We examine the impact of a regional policy designed to increase the number of innovative start-ups in the second-largest Italian region (Latium). The program provided funding for the creation of innovative firms, selecting projects submitted in response to a call for applications open to faculty members, researchers, and recent graduates. By comparing recipients with similar non-recipient applicants, we find that nearly all funded projects resulted in the creation of a new firm, whereas only about 50

The paper investigates the effects of the adoption of advanced digital technologies (i.e., Industry 4.0) on firms' credit conditions through a signaling effect. The empirical analysis exploits microdata from the Bank of Italy's "Survey on Manufacturing and Service Firms"available for the period 2015-2019, integrated with balance sheet information provided by Cerved. We use a binary endogenous treatment effect model and IV estimation strategy to determine the average effect of digital technology adoption on firms' financing variables. The results can be summarized as follows: (i) the adoption of digital technologies (DT) lowers the likelihood of being credit rationed; (ii) the adoption of DT is associated with a higher level of leverage but with a lower cost of debt; (iii) the increased firm's debt is associated with a composition effect resulting in an expansion of bank debt and a reduction in financial debt. These results, which are robust to a number of checks, suggest that digital technology adoption improves firms' financial conditions, with lower constraints and lower costs, and also influences the between the firm and the financial institutions.

Italian Abstract: Il rapporto analizza l'economia dell'area metropolitana di Roma dagli inizi degli anni duemila fino alla vigilia della pandemia. Nell'arco di quasi un ventennio, l'andamento del valore aggiunto pro capite della capitale è stato peggiore di quello delle altre principali città italiane ed europee, conseguenza di un'insoddisfacente dinamica del prodotto per occupato. A fronte dell'arretramento del settore pubblico, delle grandi imprese e degli investimenti, si è assistito a una rapida crescita dell'occupazione nei servizi a bassa intensità di conoscenza, anche a causa del forte incremento dei flussi turistici. Ne è derivata una sensibile riduzione della specializzazione nei servizi ad alta intensità di conoscenza e una forte espansione delle occupazioni meno qualificate. Nonostante tali dinamiche, l'economia di Roma presenta ancora una serie di punti di forza, tra cui: il ruolo ancora centrale dei servizi ad alta intensità di conoscenza e l'alto grado di internazionalizzazione di quelli per le aziende, il peso rilevante dei lavoratori con istruzione superiore, un elevato tasso di natalità delle imprese e un notevole peso della ricerca pubblica.English Abstract: The report examines the Rome metropolitan area's economy from the early 2000s to the eve of the pandemic. For over nearly two decades the capital's per capita value-added dynamic has been lower than that of the other major Italian and European cities, owing to an unsatisfactory output per worker trend. In the face of a decline in the public sector, in large companies, and in investments, there has been a rapid rise in employment in low knowledge-intensive services, which is also due to a significant increase in tourist flows. As a result, there has been a significant decrease in specialization in knowledge-intensive services and a significant increase in low-skilled occupations. Despite these dynamics, Rome's economy retains a number of strengths, including: the continued centrality of knowledge-intensive services and the high degree of internationalization of those for businesses, the significant weight of workers with a higher education, a high company birth rate, and a large portion of public research.

In this paper, we study the structural change in both central-northern and southern Italy, focusing on its implications for productivity dynamics and its micro-economic determinants. We document three main results. First, between 2001 and 2018, the deindustrialization process involved both areas; however, in the southern regions it mostly started after the financial crisis. In the South, the employment shares in low knowledgeintensive services increased more than in the central-northern area, whereas those in high knowledgeintensive services increased less markedly. Second, structural change slowed down productivity growth in the central and northern regions, but had no role in the productivity fall in the South. Finally, in central and northern Italy, employment growth was driven by the net creation of jobs among incumbents and larger firms. In contrast, employment dynamics in the southern regions largely reflected the process of firms entering and exiting the market, in particular in less knowledge-intensive service sectors, and in young and smaller enterprises.

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This paper examines the financial structure and bank relationships of multinational firms in Italy, a large European country strongly reliant on bank debt. We show that multinationals are, on average, more leveraged than non-internationalized companies. Moreover, multinationals have larger shares of both financial debt and bank debt as a percentage of total debt, benefit from lower interest rates, maintain more bank relationships, and are less dependent on the primary bank for the firm. Overall, these findings suggest that globally diversified firms have better access to credit markets than domestic companies. These results are robust to estimation methods that address the potential endogeneity of the choice to go international, such as matching and instrumental variable estimation.

Economic theory and the empirical literature are not conclusive on the relationship between tourism and economic growth. In this paper we estimate the impact of foreign tourists' spending on value added per capita growth in the Italian provinces, using various econometric strategies. The overall results show that the effect is positive and statistically significant, but modest in economic terms. The impact is larger for the less developed provinces, and null for those that showed the highest tourist revenues per inhabitant at the beginning of the period, suggesting that congestion phenomena may occur.

