competitor, the Baden-Württemberg district. The analysis covers various aspects
beginning with: (a) a detailed examination of exports and Italian and German trade
balances as well as their automated machinery for wrapping and packaging sectors,
using Eurostat data; (b) an analysis of where the two countries rank in the world
trade classification of the top 10 countries exporting automated wrapping and
packaging machines worldwide, using UN Comtrade data; (c) a scrutiny of the size
of the two districts—Baden-Württemberg and Emilia-Romagna—for automated
packaging machinery. This analysis highlights Italy’s “superiority” particularly
with respect to Germany. The Emilia-Bologna industrial district, which from the
original Bologna district expanded to embrace Modena and the provinces of Parma
and Reggio Emilia, in this “broader” form employed 16,000 workers in 2011 and
had a turnover of €3.7 billion. The German district of Baden-Württemberg which
now also encompasses the neighboring regions North East of Stuttgart of
Schwäbisch Hall and Waiblingen, employed 13,000 workers in 2010.
Chapter 5 analyzes a sector which in more recent years has re-acquired a significant role in the Italian economy. The pharmaceutical sector has found ample
space for growth in Italy due to numerous investments from foreign multinationals
attracted by its production sites, research centers, and qualified personnel at competitive prices. The chapter describes the relevant size of the pharmaceutical sector,
focusing on those regions where the pharmaceutical industry is most present. It
compares these industries at the European level and identifies the ranks of the five
Italian regions within the classification of large European pharmaceutical regions.

The chapter then provides an analysis of the industrial performance of the


viii

Preface

pharmaceutical sector in terms of production, investments and exports both
domestic and foreign. More specifically, from 1991 to 2014 Italy’s export share of
pharmaceutical products (medicines and pharmaceutical preparations) of total
exports improved from 0.5 % to 4.5 % and the ranking of exported pharmaceutical
products increased from 53rd place in 1991 to 4th place in 2014. Within an
international context, Italy, over the last 5 years, has registered the largest increase
in absolute value of pharmaceutical exports ($8.1 billion), and its share of exports
between 2010 and 2014 grew by 2 percentage points from 4.5 % to 6.5 %. German
pharmaceutical exports increased by 1 percentage points, while that of other major
European countries decreased. Lastly, the chapter concludes with a brief analysis
of the Italian pharmaceutical biotech sector.
Chapter 6 is dedicated to “Food and Wine”. This sector places Italy at the top
echelons of world classifications due to the excellent quality of its products and
production system. Even though Italy, in the primary sector (plant products, livestock, forestry, fishery, game), is a net importer, the food and beverage industry in
terms of both exports and trade balance is performing extremely well. After a brief
overview of the agricultural, fishery and forestry sectors (in which Italy has the
highest added value of any of the European countries), an in-depth analysis is
provided of the food sector in terms of turnover, employment and exports. The food
industry in Italy has a turnover greater than €130 billion, which is second only to
the mechanical engineering and metal products sector. As regards foreign trade, the
analysis shows that, over the 2010–2014 period, exports increased by 29.6 % from
€20.9 to €27.1 billion, while the trade surplus grew by around 60 % from €4.2 to
€6.7 billion. The Italian food industry’s competitiveness in international trade has

been confirmed by the UNCTAD/WTO Trade Performance Index, which ranks it
sixth worldwide, and by the Fortis–Corradini Index (IFC). The Fortis–Corradini
Index shows that of the 616 agro-food products considered, Italian products reach
top spots 65 times (21 products placed first, 23 placed second and 21 placed third),
with a trade surplus of $20.3 billion (in 2012). Last, the chapter dedicates a specific
section to wines, the branch which contributes the most to overall exports. In 2015,
the beverage sector exported €7.3 billion: €5.4 billion was in wines. More significantly, of the €5.4 billion, the wine trade surplus accounted for €5.1 billion.
Chapter 7 is dedicated to tourism. After a brief reconstruction of the global
demand for tourism in terms of foreign arrivals at the border, the analysis concentrates on the number of “tourists nights” (nights spent in hotels and similar
accommodation establishments). The competitiveness indicator used considers this
data more significant than the number of arrivals at the border, since the latter are
influenced by the presence, in some instances, of large airport hubs which attract the
arrivals of foreign tourists who tend to go elsewhere for longer periods of time.
Using tourists nights as an indicator of competitiveness, Eurostat places Italy as the
second most popular destination in Europe after Spain, and third for overall tourism
(including domestic), after Spain and France. Italy, however, is placed first in the
Eurozone when considering the number of nights spent by extra-EU tourists. It is
the favored destination of Japanese, Chinese, American, Australian, Canadian and
Brazilian travelers who are attracted by Italy’s impressive heritage in art,


