Heterogeneous Fall in Productive Capacity in Italian Industry During the 2008 13 Double Dip Recession
Between 2008 and 2013 productive capacity was considerably downsized in the Italian manufacturing sector. This paper analyses the micro data collected for the Bank of Italy surveys to identify the main drivers of the reduction in the whole 2008 13 period and in four sub periods (pre crisis 2001 07, first phase of the crisis 2008 09, recovery 2010 11, and second crisis 2012 13) Our main findings are that i) losses of productive capacity varied widely across manufacturing sub sectors with differences in pre crisis trends tending to persist in a few sub sectors during the double dip recession; ii) large firms were more successful in avoiding major capacity losses, especially in the first phase of the crisis; iii) the share of sales on foreign markets was negatively correlated with performance in 2008 09, but the correlation turned positive in 2012 13; iv) among the Italian macro regions, the Centre weathered the long recession better; v) subsidiaries underperformed firms not belonging to any group; and vi) the negative effects on productive capacity of credit constraints, which discouraged investments, were felt by Italian firms particularly in 2012 13.