Modeling the incidence of international trade on Italian regional productive efficiency using a meta-frontier DEA approach

Although there continues to be considerable debate about the impact of European integration on the EU regions, studies in this field have mainly investigated the convergence-divergence issue, while the effect of trade on regional performance has attracted few empirical studies. A bootstrapped DEA metafrontier framework used in this study, as a first stage of analysis, is exploited to account for the heterogeneity between the Italian regions in the whole period and in two distinct time frames before and after EMU implementation. In a second stage, using a partial least squares model, the technology gaps estimated for each period are regressed, investigating factors related mainly to R&D efforts and trade behavior that may have affected regional performance. Our findings reveal a significant improvement for the Italian regions since 1993, a paradoxically unchanged behavior for efficiency performance in the Center-North regions, and clear identification of which regions performed better in terms of the technology gap. Inclusion of variables related to international trade performance in the model indicates that trade is of major importance for better regional performance. In addition, the technology gap is negatively influenced by R&D expenditures, denoting the catching-up phenomenon for the technology level of Italian regions.