Preface

ix

architecture and monuments that il Belpaese is known for. Italy is in fact world
leader for the number of sites on the UNESCO World Heritage list (51), thus
placing it before China (48), Spain (44), France (41) and Germany (40). The
chapter also provides a territorial analysis that singles out specific Italian regions
which, if they could be inserted in the EU classification of overnight stays of foreign

tourists per country, they would place in the top half. When considering single
Italian regions, Veneto would place seventh before Holland and Portugal, Trentino
Alto Adige would place tenth and Tuscany twelfth (both before the Czech
Republic), Lazio and Lombardy would place fourteenth and fifteenth respectively
(both before Belgium), Emilia-Romagna would place twentieth and Campania
thirtieth. Once again, the myth is dismantled that Italy is incapable of revitalizing
and adapting its tourism industry to the new demands of the continuously
increasing foreign visitors.
In conclusion, fashion and furniture products are no longer the only sectors of
excellence identified with “Made in Italy” products. The concept of Italian excellence has been broadened to include other areas like high-quality food and wine and
many branches of the mechanical engineering-machinery sector, chemicals, pharmaceuticals and means of transport other than cars (luxury yachts, cruise ships,
helicopters), without forgetting the enormous economic potential of the Italian
tourism industry. These new developments do not take away from the important
role of the more traditional sectors like fashion and furniture, which together with
fabricated metal products, machinery and transport equipment, and food and wine
continue to represent the Italian manufacturing industry’s four main areas of
excellence for added value, exports, and foreign trade surplus.
According to the 4Fs paradigm developed by the Fondazione Edison, “Fashion
and cosmetics” includes textiles, wearing apparel, footwear, leather goods, travel
items, eyewear, jewelry, cosmetics and perfumes; “Furniture and ceramic tiles”
includes wood products, furniture, ceramic tiles, ornamental stones and ceramic
sanitary ware; “Food and wine” includes agro-food products and beverages
excluding those that have been slightly processed like fresh milk and meats; and
lastly “Fabricated metal products, machinery and transport equipment” includes all
means of transport and vehicle parts but not finished vehicles, with the exception of
Ferrari luxury sports cars, by now, one of the most popular symbols of “Made in
Italy” excellence. It includes non-electronic mechanical engineering, i.e. industrial
machinery and mechanical equipment, rubber and plastics.
When observing the dynamics of the 4Fs, it is clear that over the past two
decades, Italy has undergone a very real industrial reconversion. It has focused

increasingly on quality, and less on the quantity of products and processes. It has
worked to create added value in the traditional fashion and furniture sectors which
are more exposed to competition from emerging economies. It has invested in new
specializations like pharmaceuticals and especially mechanical engineering, which
today is by far the most important sector in terms of foreign trade surplus. In less
than 15 years, from 2001 to 2014, the manufacturing surplus in the Fabricated metal
products, machinery and transport equipment sector almost doubled from €47 to
€84 billion. Fashion and furniture in 2014 generated an overall trade surplus of €38


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Preface

billion, a figure impressive enough to cover the deficit created by weaker specializations (especially IT, telecoms and finished vehicles with the exception of Ferrari
cars). The Food and wine sector trade surplus was €7 billion.
The contribution to the balance of trade from the more traditional sectors like
fashion and furniture remains fundamental, notwithstanding their decline.
Fabricated metal products, machinery and transport equipment, and food and wine
instead are thriving. The latter sector, while smaller than the others, remains
buoyant and rich in potential.
Milan, Italy

Marco Fortis


Contents

1 Italy’s Top Products in World Trade. The Fortis-Corradini
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Marco Fortis, Stefano Corradini and Monica Carminati

1

2 Production Districts and Their Relevance in the Italian Economy:
A Few Analytical Profiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marco Fortis

83

3 Development Profiles of the Italian Industrial System
and Its Exports from the Unification of Italy to the Present:
The Case of Mechanical Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Marco Fortis and Monica Carminati
4 The Automatic Packaging Machinery Sector in Italy
and Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Marco Fortis and Monica Carminati
5 Italy: A New European Pharmaceutical Hub . . . . . . . . . . . . . . . . . . . 265
Marco Fortis and Monica Carminati
6 Food & Wine: Quality, Tradition and Innovation . . . . . . . . . . . . . . . 283
Marco Fortis and Andrea Sartori
7 Italian Tourism in the Age of Globalization . . . . . . . . . . . . . . . . . . . . 319
Marco Fortis and Cristiana Crenna

xi


Chapter 1

Italy’s Top Products in World Trade.

