We The Italians | Italian good news: Bilateral Investments Italy-US

Italian good news: Bilateral Investments Italy-US

Italian good news: Bilateral Investments Italy-US

  • WTI Magazine #98 Dec 17, 2017
  • 103

The overall trend in investments between Italy and the United States in 2016 was slightly in contrast to that of previous years. This is an abstract of a much loner and complete report from ICE, the Italian Trade Agency, that can be found here.

US INVESTMENTS IN ITALY - STOCK

At the end of 2016, US investments in Italy represented 7.1% of all foreign investment stocks in Italy, equivalent to US$ 346.4 billion (UNCTAD WIR 2017).

However, with a stock of US$ 24.7 billion of US$ in 2016, Italy won less than 1% of the total, ranking 26th in the list of countries that attract investments from the US. Other European countries such as the Netherlands, the United Kingdom, Luxembourg and Ireland account for a much larger share of these investments.

The sector that absorbs the largest share of US investments in Italy (36.3% of the total) is the manufacturing industry, with US$ 9 billion. Wholesale trade followed (15.2%); banking services (11%); financial and insurance activities (9.2% of the total); IT and telecommunications services (9%), chemicals and derivatives (5.4%) and electronics (4.7%).

US INVESTMENTS IN ITALY – FLOW

In 2016, the United States made divestments in Italy for a value of - US$ 950 million. Among the recipient countries of FDI US, Italy fell to 163rd place in the ranking. Ireland, the United Kingdom and the Netherlands were the top three recipients of US flows in 2016.

ITALIAN INVESTMENTS IN THE US - STOCK

In 2016, the stock of Italian investments in the US reached a value of US$ 30 billion, equal to 0.8% of the total stock (stocks) held by foreign investors in the US. Italy remains the 16th largest investor country.

Taking into consideration the total Italian investments abroad, which according to UNCTAD figures amounted to US$ 460.4 billion at the end of 2016, Italian stocks in the US represented about 6.5%.

ITALIAN INVESTMENTS IN THE US - FLOWS

In 2016, Italian FDI flows to the US decreased to about US$ 700 million from US$ 6.9 billion (one of the highest values recorded in the last 10 years), a decrease of -89.3%. It should be remembered that the increase in 2015 was largely due to the fact that the acquisition of IGT by the Italian group Gtech decided in July 2014 was accounted for in 2015.

Again according to UNCTAD data, taking into consideration the total flows of Italian FDI abroad at the end of 2016 (US$ 22.8 billion), Italian flows to the US represented 3%.

THE ITALIAN PRESENCE IN THE US

Settlement models

The Italian presence is mainly characterized by 3 settlement models:

  1. large companies facing the US market by establishing a subsidiary, having assessed their presence in a growing market as strategic;
  2. small and medium-sized enterprises that decide to start a productive investment on the spot, in order to be closer to their customers and to influence the cost structure, having evaluated the enormous development potential of the US market in their sector;

3) companies that, in implementing a real policy of internationalization, have decided to focus above all the control of their distribution network.

Analysis of the Italian presence

The database of Italian companies with a stable presence in the United States is constantly updated and revised, considering the changes in the market. At the moment 955 Italian companies are surveyed, certainly not all those present in the US but, considering that the registration takes place on a voluntary basis, a sample sufficiently representative from a statistical point of view.

The analysis of this presence shows the following considerations: in terms of sectors, the greatest presence concerns the mechanical engineering sector and means of transport (35.1% of the presence), furniture and construction (15.5%), fashion (11.9%), services (11.7%) and agri-foodstuffs (8.6%). In essence, Italian investments in the area follow the trade trend and to some extent influence and are influenced by it.

As far as the geographical distribution in the US territory is concerned, the greatest concentration of Italian companies is in the North East (where 36.5% of them are located). It follows the South with 30.4%, Central North with 21.4% and West with 11.7%.

Finally, with regard to the type of investment, the predominant form of presence is represented by the commercial company, which reaches 85% of the total, a sign of a still slight presence, almost always motivated by a prevalent commercial approach and not by industrial development. Investments with production sites represent a 9% share.