The role of knowledge-based supply specialisation for competitiveness: A spatial econometric approach

This paper aims to assess to what extent deterioration of Italy's trade competitiveness in manufacturing over the decade 1993-2004 has been determined by the evolution of localised comparative advantages in knowledge based industries. Stressing Kaldor's idea of dynamic increasing returns in manufacturing industries, we adopted a spatial econometric approach in order to account for the role of geographical proximity in facilitating the exchange of knowledge flows. We estimated a canonical regional export demand function for the 103 NUTS 3 explicitly introducing specialization in high-tech goods. Export competitiveness is shown to be deeply rooted at the local level with the role of knowledge-based competitiveness declining in the centre and north and world demand remaining the only engine of export growth in the south. Copyright (c) 2008 the author(s). Journal compilation (c) 2008 RSAI.