The Fortis-Corradini Index
Marco Fortis, Stefano Corradini and Monica Carminati

Abstract This chapter analyzes Italy’s external competitiveness in detail and
introduces a new index, devised by Marco Fortis and Stefano Corradini for
Fondazione Edison, that highlights the strengths of Italy’s foreign trade. Compared
with the Trade Performance Index compiled and updated annually by
UNCTAD/WTO’s International Trade Centre, the Fortis-Corradini Index
(FCI) provides greater sectorial detail by referring to 5117 products identified
according to the six-digit HS 1996 international classification available on the UN
Comtrade database. The new index confirms that, contrary to widespread opinion,
Italy is one of the world’s most competitive countries, with an extraordinary position
of leadership in world trade. Thus, according to the FCI, for 932 products Italy was
either first, second or third worldwide in terms of foreign trade surplus in 2012.
Furthermore, the FCI reveals, for example, that only three countries (China,
Germany and the United States) surpassed Italy in 2012 in terms of the number of
first, second and third places in their trade balance worldwide. In presenting the FCI
and meticulous statistical data, this highly original study will be of wide interest.

This chapter is a revised and partly updated version of: Fortis et al. (2015).
M. Fortis (&)
Department of International Economics, Institutions and Development,
Università Cattolica del Sacro Cuore, Milan, Italy
e-mail:
S. Corradini Á M. Carminati
Fondazione Edison, Milan, Italy
e-mail:
M. Carminati
e-mail:
© Springer International Publishing Switzerland 2016

M. Fortis (ed.), The Pillars of the Italian Economy,
DOI 10.1007/978-3-319-40186-7_1

1


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M. Fortis et al.

1.1

Introduction

In recent years the problem of Italy’s and other mature economies’ weak GDP
growth has often been confusedly associated with low competitiveness and the
inability to compete on global markets. In reality over the last 20 years competitiveness in foreign trade has had very little to do, positively or negatively, with the
more developed economies’ GDP growth, with the exception of the case of
Germany. Figure 1.1 clearly illustrates how factors other than competitiveness have
been the real drivers of growth in the recent past: in the developed world economies
which in the years prior to the crisis had the highest rates of development were
driven above all by the unbalanced growth of private debt and not by the performance of their production systems on international markets. Over time, the
explosion of private debt fed unsustainable economic growth, based on the
well-known real estate and financial “bubble” which exploded at the end of 2008,
leading to the most serious economic-financial crisis since that of 1929.
In the years prior to the crisis Italy did not experience this “bubble” in any way.
Households’ and companies’ private debt rose moderately but was still one of the
lowest in the world, while the government attempted to stabilize public debt, a
heavy legacy of the past, lowering it from 117.2 % of GDP in 1994 to 99.7 % in
2007. Whereas in the pre-crisis years Italy grew only slightly, this did not depend or

was only partially a result of a temporary loss of its economic system’s competitiveness. Nor was the cause of the country’s weak growth an unfavorable product
specialization (Tiffin 2014), which would have exposed Italy to emerging market

Cumulated domestic demand real growth 2001 -2008 (pct)

40
35
30
IRE
GRE

25

SPA

20
UK

15
FRA

USA

BEL

10
NET
5

ITA

DEU

0
0

20

40

60

80

100

120

140

160

180

Cumulated credit flow to private sector and government primary deficit 2001-2008 (% of GDP)

Fig. 1.1 “Drugs”, not competitiveness, have been the real drivers of growth in 2001–2008.
Source Compiled by Fondazione Edison using data from Eurostat


1 Italy’s Top Products in World Trade …

3

competition, as asserted (erroneously, in our opinion) even by the European
Commission (2013, 2014). What actually slowed Italy’s growth, in addition to the
myriad of country’s institutional and infrastructural system constraints that for years
have impeded companies and discouraged foreign investment (bureaucracy, fiscal
pressure, the high cost of energy, the uncertain legal framework and the infrastructure deficit) was the prolonged austerity that the country was subjected to in an
effort to reduce the public debt: while on the one hand the process of deleveraging
public finances, based on continuously increasing taxes for households and companies, allowed Italy from 1992 to 2014 to remain in primary surplus for 22 out of
23 years (no other EU country, nor the US or Japan has been able to achieve this!),
on the other hand this led to excessive fiscal pressure on the private sector, a
reduction in households’ disposable incomes with consequent low growth of
consumption and a similar negative impact on industrial production and investment.
The situation became even more critical in 2011 when excessive austerity policies
(with no growth) imposed from Europe dealt a further blow to Italian households’
purchasing power. All these factors drastically slowed Italian domestic demand, an
important driving of economic growth in any developed economy, especially if the
country is a major producer of manufactured goods as is the case of Italy. Thus the
absence of an adequate level of domestic consumption, not weak external competitiveness, has been the main cause of Italy’s low GDP growth over the last
twenty years.
To demonstrate the lack of validity of this widespread belief in Italy’s weak
external competitiveness we point out how Italian exports reacted to rapidly
overcome the temporary steep decline in world trade in 2009: in 2011 Italian
exports had already recovered to well above pre-crisis levels, compensating, albeit
only partially, for the dramatic drop in domestic demand which weighed negatively
on GDP in 2012–14.
After all, if Italy were really as non-competitive as some think, it would not have
been able to react, as it actually did, to the fierce asymmetrical competition from
Asian countries at the beginning of the new century; to cope with this competition it

