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The Oxford Handbook of the Italian Economy Since Unification



This paper by Michele Di Maio and Federico Tamagni (2008) provides an empirical analysis of the sophistication level of Italian international trade specialization from 1980 to recent years, examining the 'Italian trade specialization anomaly'.

Key Points

  1. Trade Specialization Anomaly in Italy:

    • Italy's trade pattern is characterized by strong comparative advantages in low-skilled, labor-intensive sectors, making it more akin to an emerging economy than to other countries with similar per-capita income levels.
    • There is a high degree of persistence in this peculiar structure of specialization.
  2. PRODY Index Analysis:

    • The PRODY index, developed by Hausmann et al., is used as a measure of export sophistication. It represents a weighted average of the per-capita incomes of countries exporting in a particular sector.
    • Sectors with high PRODY values involve high-income countries, indicating sophisticated sectors with opportunities for growth.
    • The study explores the evolution of the PRODY index across various sectors and its implications for Italy's trade pattern.
  3. Dynamic Changes in Export Sophistication:

    • Significant changes have been observed in the sectoral ranking of sophistication levels over the years.
    • Entry of low-medium income countries into international trade is a major factor influencing these dynamics.
  4. Italian Specialization Pattern Analysis:

    • Utilizes the symmetric index of Revealed Comparative Advantage (RCA) to characterize Italy's trade pattern.
    • Analysis indicates high persistence in Italy's trade specialization, with robust rank correlations across different time periods.
  5. Measuring Sophistication of Italian Trade:

    • The sophistication level associated with Italy’s specialization pattern is a key focus.
    • The EXPY index, a weighted sum of the PRODY indexes across sectors, is used to assess the overall sophistication content of Italy's exports.


This comprehensive analysis provides insights into the evolution of export sophistication and Italy's unique trade specialization pattern. The study underscores the importance of sophistication levels in understanding a country's trade dynamics and economic growth opportunities.