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Firms

The fall in exports last year was severe for large companies. There seems to be a precise negative correlation between the performance of exports and firm size, overturning the trend of the preceding years toward a progressive concentration of export shares in the larger companies. It thus appears that smaller firms, including those oriented toward foreign markets, were better able to defend themselves from the blows of the crisis. A contribution to this development came from a composition effect, due to the greater relative presence of large companies in sectors in which the export collapse was greatest, but the phenomenon also emerged clearly within most sectors. The number of exporting firms decreased for the second consecutive year, although less sharply than the value of exports. Consequently, average export sales revenues per firm declined considerably, interrupting a long rising trend. For the first time in many years the number of outlet markets per firm also declined, indirectly corroborating that the impact of the crisis fell more heavily on larger companies, whose diversification of markets is greater than average. Available data on the structural characteristics of firms, updated to 2007, confirm that exporting firms are not only larger but also more productive and more capital and skilledlabor intensive than companies that only sell on the domestic market. However, this gap rapidly diminishes as firm size increases, and its sign changes for the largest companies (with 250 or more workers). In that size class, exporters, though larger on average than nonexporters, are worse than them in terms of value added, compensation and investment per worker. That is, it appears that small firms, to be able to sustain the greater costs of internationalization, need to enjoy a very pronounced edge in productivity which is not necessary for the others. One might therefore put forward the hypothesis that this greater structural robustness helped them weather the global crisis in 2009 better than other companies. The case of the clothing industry,14 though confirming the structural advantages of larger firms in terms of propensity to export, productivity, competitiveness, profit margins and balance sheet strength, also shows that the fall in exports in 2009 was more severe for larger companies. The data on the foreign affiliates of Italian firms only go up to 2008, but they already show a slowdown compared with the preceding years, when the number of affiliates, their work forces and their sales revenues had increased appreciably, particularly in services. A detail worth underscoring is that in the period 2002-08 the sales revenues of Italian firmsí foreign affiliates grew more rapidly than exports of goods and services, possibly suggesting that the Italian firms equipped with more mature strategies of internationalization substituted deliveries made by their own foreign affiliates for exports. For several years the ISAE surveys of Italian manufacturing have also been providing valuable data on their transfer of production activities abroad.15 The prevalence of such areas of destination as Eastern Europe and China confirms that Italian companies relocate production abroad mainly with a view to cutting production costs. Transfers designed to strengthen the firmís presence in its principal outlet markets play a more marginal role. The latest survey, conducted in February 2010, shows a substantial decrease in the percentage of firms that have shifted production abroad or intend to do so in the coming months. The percentage was already very low in previous years (the surveys began covering this in 2005), but the recession appears to have forced Italian firms, smaller ones especially, to retreat within the national borders. Firmsí marketing and production presence abroad partly depends on the availability and quality of financial services both for firmsí initial investments and for support of their activity in foreign markets. From this perspective, a strengthening of the international activities of Italian banks could make a positive contribution to Italian firmsí exports and the internationalization of their production, notably for smaller firms that rely more on bank financing.16 The Istat survey on multinational companies present in Italy provides statistical information comparable to that of the other countries of the European Union. It shows that Italy is significantly less able than other EU countries of similar size to attract foreign direct investment. This is due in part to a sectoral composition effect, because the presence of multinationals is concentrated in sectors that offer large economies of scale and are research intensive, sectors that are relatively less extensive in Italy. However, within each sector, the degree of passive multinationalization of the Italian economy, measured in terms of employees, is also generally lower than that of France, Germany, the United Kingdom and Spain.