moved up to segments of higher value-added in the sectors most exposed to Asian
competition (personal and household goods) and increased its orientation toward
metal products and mechanical engineering (which includes equipment and industrial machinery, household and electrical appliances), means of transport other than
automobiles (such as luxury yachts, cruise ships and helicopters), packaged pharmaceuticals, cosmetics and niche chemical products (ICE 2014). In fact, Italy’s
product specialization today has profoundly changed from what it was 20 years ago
(Fortis 1984, 1996, 1998), when fashion and furniture made up three fourths of the
foreign trade manufacturing surplus: the weight of the traditional sectors of fashion
and furniture in the manufacturing surplus went from 74 % in 1994 to 30 % in 2013
and this 30 %, as mentioned above, is currently composed mainly of higher value
added and luxury items compared to the past. The value of Italian exports of
mechanical engineering products is currently nearly double that of textiles-clothingleather-shoes. Furthermore, exports of pharmaceuticals are more than twice that of
furniture.


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M. Fortis et al.

Proof of Italy’s dramatic shift towards hi-tech production is the fact that from
2010 to 2014 Italian exports of packaged pharmaceuticals grew by 8.1 billion
dollars, the largest increase in the world in absolute value. This result was achieved
not only by Italian companies but above all with the significant investment of
foreign multinationals, attracted by Italy’s production facilities, research centers and
a qualified workforce at competitive cost levels: all these factors have made provinces such as Latina, Milan, Frosinone, Bari, Ascoli Piceno and others into
absolute leaders in the pharmaceutical industry at an international level, in spite of
the many obstacles to doing business that continue to afflict Italy’s economic
system.
Thus, in spite of austerity policies, chronic inefficiencies on the political,
bureaucratic and infrastructural level, asymmetrical Asian competition and the
collapse of global trade in 2009, Italy is one of the most competitive countries in the

world despite certain indicators put out by organizations like the International
Institute for Management Development in Lausanne or the World Economic Forum
which describe Italy’s chronic decline in the global context (UNIDO 2013;
Andreoni 2015). But what the IMD and the WEF are describing are not so much
“competitiveness indicators” as “attractiveness indicators” of economic systems and
from this perspective Italy does rank low in the international classifications, given
the negative factors of public administration, infrastructure, energy and legal
uncertainty. The external competitiveness of Italy’s industrial-manufacturing system, however, is very high, as shown by numerous recent studies by the Fondazione
Edison (Fortis 1998, 2004, 2005, 2006a, b, 2008a, b, 2009, 2011a, b, 2013a, b;
Fortis and Quadrio Curzio 2006; Fortis and Carminati 2009, 2010, 2012; Quadrio
Curzio and Fortis 2000, 2007, 2012) and as is affirmed by the most recent statistics,
which we will briefly summarize below:
• The Italian manufacturing sector in 2013 is second in Europe and sixth in the
world in terms of generated value-added (World Bank 2015).
• From 1999 to 2014 Italy’s share in world exports of manufactured products
decreased, but to a lesser degree than other advanced countries such as the
United States, Japan, France and the United Kingdom.
• It should be pointed out that a country’s share of world exports is a misleading
parameter for measuring countries’ international competitiveness: to have a
clearer idea one should consider not just exports, but also each country’s share
of world imports of manufactured products, so in the end the trade balance is the
most important indicator of a country’s competitiveness. In 2012 Italy joined an
elite group of global economies which boasts a trade surplus of manufactured
goods (excluding food) of over 100 billion dollars (Fortis 2013b). In 2014
Italy’s manufacturing surplus (excluding food) reached 134.5 billion according
to the WTO’s latest data (WTO 2015). Italy is behind only China (with a trade
surplus of 1.023 billion), Germany (419 billion), Japan (190 billion) and South
Korea (219 billion).
• According to Istat (2015), in 2014 Italy’s manufacturing total trade balance
(including also food) closed with a surplus of 99 billion euros, the highest value

1 Italy’s Top Products in World Trade …

5

ever achieved in history; 50 billion euros of this was generated by the
non-electronic machinery sector (equipment and industrial machinery), an
industry in which Italy boasts the third largest foreign surplus in the world after
Germany and Japan.
• Between 2010 and 2014 Italy improved its total trade balance by 72.9 billion
euros, going from a deficit of 30 billion euros to a surplus of 42.9 billion euros.
This is the best result in absolute value in the EU, including Germany, and is 83
% dependent on the growth of exports during this period. Italian imports
actually decreased from 2010 to 2014 by just 12.3 billion euros compared to a
60.7 billion euros increase in exports.
• The Italian total foreign trade surplus of 42.9 billion euros in 2014 is third of the
EU’s or even second only to Germany’s if one excludes the “anomalous” cases
of The Netherlands and Ireland (the first being purely a transit country for
non-EU goods going to neighboring countries, and the second country a fiscal
hub).
Even the Trade Performance Index (TPI) developed by UNCTAD/WTO’s
International Trade Centre affirms Italy’s strength on international markets: this
index, which will be briefly described in Sect. 1.2, places Italy at the top in terms of
competitiveness in world trade, just behind Germany. This position is maintained in
2014 (the latest available update) in spite of the drastic slowdown of the Italian
economy, which entered recession in 2011 principally because of the collapse of the
domestic demand generated by the austerity.
Section 1.3 will introduce a new indicator, the Index of competitive excellence
in international trade compiled by Marco Fortis and Stefano Corradini for

