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RESHORING GIVES NEW HOPE TO ITALY

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One particular challenge among the many that Italy has had to face during the global financial crisis worries analysts: the low level of "real and potential" internationalization of the economy.

An analyst told WikiLao that "there is very little light ahead for Italy if the obstacles that keep us on the sidelines of a true globalization aren't removed; globalization that affects us in a lesser degree compared to others because of the small size of our businesses."

In the EU rankings of the most integrated countries in international mechanisms, based on data on the exchange of goods and services, Italy ranks only above Greece. This provides food for thought. Not only are we unable to attract 'positive' foreign investment; the Italian genius is also crossing borders much less than it used to. And with internal demand falling in all of Europe, exports - especially outside the EU - are seen as the solution to spur recovery, but looking at the numbers it would seem like a train that has sped by without stopping in Italy. The strong Euro obviously isn't helping, " even though the advantage of the lower cost of imported goods must be taken into account." The truth is that with declining internal production and demand, increasingly fewer goods are being imported.

There is one phenomenon that could benefit Italy in the medium-long term and bring a sign of hope. Reshoring: to bring home, or back to our geographical area, production that had previously been outsourced. This seems to be a trend, essentially because "the favorable initial conditions in countries where businesses had opened new production plants are changing" - and for the worse. In some cases it's due to security issues (some areas of the world have become too dangerous for firms to stay), but mainly it's about money, and different fiscal regimes and lower costs of labor.

Businesses of diverse sectors are returning or moving closer to Italy, ranging from pharmaceutical or energy-sector firms, to those producing furniture, leather goods and clothing. Even some service providers seem disappointed with the experience abroad and appear to be getting ready for a change in strategy.


If on one hand Italy's low level of internationalization can still be seen as a constraint, an analyst explains that on the other hand reshoring "reduces the country-risk 360 degrees": it brings home know-how and tradition; it shows that it is possible, and ultimately better, to do business in Italy despite all the challenges; and above all it can provide oxygen for the labor market, which is the main cause for concern at this stage.

February 25, 2014