The economic and institutional determinants in the international delocalisation of Italian companies

Abstract

The latest trend of companies is that of fragmenting their production across several countries as a cost-saving policy. The selection of an optimal location for the fragmentation of the production depends on the economic, fiscal and institutional factors. This paper examines the main factors that influence the process of delocalisation of Italian companies in the Balkans. The results suggest that the work cost and productivity of the hosting country encourage the Italian enterprises to fragment their production in the given country. The empirical results of this study also suggest that institutional factors such as rule of law and corruption have a positive and significant correlation in the delocalisation. Finally, this study empirically examines the impact of fiscal factors. The results suggest that Italian companies are not influenced by the fiscal pressure of the host country.