Fondazione Edison—the Fortis-Corradini Index—which highlights how in recent
years, in spite of the global economic crisis, “made in Italy” has achieved
extraordinary levels of preeminence on foreign markets. This fact remains unknown
to the majority of Italian and international public opinion and this index intends to
shed proper light on it.

1.2

Italy’s Competitiveness According
to UNCTAD/WTO’s Trade Performance Index

The Trade Performance Index (TPI), compiled for the first time in 2006, analyzes
the main actors’ relative positions in international trade based on a comparison of
about 190 countries and the export of goods from 14 macro-sectors in which world
trade is divided. These sectors are: Fresh food, Processed food, Wood products,
Textiles, Chemicals, Leather products, Basic manufactures, Non-electronic
machinery, IT and Consumer electronics, Electronic components, Transport
equipment, Clothing, Miscellaneous manufacturing and Minerals. For every
macro-sector in each country a composite index was constructed, called the Current
Index, based on 5 sub-indicators: (1) net exports; (2) per capita exports; (3) share in


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M. Fortis et al.

world market; (4) product diversification (No. of equivalent products); (5) market
diversification (No. of equivalent markets) (ITC 2015). Thus the TPI takes into
account not only the absolute value of trade, but also the size of the various
countries and their specializations, as well as weaknesses deriving from excessive

concentration of exports in a few products or a few target markets.
Table 1.1 summarizes each G-20 country’s position in the first 10 places in the
world classification of competitiveness of foreign trade in the 14 sectors that make

Table 1.1 Ranking of international competitiveness (189 countries): Trade Performance Index
UNCTAD/WTO (2014)
Number of positions
Best

Second

1

Germany

8

1

Third

Fourth

Fifth

Sixth

Seventh

Eighth

Ninth

2

ITALY

3

5

3

Russia

1

4

China

2

1

5

France

1

1

5

Australia

1

6

Turkey

1

7

South
Korea

1

8

Japan

1

9

United
States

1

10

South
Africa

1

11

India

1

11

Canada

1

12

Brazil

1

12

Saudi
Arabia

1

13

Indonesia

2

14

Argentina

1

15

United
Kingdom

15

Mexico

Tenth

1
1

1

1

1

1
1

1
1

2

1
2

1
1

1
1
1

Current index; sum of 5 sub-indexes: net exports, per capita exports, share in world market, product
diversification, market diversification
Number of top 10 placings in the world rankings of foreign trade competitiveness in 14 sectors: Fresh food,

Processed food, Wood products, Textiles, Chemicals, Leather products, Basic manufactures, Non-electronic
machinery, IT and Consumer electronics, Electronic components, Transport equipment, Clothing,
Miscellaneous manufacturing, Minerals
Source Compiled by Fondazione Edison using data from International Trade Centre UNCTAD/WTO


1 Italy’s Top Products in World Trade …

7

up the TPI. The results of the TPI show Germany’s absolute leadership in international trade; in 2014 it won 8 first places and 1 second places for competitiveness
out of the total of 14 macro-sectors analyzed. Nevertheless, Italy also proved to be
very competitive, coming in first 3 times in the UNCTAD/WTO ranking: in textiles,
clothing and leather products. What’s more, Italy also came in second 5 times: in
non-electronic machinery (where it competes almost on equal terms with Germany),
transport equipment, electric and electronic components, miscellaneous manufacturing (mainly sunglasses and jewelry) and in basic manufactures (which includes
sectors such as metal products, marble and ceramic tiles, where Italy is among the
top producers in the world) (Fortis 2008b, 2014, 2015). Italy reached the second
position in transport equipment and electronic components. Finally, in 2014, while
the three best rankings and five second places were maintained, Italy also improved
its ranking in processed food (which includes wine) (Said 2015), going from 7th to
6th place (Fortis 2016). These 9 macro-sectors alone, in which Italy led worldwide
in 2014, generated a total of 390.2 billion dollars of exports and a trade surplus of
154.5 billion dollars (Table 1.2).
In particular, among the G-6 countries, China and South Korea, Italy is the
country that, along with Germany, holds the highest number of placements
worldwide (Table 1.3).

