Legal Enforcement and Global Value Chains: Micro-Evidence from Italian Manufacturing Firms

40 Pages Posted: 17 Nov 2017

Date Written: October 18, 2017

Abstract

In this paper we study the relationship between the quality of contract enforcement and firms' participation in Global Value Chains. Using new data on Italian manufacturing firms' supply of customized inputs to other firms and variations in law enforcement in courts across Italy, we find that firms located in courts with longer trial lengths are less likely to supply customized intermediate inputs to foreign firms. The effects are stronger for firms operating in contract-intensive industries. Our results are confirmed when we use a spatial regression discontinuity design that compares the probability of supplying customized inputs for firms that are located on different sides of a court border, and are therefore characterized by different trial lengths.

Keywords: Global Value Chain, Judiciary Efficiency, Italy

JEL Classification: F10, F14, L14

Suggested Citation

Accetturo, Antonio and Linarello, Andrea and Petrella, Andrea, Legal Enforcement and Global Value Chains: Micro-Evidence from Italian Manufacturing Firms (October 18, 2017). Bank of Italy Occasional Paper No. 397, Available at SSRN: https://ssrn.com/abstract=3072342 or http://dx.doi.org/10.2139/ssrn.3072342

Antonio Accetturo

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Andrea Linarello

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Andrea Petrella (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
27
Abstract Views
242
PlumX Metrics