Multinational Italy 2008

The “Multinational Italy 2008” survey by ICE examines the activities of multinational companies that involve the domestic economy: the Italy-based multinationals and their foreign subsidiaries and the Italian firms in which foreign-based multinationals hold an interest.
The sectors considered are: extraction and manufacturing; energy, gas, water; construction; wholesaling; logistics and transport; telecommunication services; software and IT services; other professional services.
There are 7,152 Italian investee companies in which 3,961 investor companies own equity. Their employees in Italy total 852,741, while 2006 revenues of the investee companies was € 429,512 million. Controlling interests predominate, in this case, involving 92.1% of the companies, 91.1% of the employees, and 89% of total revenues.

The foreign companies invested in Italy operate primarily in the service industries. The growth of investments in logistics and transport and in professional services reflects the trend of new infrastructure and the transition to services in the economies of the major industrialized countries and, at the same time, expresses the competitive superiority of international businesses in those sectors with respect to our companies.

The wholesaling sector is also expanding, though at a slower rate, and is largely composed of the commercial subsidiaries of industrial multinationals.

On the whole, however, the IT and telecommunication services sector has seemed stationary in recent years, after the setbacks of the early 2000s caused by the bursting of the Internet bubble.

In recent years, the principal cross-border acquisitions have involved companies operating especially in capital machinery, instrumentation, and in a few sectors with strong economies of scale (such as cables and home appliances). This activity is concentrated in production and technology where Italian industry has clear competitive advantage and in which the subsidiaries of the multinationals have a more significant R&D effort.

Origin of the multinationals present in Italy

Regarding the origin of the multinationals currently present in the country for all the industries considered:
  •  61.7% of the employees in the foreign investees are associated with European investors
  • 30.5% to North America
  •  3.5% to Japan
  •  4.3% to the rest of the world.
The North American presence, once important, has declined: in terms of employment, it dropped from 43% in 1986 to 30.1% in 2007. The Europe-based initiatives, on the other hand, have expanded  (from 55.3% to 62.9%), as have the equity investments from Japan (from 0.5% to 4%) and from the rest of the world (from 1.1% to 2.9%).

The distribution of foreign presences throughout the country is also of interest, again referring to the manufacturing sector.
The regions of the northwest predominate: they host 56.9% of the companies (administrative offices) and 59% of the employees (attributed in block to the company and located at the administrative HQ).
They are followed by the northeast, with 24.9% of the companies and 19% of the employees (because of the smaller average size of the investee companies).

The regions of central Italy and those of the south and islands account for 11.6% and 6.6% of the companies and 14.6% and 7.4% of the employees, respectively.
This distribution confirms the tendency of international businesses to make “conservative” choices based on a desire to reduce risks and limit information costs, by selecting sites in the major metropolitan areas and in zones with the best location factors.

Advantages generated by multinationals

Multinationals are characterized by higher productivity of labor (56% higher than the national average). This evidence is consistent with theory and studies conducted internationally regarding the superior services of subsidiaries of multinationals compared to domestic companies, thanks to the greater input of expertise, technology, managerial ability and advantages of scale and network.

A robust, diversified presence of multinationals plays a strategic role for all advanced areas:
  •  in direct terms, because of the contribution to employment, innovation, teaching of managerial skills and growth of the company system
  •  in indirect terms, because of the externalities, spillovers and competitive stimuli that multinationals generate, especially with regard to the industrial and service activities most involved in the processes of international integration.
The presence of multinationals also exerts a positive influence on the foreign projection of companies in the host country, providing them with a bridge to foreign markets. In fact, they create a virtuous spiral of globalization, so that acceptance of foreign investment in a country facilitates the foreign projection of domestic companies as well, through business relations and personnel mobility.

In conducting the survey, a minimum size threshold was adopted for the inclusion of investee companies, set at € 2.5 million in revenues abroad for Italian multinationals and in revenues in Italy for the investees of the foreign multinationals.
The data was collected in 2007 and in part in 2008.
Invest in Milan - Via Camperio,1 - 20123 Milan - Italy - Tel +39 02 85 15 53 92 - info@investinmilan.com
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