Choosing between foreign investment and subcontracting: Strategies of Italian firms in Romania

Tattara, Giuseppe (2011): Choosing between foreign investment and subcontracting: Strategies of Italian firms in Romania.

Abstract

Vertical disintegration in most industries and the globalization of markets has led to significant changes in the pattern of international division of labour among manufacturing firms. At the same time increased competition from low cost producers, exchange rate constraints, the opening up of CEE countries have had huge consequences for the Italian industrial system. This paper deals with the Veneto footwear, furniture and refrigeraion industries and examines the effects of foreign direct investments and subcontracting in Romania. The reorganization of the division of labour, in the most dynamic suppliers induced a change in the “nature of subcontracting”, upgrading along the ladder of the value chain as more and more operations are offshored.

• Item Type: MPRA Paper
• Language: English
• Keywords: Foreign direct investment; International subcontracting
• Subjects: F - International Economics > F3 - International Finance > F32 - Current Account Adjustment ; Short-Term Capital Movements; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design

References

Bazan, L., and E. Navas-Aleman. 2003. “Upgrading in the Global and National Value Chains: Recent Challenges andOopportunities for the Sinos Valley Footwear Cluster, Brazil.” Paper presented at EADI Workshop Clusters and Global Value Chains in the North and in the Third World, 2003.

Brusco, S. 1975. “Il convegno FLM di Bergamo sull'organizzazione del lavoro e sul decentramento produttivo nel settore metalmeccanico”. Inchiesta, No.17. Now in Brusco S. 1989. Piccole imprese e distretti industriali. Una raccolta di saggi. Torino: Rosenberg&Sellier.

Buckley P. J. and Casson M., 1976, The future of the multinational enterprise, Macmillan: London, Basingstoke. Callegari, F. 2004. “Strategie e modelli di internazionalizazzione del distretto Montebelluna. Una ricerca sul campo indaga natura e intensità delle relazioni con i paesi dell’allargamento”. Now in Andarsene per continuare a crescere. La delocalizzazione internazionala come strategia competitiva, G. Tattara, G. Corò and M. Volpe, eds. 2006.

Camuffo, A., A. Furlan and P. Romano. 2006. “Customer-supplier Integration Forms in the Air-conditioning Industry.” Journal of Manufacturing Technology Management, Vol.17, pp.633-655.

Constantin F. De Giusti G., Tattara G., 2010, Strategies of Italian Firms in Romania: Evidence from Selected Case Studies. Transition Studies Review, Volume 16, Issue 4, p. 829. Crestanello, P. and G. Tattara. 2011. “Industrial Clusters and the Governance of the Global Value Chain. The Romania- Veneto Network in Footwear and Clothing”. Regional Studies 45(2): 187-203

Gereffi, G. 2007. The New Offshoring of Jobs and Global Development. Geneva: ILO.

Gereffi, G., J. Humphrey and T. Sturgeon. 2005. “The Governance of Global Value Chain”. Review of International Political Economy, 12(1) now Il governo delle catene di valore globali, in Andarsene per continuare a crescere. La delocalizzazione internazionala come strategia competitiva, eds. G. Tattara, G. Corò and M. Volpe. 2006. Roma: Carocci.

Gianelle, C., and G. Tattara, 2009. “Producing Abroad while Making Profits at Home: Veneto Footwear and Cclothing Industry”. In Corporate Governance, Organization and the Firm: Co-operation and Outsourcing in a Globalised Market, ed. M. Morroni, Elgar and Pitman.

Graziani, G. 1998. “Globalization of Production in Textile and Clothing Industries: The Case of Italian Foreign Direct Investment and Outward Processing in Eastern Europe”, In Enlarging Europe: The Industrial Foundations of a New Political Reality, J. Zysman and A. Schwartz, International and area Studies, Research Series, No. 99, University of California.

Hanz Weiß, D. 2004. Enlargement and the Textiles, Clothing and Footwear Industry. The World Economy, XXVII(6), 923-45

Humphrey, J. and H. Schmitz. 2002. “How Does Insertion in Global Value Chain Affect Upgrading in Industrial Clusters?” Regional Studies, 36(9):1017-1027.

Javorcik, B. S. 2004. “Does Foreign Direct Investment Increase the Productivity of Domestic Firms?” In Search of Spillovers through Backward Linkages, American Economic Review, 94(3):605-627.

Kaminski, B. and F. Ng. 2004. “Romania’s Integration into European Markets: Implications for Sustainability of the Current Export Boom”. WB Policy Research Working Paper 3451.

Lawton, C.T. and S.M. McGuire. 2005. “Adjusting to Liberalization: Tracing the Impact of the WTO on the European Textiles and Chemicals Industries.” Business and Politics, 7(2):1-23.

Markusen, J. R. and A.J. Venables. 1999. “Foreign Direct Investment as a Catalyst for Industrial Development”. European Economic Review, 43(2):335-356. Forte R., Brandão A., 2005. "Choosing between Foreign Direct Investment and International Subcontracting. A Model of a Multinational Firm's Decision in a Context of Moral Hazard," CEF.UP Working Papers 0506, Universidade do Porto, Faculdade de Economia do Porto.

Giunta A. Nifo A. and Scalera D. 2009, Subcontracting in the Italian industry. Labour Division, Firm Growth and the North-South Divide. MPRA Paper No. 20629.

Osem. Rapporto 2002. Distretto dello Sportsystem di Montebelluna- Relazione di V. Durante www.clubdistretti.it/Archivi/archivi03/osem2002.htm

Osem. Rapporto 2004. Distretto dello Sportsystem di Montebelluna www.clubdistretti.it/Archivi/archivi03/osem2004.htm

Schmitz, H. 1999. “Global Competition and Local Cooperation: Success and Failure in the Sinos Valley, Brazil.” World Development, 27(9):1627-1650.

Schmitz, H., (ed.) 2004. Global Enterprises in the Global Economy. Issues of Governance and Upgrading. Edward Elgar, Cheltenhamm UK, Northampton MA, Usa.

Schmitz, H. 2006. “Learning and Earning in Global Garment and Footwear Chains.” European Journal of Development Research, 18(4):546-571.

Scott, A. 2006. “The Changing Global Geography of Low-Technology Labour Intensive Industry. Clothing, Footwear and Furniture.” World Development, 34 (11):1517-1536.

Tattara, G. (ed.) 2001. Il piccolo che nasce dal grande. Le molteplici facce dei distretti industriali veneti. Milano: Franco Angeli. Tattara, G., G. Corò and M. Volpe (eds.). 2006. Andarsene per continuare a crescere. La delocalizzazione internazionale come strategia competitiva. Roma: Carocci.

Tattara, G., 2007, Emerging Hubs in Central-Eastern Europe, Trade Blocs and Financial Co-operation”. In Bagchi A and G. Dimsky (eds.) Capture and Exclude: Developing economies and the poor in global finance, Tulika books, N. Delhi. pp. 282-304.

Vining, A. and Globerman, S. 1999. "A conceptual framework for understanding the outsource decision", European Management Journal, Vol. 17, Nº6, pp. 645-654.

Webster, M., A. C. and Muhlemann, A. P. 1997, "Subcontracting within the supply chain for electronics assembly manufacture", International Journal of Operations & Production Management, Vol. 17, Nº9, pp. 827-841.

World Bank. 2005. “Romania. Restructuring for EU Integration. The Policy Agenda. Country Economic Memorandum. Volume 2: Main Report and Annexes.” Report N. 29123-RO, 2004.