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Sectors

The crisis of 2008-09 and the present recovery have had major effects on the sectoral distribution of trade. The fall in the prices of raw materials during the crisis led to a pronounced narrowing of Italy’s structural deficits on primary products, which more than offset the reduction of the surplus on manufactures. Against the background of a contraction in household consumption, particularly as regards durable goods, firms ran down their stocks of intermediate goods and cut back on investment. In January-April 2010 the inversion of the cycle led to a fresh worsening of the balances on primary products, but the surplus on manufactures continued to narrow. The recovery has not yet restored a sufficient climate of confidence to recoup the pre-crisis levels of trade. In the two years 2008-09 Italian exports’ market shares diminished in nearly all sectors, with especially large losses in footwear, textiles and furniture. Confirming a trend under way for some time in the Italian economy’s model of international specialization, exports were more resilient for the machinery sector, whose market share slipped by just a tenth of a point from the relatively high level attained in 2007, and the food products industry, whose share rose to the same extent with respect to one of the lowest levels of the decade. For many years the extraordinary growth of Chinese exports has corresponded to the losses recorded by the shares of Italy and other developed countries. The Chinese expansion spread beyond its initial strengths in textiles, clothing, footwear and consumer electronics, to such other sectors as machinery and transport equipment. In the last decade the sectoral specialization model of Chinese exports has not basically changed, but Chinese exports have also gained market shares in sectors of comparative disadvantage and have diversified their intra-sectoral specialization.8 In many sectors, the unit values of Italian exports rose more than the prices applied in foreign markets. This could be viewed as a sign of upgrading of the quality of the products exported by Italian firms, in response to heightened competitive pressure in markets abroad. However, other empirical evidence does not fully corroborate this interpretation. The prospects of Italian exports will also depend on their ability to intercept the demand for “affordable luxury”, which is expected to grow rapidly in the emerging countries in the coming years as the upper-middle class expands and women increasingly participate in education and employment.9 With this objective in mind, distribution channels and technology will have to be adapted to the new market trends. In addition, it is essential to strengthen Italian firms’ competitive position in the production of intermediate and investment goods, whose importance could grow further as the international fragmentation of production intensifies. This requires an ability to combine export strategies and international partnerships in production, as is shown by the example of the energy sector.10 The shift of production capacity toward the emerging countries is also continuing in the world motor vehicle market, which reeled under the impact of the crisis.