Table 1.2 Italy’s competitiveness according to the Trade Performance Index UNCTAD/WTO
(2014)

Sectors

Position of
Italy

Italy’s exports
(billion $)

Italy’s trade balance
(billion $)

Clothing
1
24.7
7.6
Leather products
1
25.3
12.4
Textiles
1
13.9
4.9
Non-electronic
2
108.3
72.1
machinery
Transport equipment
2

47.7
8.4
Basic manufactures
2
63.3
17.7
Miscellaneous
2
50.2
20.9
manufacturing
Electronic components
2
23.7
4.6
Processed food
6
33.2
6.0
Total 9 best sectors
390.2
154.5
Source Compiled by Fondazione Edison using data from International Trade Centre,
UNCTAD/WTO


8

M. Fortis et al.

Table 1.3 Positions of G-6 countries, China and South Korea in the ranking of competitiveness
of the Trade Performance Index UNCTAD/WTO (2014)
Countries
Sectors

Germany

Italy

China

South
Korea

Japan

France

United
States

United
Kingdom

Fresh food
25
33
49
82
97

25
5
42
Processed food
1
6
20
70
86
3
39
42
Wood and paper
1
25
36
44
54
30
33
36
Textiles
2
1
2
9
38
20
36
23

Leather products 15
1
3
41
68
18
39
21
Clothing
18
1
2
50
87
14
47
20
Chemicals
1
28
25
7
8
2
20
34
Basic
1
2
4

6
8
27
48
29
manufactures
Non-electronic
1
2
5
10
12
11
25
14
machinery
Electronic
1
2
34
17
5
21
30
23
components
IT and Consumer 11
24
6
7

41
21
25
18
electronics
Transport
1
2
27
3
13
16
33
31
equipment
Miscellaneous
1
2
9
42
10
25
27
28
manufacturing
Minerals
30
46
76
62

84
25
18
32
Ranking in each sector worldwide
In bold the placements among the top 10 most competitive countries
Source Compiled by Fondazione Edison using data from International Trade Centre
UNCTAD/WTO

1.3
1.3.1

The Fortis-Corradini Index (FCI)—Fondazione
Edison
The 2012 Fortis-Corradini Index

Italy’s strong position in international trade is also reflected in the Fortis-Corradini
Index (FCI) of competitive excellence in international trade. This indicator, with a
special algorithm developed by the authors in 2010, measures instantaneously and
with a high level of detail the number of products in which each country is first,
second or third in terms of its trade balance on a world level (Fortis and Corradini
2010). According to this index, in 2012 Italy had nearly 1000 products (932 to be
exact) in which it placed in the first three positions in terms of foreign trade surplus
(Table 1.4).
The FCI is based on information from the UN’s database on international trade
(UN Comtrade 2015) and other sources such as Eurostat (2015) and Istat (2015)


1 Italy’s Top Products in World Trade …

9

Table 1.4 Products in which Italy holds the top spots in the world trade balance: year 2012
Italy’s positioning in the world trade
balance

Number of
products

Trade balance of products
(billion $)

First
235
56
Second
376
68
Third
321
53
Total
932
177
Index of Italy’s competitive excellence in world trade; Fortis-Corradini’s Index © (case study of a
total sample of 5117 products that comprise international trade)
Source Compiled by Fondazione Edison using data Istat, Eurostat and UN Comtrade

and is based on 5117 products from the 6 digit breakdown of the HS 1996 classification. The data presented here are from 2012.
In 2012 Italy was second only to Germany in terms of the total number of first,

second and third places in the worldwide trade balance of products for every
100,000 inhabitants, ahead of South Korea and France (Fig. 1.2). In absolute terms,
on the other hand, Italy was first place worldwide for 235 products by trade balance
(the total value of the balance of these goods: 56 billion dollars), second place in
376 products (68 billion dollars) and third place for 321 products (53 billion dollars). The total: 932 positions of excellence, especially for high value added “niche”
products, for a total trade surplus value of 177 billion dollars.

1.8
1.64
1.57

1.6
1.4
1.2
1.0
0.8

0.68

0.63

0.63

0.63
0.55

0.6

0.51

0.4
0.2
0.0
Germany

ITALY

South Korea

France

Japan

Canada

Australia

United
Kingdom

Fig. 1.2 First, second or third place in terms of trade balance, per every 100,000 inhabitants, for
each of the G-20 countries (out of a total of 5117 products). Source Processed by Fondazione
Edison using data from Istat, Eurostat, and UN Comtrade


