The Evolution of the World Trade and the Italian 'Anomaly': A New Look

Centro Studi Luca d'Agliano Development Studies Working Paper No. 227

26 Pages Posted: 24 Jul 2007

See all articles by Michele Di Maio

Michele Di Maio

Sapienza University of Rome

Federico Tamagni

Scuola Superiore Sant'Anna di Pisa

Date Written: May 2007

Abstract

This work provides an empirical assessment of the 'sophistication' of the Italian international specialization pattern and of its evolution during the period 1980 - 2000. In particular, we discuss the Italian 'anomaly', i.e. the evidence that Italy displays a specialization pattern more similar to the one of emerging economies than to the one of countries of comparable level of per-capita income. We show that combining the information coming from a new index measuring the income/productivity content of traded goods, i.e. the PRODY index recently proposed in Hausmann et al. (2005), with the index of Revealed Comparative Advantages (RCA) can shed light on the Italian anomaly. We begin providing a detailed picture of the theoretical and empirical characteristics of the PRODY index. In particular, we calculate the index for 1980, 1990 and 2000, mapping its dynamics through that period. Then we describe the characteristic and evolution of the Italian RCA using both parametric and non parametric techniques finding that the Italian pattern of specialization is particularly persistent. Finally, we describe the co-evolution of the PRODY and of the RCA indexes. Our analysis shows that in the last two decades, the world trade has been rapidly changing with Italy becoming increasingly more competitive and specialized in products that are characterized by decreasing income/productivity levels. Thus, while the Italian 'anomaly' was not a problem in the past, it may have become an obstacle to future growth.

Keywords: Specialization Pattern, RCA, PRODY index, Italian anomaly

JEL Classification: C14, F14

Suggested Citation

Di Maio, Michele and Tamagni, Federico, The Evolution of the World Trade and the Italian 'Anomaly': A New Look (May 2007). Centro Studi Luca d'Agliano Development Studies Working Paper No. 227, Available at SSRN: https://ssrn.com/abstract=1002583 or http://dx.doi.org/10.2139/ssrn.1002583

Michele Di Maio (Contact Author)

Sapienza University of Rome ( email )

via del Castro Laurenziano 9
Rome
Italy

HOME PAGE: http://https://sites.google.com/a/uniroma1.it/micheledimaio/home

Federico Tamagni

Scuola Superiore Sant'Anna di Pisa ( email )

Institute of Economics
Piazza Martiri della Liberta, n. 33
Pisa, Pisa 56127
Italy