Internationalization Modes and Productivity of Italian Manufacturing: some firm-level evidence

This paper compares the productivity ranking of alternative modes of internationalization for apanel of Italian manufacturingfirms that are (i) purely domestic or internationally engaged in(ii) exports, (iii) foreign sourcing and (iv) foreign direct investment. By using consistent tests ofstochastic dominance offirst and second order, as well as by estimating productivity premiaacrossfirms for all strategies, we aim at investigating whether and to what extent these modes offirm's entry into the foreign markets conform to the predictions of bothHelpman et al. (2004)and Antràs and Helpman (2004)'s seminal papers. While our data confirm the hierarchicaltheoretical ranking of the traditional moves, no evidence emerges that FDIfirms dominate inproductivity foreign sourcingfirms. Obviously, our evidence also supports the prediction in theliterature that domesticfirms exhibit lower performances compared to their internationallyinvolved counterparts