The paper analyses Italy's trend in the trade of services over the last twenty years. Italy's export dynamics are analysed at sectoral and geographical level, and are compared with the main euro-area partner countries and with potential foreign demand. Using firm-level data, the main determinants of foreign sales of services and their role in the recent recovery are examined.
Over the last twenty years Italian exports of services have shown a trend that is much lower than that of its potential demand, especially with regard to services other than travel and transport and in the non-EMU area. The firm-level analysis shows the negative role played by the low presence of medium- and large-sized companies, low productivity and limited internationalization of the service sector. Only in the 2016-18 period was there a recovery, driven by large foreign-controlled companies.
