Resilience in Italian LLMAs: The role of specialization and diversification patterns in two recent crises

Abstract

This paper investigates the resilience of local economic systems (LLMAs) in Italy over 2008 to 2022 distinguishing between two resistance periods (2008–13 and 2019–20) and two recoveries (2013–19 and 2020–22). The main focus is on the role of diversification patterns, to check whether –and to what extent- related/unrelated variety is important in determining local performance. We estimate a spatial model and include a number of control variables. Results show that relatedness is important both for resistance and for recovery; unrelated variety is less important. We also find significant spatial spillovers only for recovery, with ambiguous effects over time. Results confirm the country’s general de-industrialization trend, coupled with growing importance for services, in particular for the less knowledge-intensive ones. While the South recovers better than the rest of the country, we tentatively explain this fact in terms of the role played by traditional services.