Keywords: Multinational Firms; Self-Selection; Home Country Effects; Industrial Policy; Italy
This paper carries out a review of the recent literature on the internationalisation of production, with a special focus on the characteristics of Italian firms investing abroad and the effects of international production on the Italian economy. First, it is argued that that firms investing abroad are different than non-internationalized firms. Second, the mechanisms through which international production affects the size and "quality" of the home activities of firms investing abroad are explored. Finally, the analysis focuses on the effects in terms of crowding out, externality and structural change induced by international production on home countries. The paper draws implications for policies towards Italian firms investing abroad.