10

M. Fortis et al.

Only 3 countries (China, Germany and the United States), with population and

economy by far larger, performed better than Italy in 2012 in terms of the number
of first, second and third places in the trade balance of products worldwide, and
only 5 countries (the 3 ones previously mentioned plus Japan and South Korea)
registered total values of trade surpluses higher than Italy’s for the goods in which
they are among the first three countries by trade surplus (excluding crude oil and
natural gas). “Made in Italy’s” excellence is rounded out with 500 other products in
which Italy in 2012 came in fourth or fifth in terms of its worldwide trade balance;
these products added another 40 billion dollars to Italy’s trade balance surplus.
The strength of “made in Italy” derives from the extensive diversification of its
specializations, driven mainly by the “4F” macro-sectors (Fashion and cosmetics;
Food and wine; Furniture and ceramic tiles; Fabricated metal products, machinery
and transport equipment), but also by other important sectors such as metallurgy
(see Chap. 3), paper and chemicals-pharmaceuticals (see Chap. 5).
Thousands of medium-large, medium and small enterprises are producing these
results and enabling Italy to compete with countries that have many more largescale, multinational groups, but which do not have Italian companies’ typical ability
to be flexible and handle hundreds of different types of products, a sort of customizing excellence. It is in this area that the winning factors of “made in Italy”
emerge, such as creativity, innovation, quality, design and a strong tradition of
“industrial craftsmanship”, in other words the ability to build customized products
for the clients, even in hi-tech sectors such as mechanical engineering or transportation vehicles.
Italy, like other countries, is suffering from the worst global crisis since 1929.
But it would be difficult for this crisis to destroy Italy’s ability to practice those
traditional and new “trades” that it does better than other countries and at which it
excels internationally.

1.3.2

Products in Which Italy Holds First Place
in the World by Trade Surplus

According to the FCI there are 235 products for which Italy in 2012 held first place

in the world by trade surplus. Italy’s trade balance for these 235 products was 55.7
billion dollars, divided up as follows (Fig. 1.3): 25.6 billion dollars in trade balance
was generated by goods in the mechanical engineering-rubber and plastic sectors;
18.4 billion dollars of goods in the sector of fashion and luxury; 7.3 billion dollars
of goods in the food and wine sector; 0.4 billion dollars of furniture and building
materials and finally 4 billion dollars of other products including goods in the paper
industry, glass and chemicals.
There are no sectors in which Italy did not hold a significant number of first
places in its trade balance in 2012. For space reasons in Table 1.5 we chose only a
few of the most significant products from each sector. Let us examine them briefly.


1 Italy’s Top Products in World Trade …

11

Fig. 1.3 Distribution of 55.7 billion dollars in trade balance generated by the 235 products for
which Italy is a world leader: year 2012. Source Processed by Fondazione Edison using data from
Istat, Eurostat, and UN Comtrade

Italy leads in a wide range of products from machines and technology for
agriculture and tobacco to food products and beverages (Italy leads worldwide in
the export of pasta, chocolate and other processed foods containing cocoa, tomato
derivatives, apples and salami and seasoned meats) to many types of food processing machines. Other Italian winners are fashion (with many textile-clothing
products, leather goods, shoes, jewelry, sunglasses, components for these sectors
and industrial machines to manufacture them).
Furthermore, Italy has many winners by global trade balance in the paper
products industry (from tissues to paper towels to paper bags), as well as metallurgical products (from iron and steel pipes to aluminum castings) and it also leads
in many important metallurgy technologies, heating, cooling, refrigeration and
furnace technologies (including commercial refrigeration equipment), as well as

machines for woodworking and processing of non-metallic minerals (such as
ornamental stones and ceramics). Italy is also first by trade balance for different
types of metal products, special hi-tech mechanical machinery (including packaging
machinery, metal-working and plastic material machinery). It also holds first place
by trade balance for transport equipment, precision and safety products (such as
helicopters, insulated copper wires and safety glass for vehicles and parts for
security and control equipment), as well as sports and entertainment goods (such as
hunting rifles, ski boots and snow-surfing footwear).
Italy also has numerous internationally top positions by trade surplus in rubber
and plastic articles such as could not fail in the country that invented polypropylene
by Italian Nobel prize winner Giulio Natta. Among these, the records in trade


12

M. Fortis et al.

Table 1.5 The products in which Italy holds the top spots in its trade balance with foreign
countries: selection of some significant cases for each product category: year 2012
Categories and products
Technologies of agriculture and tobacco
Machinery for preparing or making up tobacco
Parts for soil preparation or cultivation machinery
Rollers, soil preparation, cultivation machinery, nes
Dairy machinery
Food products
Uncooked pasta, not stuffed or prepared, without eggs
Chocolate/cocoa food preparations nes
Tomatoes, whole/pieces, prepared/preserved, no vinegar
Apples, fresh

