Foreign direct investment and regional attractiveness in the EU integration process - Some evidence for the Italian regions

The analysis of foreign direct investment (FDI) in the EU regions has shown changes in both the sectoral composition and the geographical orientation of productive investments operated by multinational enterprises (MNEs), Such variations may be attributable to factors such as the 'deepening' of the integration process in the 1980s and the early 1990s and the change in the location strategies of MNEs. Assuming regions as units of analysis with regard to economic integration, this paper provides a first description of where and in which sectors inward FDI is located in Italy, by carrying out a simple analysis at regional level in the period 1985-95. It attempts to shed some light on the characteristic features of Italian regional systems in order to assess their degree of attractiveness for FDI. The geographical distribution of foreign plants in Italy emphasizes the historical imbalances affecting the country, stressing the concentration of FDI in a few advanced regions and the marginalization of the Italian Mezzogiorno. Furthermore, the analysis turns to investigate whether FDI follows regional specialization models by distinguishing between EU and non-EU FDI in sectoral and geographical terms. EU investors turn out to be increasingly related to the sectoral comparative advantages of regional economic systems, while the matching between the specialization of non-EU FDI and that of local firms is relatively less pronounced.