Off-shoring and Productivity Growth in the Italian Manufacturing Industries

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.