Structural change and productivity revolutions: Some hints from the Italian case, 1979-2016

The reallocation of resources between productive sectors is classically regarded as the engine of long-term economic growth. The different technological opportunities and the inherent levels of productivity that characterise each production sector explain why changes in sectoral composition can trigger development processes. On the contrary, in the short run, productivity growth is often associated with differentiation processes among firms operating in the same industry. The paper aims to better understand the role of structural change in determining productivity changes by analysing the structural transformation of the Italian industry between the 1970s and the 2010s. The recent debate on the decline in Italian productivity has mainly focussed on short-term interpretations of the phenomenon. Therefore, the paper–using a new dataset collecting end-of-year financial statements data and off-balance sheet information on the 800 largest Italian manufacturing companies by turnover–aims to assess, from a long-term perspective, the role of structural change in explaining changes in Italian industrial productivity.