Abstract

Through the analysis of structural and institutional factors, the work aims to understand why Italy experiences a very low flow of Foreign Direct Investment (FDI), although characterised by a very high potential for their attraction. After a literature review on the issue and a detailed analysis of the inward FDI flow at both a regional and provincial level between 1999 and 2006, an empirical work is carried out to understand the linking dynamic between this flow and the or ganisational features of local production. In addition, the linkage between FDI location and the concentration of activity, which is also observed considering its organisational form (large enterprise, area of location of SMEs and industrial districts), is also investigated. This is done through the use of the econometric technique and, more precisely, the estimation of panel data containing a wide and complex set of indicators representing the local economic and productive structure and the socio-institutional assets. The empirical study confirms the existence of a deep territorial distributive disequilibrium of inward FDI in Italy, which is even more marked than that resulting from the observation of the way in which the productive system is spread between the Italian macro-areas and regions. As a matter of fact, it can be observed how the Italian inward FDI flow basically goes towards those areas characterised by a higher density of medium and large enterprises and the existence of innovative services (i.e. agglomeration effect, especially when it is "sector specific"). The result also shows how differences in the socio-institutional structure of the various considered areas affect less significantly the Italian distribution of FDI. On the basis of these results, the work also identifies some policy suggestions to improve the strategies to attract foreign investors to Italy and, particularly, to its southern regions.