Swine meat, salted/dried/smoked not ham/shoulder/belly
Stuffed pasta
Beverages and condiments
Vinegar and substitutes for vinegar from acetic acid
Vermouth and other flavoured grape wines—pack <2 l
Technologies of food, beverages and tobacco
Bakery and pasta making machinery
Automatic beverage-vending machines: incorporating heating or
refrigerating devices
Machinery for preparation of fruits, nuts, vegetables
Bakery ovens, etc. non-electric
Presses, crushers etc. for wine, fruit juice, beverages
Textiles and clothing
Woven fabric, >85 % combed wool or fine hair, <300 g/m2
Womens, girls ensembles, material nes, not knit
Womens, girls dresses, of material nes, not knit
Woven fabric, >85 % combed wool or fine hair, >300 g/m2
Woven fabric of silk, nes
Fashion accessories
Shoes and boots, with outer soles and uppers of leather
Leather and tanned skins of each type
Handbags with outer surface of leather
Sunglasses
Belts and bandoliers of leather or composition leather
Frames and mountings for spectacles etc., of plastic
Watch straps etc. and parts, of/clad with precious metal
Watch cases of, or clad with, precious metal

Trade balance
(million $)

314
261
172
57
1853
1007
998
910
632
377
263
204
708
181
120
114
79
581
517
367
146
72
3271
2671
2536
1828
367
329
234
123

(continued)


1 Italy’s Top Products in World Trade …

13

Table 1.5 (continued)
Categories and products
Technologies and components of fashion
Parts of footwear nes, gaiters and leggings etc.
Clasps/buckles, etc. for clothing, footwear, bags etc.
Machines and parts of machines for the industry of leather and footwear
Circular knitting machines, diameter <165 mm
Synthetic organic tanning substances. Finishing agents and dye carriers
for textile industry
Products for home
Wallpaper and similar wall coverings, nes
Materials and mechanical products for the construction industry
Door closures, automatic, of base metal
Valves, pressure reducing
Worked calcareous stone nes
Paper and its technologies
Machinery for making up pulp, paper, paperboard nes
Paper handkerchiefs, cleansing, facial tissues, towels
Sacks and bags, of paper, having a width >40 cm
Metallurgy
3 different types of pipes and hollow profiles of iron, steel and special
steels
11 different types of rods, profiles and wire, of iron and non-alloy steel

and semi-finished products, flat products, bars and rods of stainless steel
Technologies of metallurgy and metalworking
Parts of metal rolling mills and rolls
Boring-milling machines num controlled for metal
Calendering or rolling machines, not. for metals/glass
Tube mills, metal rolling
Way-type unit head machines, metal working
Metal products
Articles, iron or steel nes, forged/stamped, nfw
Expanded metal, i/nas <3 mm wire, <100 cm mesh
Copper screws, bolts or nuts except wood screws
Heating, cooling, refrigeration and furnace technologies and products
Refrigerator/Freezer chests/cabinets/showcases
Commercial equipment, hot drinks/cooking/heating food
Industrial furnace, oven, incinerator non-electric nes
Furnace burners for liquid fuel
Special machines for wood and non-metallic mineral products
Grinding or polishing machines for working stone, ceramics, concrete or
similar mineral materials or for cold working glass
Machine tools for wood, cork or hard plastic, etc. nes

Trade balance
(million $)
327
271
213
150
147

74

228
225
77
495
422
148
3139
1780

634
264
167
90
28
722
44
38
852
747
166
92
794
469
(continued)


14

M. Fortis et al.

Table 1.5 (continued)
Categories and products

Trade balance
(million $)

Drilling or morticing machines for wood, etc.
190
Grinding, sanding, polishing machines for wood, etc.
58
Mechanics hi-tech
Packing or wrapping machinery nes
2403
Pumps nes
969
2 different types of machines for the processing of metals to
310
deformation; machines for bending, folding, straightening, flattening not
numerically controlled, shears different from those not combined
punching and shearing machines, not numerically controlled.
Rubber or plastic moulding and forming machines nes
261
Machines for manufacturing or hot working glass or glassware: other
145
Transport equipment and other advanced technologies
Helicopters of an unladen weight >2000 kg
1362
Insulated winding wire of copper
570
Safety glass (tempered) for vehicles, aircraft, etc.

218
Machines for balancing mechanical parts, nes
125
Electric signal, safety and traffic controller parts
83
Goods for fun and sport
Shotguns, shotgun-rifles for sport, hunting or target
231
Ski-boots, cross-country, ski footwear and snowboard boots
116
Articles of plastics and rubber
Sheet/film not cellular/reinf polymers of propylene
627
Self-adhesive plastic, rolls <20 cm wide
561
Rubber tube, pipe, hose, metal reinforced, no fittings
208
Camel-back strips for retreading rubber tyres
45
Hard rubber (e.g. ebonite) in all forms, articles, scrap
40
Various food and industrial products
Play, fair-ground equipment, travelling circus, theatre
172
Beans, shelled, prepared/preserved, not frozen/vinegar
169
Chicory, fresh or chilled, except witloof
58
Buttons, nes
46

Other products
Domestic iron/steel solid fuel appliances, not cookers
264
Asphalt or similar material articles, in rolls
252
Corks, crown, of base metal
124
Built-in jacking systems for garages
119
Automatic vending machines
83
Source Compiled by Fondazione Edison using data from Istat, Eurostat and UN Comtrade