This paper assesses the short- and long-term economic impact of the Great Jubilee 2000 on the city of Rome’s economy; this is an important Catholic event that occurs every 25 years. By applying the synthetic control approach, we find that the value added per capita increases slightly in the short term while in the long term it is not significantly different from what it would have been if Rome had not hosted the Jubilee. However, we do find a significant effect on the employment rate. Consistently with these findings, we document a shift of the local economy towards less productive sectors, such as construction and services requiring a lower skill content, and an overall productivity loss for/in Rome with respect to the counterfactual scenario. The investment in infrastructure, facilities and urban requalification did not significantly affect tourism or house prices in the long run, with exception of peripheral residential areas which experienced an appreciation.

In this paper we use a new methodology aimed at identifying only the venture capitalists (VC) treatment effect we compare a representative sample of firms financed by private VC in the period 2004-2014 with a sample of firms rejected by VC at the very late-stages of the screening process. These firms narrowly lost the contest and are hence very similar, before VC financing, to the VC backed firms; self-selection is specifically taken into account. In line with previous results, Italian startups financed by VC reach a larger size and become more innovative than other startups. On the contrary, sales growth is similar and profitability is worse than firms in the control group. VC-backed companies experience larger rise in labor costs, while the commercialization of their innovative projects takes longer: this explains their worse profitability and the deterioration in their credit score. Both effects tend to disappear after four years from VC financing, when sales increase for VC-backed firms at the same pace as for the control group. Unlike other studies, no differences are detected for the survivorship rates of VC-backed firms in Italy. We also provide new evidence on the impact of VC on firms' financial structures: VC-backed firms show a much larger increase in equity; this rise is however only half the increase in total assets that is hence not only explained by the injection of VC equity. Another result in this direction is that the effects on firms' size and innovation hold when we restrict the control group to firms that also increase their equity from investors different from VC; this suggests that VC effects on size and innovation might also be linked to their managerial expertise and network connections. Finally, in line with previous evidence, the effects found in the paper are exclusively driven by independent VC investors compared with captive VC.

Italian Abstract: Secondo i dati di commercio estero, il settore farmaceutico, in cui il nostro paese e fortemente specializzato, ha contribuito in misura determinante alla ripresa delle esportazioni italiane di beni dal 2010; nel 2019 si e registrato un aumento particolarmente pronunciato delle vendite estere di tali prodotti, anche nel confronto internazionale, trainato dalla principale regione esportatrice, il Lazio. La crescita e stata accompagnata dal significativo ampliamento della capacita produttiva di alcune imprese nella regione e dall’espansione di modalita produttive basate su lavorazioni conto terzi, a livello sia nazionale sia regionale. Tali attivita, in assenza di un passaggio di proprieta del bene tra il committente estero e il contoterzista in Italia, si qualificano come processing e concorrono alle esportazioni di beni di fonte commercio estero ma non a quelle corrispondenti di contabilita nazionale. Il contributo del comparto farmaceutico alla crescita delle esportazioni complessive di beni dell’Italia nel 2019 risulta piu contenuto se calcolato al netto del processing, ma rimane comunque piu ampio di quello registrato nel biennio precedente, confermando la solidita strutturale del settore. English Abstract: According to international trade statistics, the pharmaceutical sector, in which Italy has a significant degree of specialization, has contributed markedly to the rebound in Italy’s goods exports since 2010; in 2019 foreign sales of these products recorded a sharp increase, even by international comparison, which was boosted by Italy’s main exporting region, Lazio. The growth in exports benefited from a significant expansion in the productive capacity of a number of firms in the region and to the spread of contract manufacturing, both at the national and regional level. This activity, when it occurs without a change in ownership of the contracted good between the foreign contractee and the contractor in Italy, is defined as “processing” and is included in goods exports sourced from international trade statistics but not in the corresponding series in national accounts. The pharmaceutical sector’s contribution to the growth in total goods exports in Italy in 2019 is smaller when computed net of processing, yet still larger than that recorded in the previous two-year period, confirming the structural soundness of the sector.

According to international trade statistics, the pharmaceutical sector, in which Italy has a significant degree of specialization, has contributed markedly to the rebound in Italy’s goods exports since 2010; in 2019 foreign sales of these products recorded a sharp increase, even by international comparison, which was boosted by Italy’s main exporting region, Lazio. The growth in exports benefited from a significant expansion in the productive capacity of a number of firms in the region and to the spread of contract manufacturing, both at the national and regional level. This activity, when it occurs without a change in ownership of the contracted good between the foreign contractee and the contractor in Italy, is defined as “processing” and is included in goods exports sourced from international trade statistics but not in the corresponding series in national accounts. The pharmaceutical sector’s contribution to the growth in total goods exports in Italy in 2019 is smaller when computed net of processing, yet still larger than that recorded in the previous two-year period, confirming the structural soundness of the sector.

