Food exporters in global value chains: Evidence from Italy

- Direct measure of value chain participation with a focus on the food industry.
- Food processing firms operating in value chains have a higher probability to export.
- Food processing firms outside value chains need higher productivity to export.
- Value chain participation can increase the international projection of firms.

This paper offers a firm level perspective of global value chain participation in the food industry. We single out some stylized facts on food global value chains and the Italian food industry. Exploiting a very rich and original dataset, based on a 2011 survey of 25,090 Italian firms operating in manufacturing and related services, we characterize the food industry, describing its main strengths and weaknesses, and analyze the links between the probability to export and the value chain participation. Our results show that participating in a value chain significantly increases the probability to export. This is particularly true for small firms in the industrial food value chain and for firms positioned downstream. Participating in distribution chains, for instance being able to sell products through large supermarkets, also significantly contributes to internationalization. These results can have important implications in terms of trade policy: tariffs and other protection measures are cumulative when intermediate inputs are traded across borders multiple times. Hence, protection can end up in a significantly higher cost of finished goods. When discussing trade policy therefore, it is crucial to “think value chain”.