The intersectoral linkages and manufacturing productivity growth in Italian regions using the I-O approach

The intersectoral linkages in the production structures have been analysed under several angles in recent years, but these were mainly developed at the national level neglecting the regional aspects. In this paper, we aim to fill this gap by analysing the intersectoral linkages from a regional perspective by studying the case of Italian regions. We use the input-output approach to investigate the process of integration between manufacturing and market services, clarifying the role of market services in strengthening the productivity of the regional manufacturing systems. The results show that an increasing share of market services in regional manufacturing is evident across the Italian regions. The empirical estimations clearly show a strong connection between the growth of market services integrated in manufacturing and the growth of manufacturing productivity. The findings are robust when we control for the intersectoral linkages along the value chain, by adopting the vertically integrated sector (or subsystem).