In this paper we investigate whether new exporter firms have a higher probability of starting to export to the countries where their financing banks have already established their branches. The underlying mechanism we hypothesize is based on the transmission of foreign market knowledge from banks to firms, so as to cut down information barriers to international trade. In those countries where such information is arguably more precious to the firm, we found a significant positive relationship between a firm’s probability of beginning to export to one market, and the presence in the same market of a branch of the firm’s financing bank. Coherently with the mechanism hypothesized, we find a stronger effect for closer firm-bank relationships, and when banks have established their branches abroad over a longer time period.

Italian startups financed by venture capitalists (VCs) experience a faster growth in size and become more innovative compared with other startups. VC-backed firms also show a much larger increase in equity and a reduction in their leverage. This evidence is obtained by comparing a representative sample of firms financed by private VCs in the period 2004-2014 with a sample of firms rejected by VC at the very last stage of the screening process or in the due diligence phase. These firms narrowly lost the contest and before VC financing have very similar observable and unobservable characteristics to the VC-backed firms; self-selection is specifically taken into account. The effects on firms' size and innovation are not exclusively explained by equity financing. The results hold when we restrict the comparison to firms in the control group that also increase their equity from investors other than VCs: this suggests that VC effects can also be linked to their managerial expertise and network connection. Finally, the results are exclusively driven by independent VC investors compared with captive VCs.

Regional policies for innovation: the case of technology districts in Italy. Regional Studies. This paper studies a policy tool implemented in Italy in the last decade to foster local innovation activity called technology districts. First, it examines the characteristics of technology districts and those of the firms within them. Next, it assesses the performance of district firms. The South of Italy has more technology districts, but they are small, poorly sectorially diversified and far from the economic structure of the area. Firms that did join a district had previously been, on average, larger, more innovative and profitable, and show also higher leverage than the others. After the institution of a district the performance of the firms that joined it did not differ significantly from that of similar firms that did not.

This paper evaluates the impact of an R&D subsidy program implemented in a region of northern Italy on innovation by beneficiary firms. In order to verify whether the subsidies enabled firms to increase patenting activity, we exploit the mechanism used to allot the funds. Since only projects that scored above a certain threshold received the subsidy, we use a sharp regression discontinuity design to compare the number of patent applications, and the probability of submitting one, of subsidized firms with those of unsubsidized firms close to the cut-off. We find that the program had a significant impact on the number of patents, more markedly in the case of smaller firms. Our results show that the program was also successful in increasing the probability of applying for a patent, but only in the case of smaller firms.

This paper investigates empirically whether inward greenfield foreign direct investment (FDI) is related to greater sectorial innovation in the host Italian provinces. We combine several sources of data to estimate panel count models, regressing the annual number of patents in each province and industry against a series of lagged FDI variables. Our results show that a positive relationship between FDI and local patenting emerges only for services. In particular, we find that greater inward FDI in services positively influences local patenting activity in knowledge-intensive business services. These results are robust to endogeneity and the inclusion of province controls and fixed effects.

Abstract In this paper we verify whether enterprises that have started to produce abroad have reduced employment at home after the first foreign investment (extensive margin). Next, we assess whether changes in foreign employment induce changes in domestic employment for a sample of multinationals that have already established activities abroad (intensive margin). Using matching method and diff-in-diffs estimates, we find that two years after the first foreign investment domestic employment of investing firms is slightly higher than that of domestic enterprises, but mainly among those that have undertaken horizontal foreign direct investment. In multinationals that have already activated foreign operations we find a positive relationship between foreign and domestic employment. Our findings suggest that the skill composition of domestic workforce does not change neither at the extensive nor at the intensive margin of FDI.

This paper investigates empirically whether inward greenfield foreign direct investment (FDI) is related to greater sectoral innovative activity in the host narrow territorial units (provinces). We combine several sources of data on Italy to estimate panel count models, regressing the annual number of patents in each province and industry against a series of lagged FDI variables. Our results show that a positive relationship between FDI and local patenting emerges only for services. In particular, we find that larger inward FDI in services positively influences local patenting activity in knowledge-intensive business services. These results are robust to endogeneity and the inclusion of province controls and fixed effects.

This paper evaluates a unique R&D subsidy program implemented in northern Italy. Firms were invited to submit proposals for new projects and only those which scored above a certain threshold received the subsidy. We use a sharp regression discontinuity design to compare the investment spending of subsidized firms with that of unsubsidized firms. For the sample as a whole we find no significant increase in investment. This overall effect, however, masks substantial heterogeneity in the program's impact. We estimate that small enterprises increased their investments—by approximately the amount of the subsidy they received—whereas larger firms did not. (JEL G31, G38, L52, O33, O38, R32)