The innovation-trade nexus: Italy in historical perspective (1861-1939)

This work investigates the relationship between trade and technological specialisation in Italy, during the long time span ranging from Unification to the eve of the Second World War. To do this, new series of Italy's indices of specialisation in trade and technology are calculated on the base of o?cial data. Empirical analysis, based on Spearman rank correlation coe?cients and fixed-e?ects regression, shows the emergence of a positive relationship between specialisation in technology and specialisation in trade after the start of the country's modern economic growth, around the turn of the twentieth century. This, however, was uniquely driven by a negative relationship between technological specialisation and import shares, while no significant relationship between the former and export shares emerges. Furthermore, this finding excludes the most important sector, leading Italian industrialisation, i.e. textiles, the outstanding performance of which can be seen as largely determined by its being particularly suited to the country's factor endowment.

Key words: innovation; trade; Italy; specialisation; comparative advantages

JEL classification: N73, N74, O14, O33