With the “globalization” of the markets and the “financialization” of the economy, there has often been seen a lack in uniformity in the distribution of both income and information between the various actors of the system, favouring the growth of corporate behaviour intended to consolidate the levels of competitiveness held to be necessary.
Among these, the decisions relative to the geographic localization of the various phases of the production cycle have assumed importance in the rationalization area of company processes.
Even though it has been present in the western industrial system for, at least, a century (1) , only in the last fifteen years has delocalization assumed the existing dimensions and characteristics. This is due to the ever-increasing demand from a universe of consumers for goods at decisively competitive market prices.
To satisfy these needs, as well as that of the containment of costs, the productive system has had to distribute itself in operative sites spread throughout the world with an obvious reorganization of the traditional industrial centres. This had led to significant transformations in the social and economic fabric of the zones in question: changes which have often been seen by the social powers as an impoverishment factor, insomuch as it has provoked, in the “abandoned” industrial areas, a reduced demand for labour (above all, for non-specialized activities) and the reduction in the buying power of the salaries, with a consequent strong fall in the level of general well-being.
The results of a Demos Observatory survey showed, for example, that 38% of public opinion of the North-East regions evaluated delocalization as one of the most serious threats to the workers and the local economy (a percentage which rises significantly, between pensioners, housewives and workers). Only 16% of people interviewed held that delocalization is a “positive fact”. Instead, the remaining 56% evaluated the phenomenon “profitable only to the business enterprises, and hazardous to the social-economic development of the single regions”.
The results of this enquiry not only poses questions concerning industrial politics, but represents an alarm signal for national security insomuch as such unease could determine fertile ground for unsuspected subversive hotbeds.


Variable factors which activate delocalization


The understanding of the determinants of the processes of globalization of the markets requires the analysis of the salient characteristics of the present system of competition.
A first factor is represented by the technological innovations of product and process. With the confluence of many technologies in the ambit of the same industry, the technological factor has become the link of communication and integration between diverse sectors at an international level. In the face of a growing complexity of technological knowledge, the need to dispose of indispensable competence at world level has led various economic subjects to the formation of agreements and to the development of trans-national alliances.
Cooperation on a trans-national basis has introduced new forms of internationalization, alternative to the multi-national model (which tends to extend economic and commercial processes abroad with the objective of generating large-scale economies) (2) .
The forms of cooperation are based on the search of synergic complementarity which involves businesses which belong to different economic systems and possess specific knowledge. Such conditions of complementarity become necessary in the face of very high starting up and maintenance costs.
In the trans-national cooperation, such synergies are realized through strategic alliances and fusions/acquisitions (3) , utilized to enter into already existing foreign markets, chosen as “targets” by the business company. Such strategies are also ascribed to decisions of fiscal optimization (through the coordination between the choices of minimization of tax dues and the foreign goals to pursue in industrial and commercial terms).
Joint-venture operations with foreign companies have been supplanted by the decentralization to foreign countries of business units (complete and autonomously functional) of the enterprise, constituting in situ new independent economic structures in order to confer major profiles of advantage to the supply markets and major dimension to the outlet markets.
In this sense, the search for conditions of complementarity has stimulated the existing competition in the matter of localization.
Among the factors which push business enterprises to transfer abroad is the lower cost of production. It is obvious that to be competitive means to realize a product at the lowest possible market price. To achieve this objective, it is necessary to cut costs relative to production: goals which are possible if raw materials are available at advantageous prices, if production is increased or salaries are contained. When evaluating the differential on the cost of labour, the percentage points are not few. The ratio between the wages of a worker in an industrialized country and that of a Bulgarian or a Philippine is 10 to 1. This differential is even more evident, if, for example, a ratio in cost is made between a Swiss worker and a worker in Bombay or Karachi. In this case, the ratio is 26 to 1, (4) .
To understand how much the cost quota of the work affects the final value of a product, it is enough to consider that if the realization of a product, for example, an air conditioner, requires 4 hours of manpower, the incidence would be $70 in a factory situated in the hinterland of Frankfurt, $13.50 in a Polish factory (not further than a few hundred kilometres from a similar German factory) and $5 in a Ukrainian or Thai factory.
Another factor which has pushed towards a more frequent recourse to delocalization is the increase in the international demand for goods.
The deregulation of the markets of goods, of services and of the production factors on a global level (in particular, in the previously centrally planned economies) has constituted an impact to supply, massive and positive, which has been of a profoundly de-inflationist nature and has contributed to a significant deflation controlled by the prices. In recent years, practically all over the world, not only the prices of goods and services, but also the wages and working activities have begun to react to the accentuated international opening in favour of the enterprises.
The stagnation of the consumers in the 80’s forced the companies in the economically advanced countries to adopt two kinds of strategies: differentiate the production to acquire other portions of the market (for example, automobile manufacturers started to construct televisions, refrigerators, computers etc.,) and to enlarge the field of potential consumers both in a vertical sense (opportunity for the lower income levels to purchase the goods) and in a horizontal sense (opening to the international market).
Other reasons of scientific and technological interest appear correlated to the expanding of delocalization. For example, today, the evolution of the information transmitting systems permits fast, reliable global communication at low cost. In 1930, a telephone call of 3 minutes from New York to London cost around $300. At the beginning of the 80’s, the same kind of conversation cost approximately $2.00. Today, the same call costs less than 10 cents and it is possible (thanks, above all, to the diffusion of Internet and the wide band) to converse with a business partner from another continent for an indefinite period at negligible expense.
If the quantity of data transmitted is impressive, also the quantity of goods transported is no less so. Over the last 20 years, the volume of the movement of merchandise has tripled, while the costs of shipping have decreased by 40-70%. This last factor, which is correlated to the reduction in customs duties, has decidedly favoured the recourse to delocalization.
Other variable factors on the phenomenon are represented by the presence, in the country of intended delocalization, of a population which possesses the know-how technology, culture and intellect able to absorb a productive strategy of medium-high level, as well as the normative regulations concerning the protection of health and the environment.

In fact, for over 10 years now, in the economically advanced countries, every industrial activity has to undergo rigid controls which render always more difficult the construction of a productive die which is polluting and noxious. To realize goods which are ecologically safe and to guarantee safe waste disposal can, sometimes, (for example, the tanning or curing industry) entail a cost burden even superior to the cost of the production of the goods themselves.
Therefore, it becomes difficult, for an entrepreneur, to resist the prospect of transferring the firm to a country where the regulations of a permissive environmental control can be exploited and where it is possible to avoid onerous checks on the disposal of industrial waste ( in practice, operating a delocalization of the waste).
Finally, the power of the unions in countries of intended delocalization represents one of the principal aspects of a feasibility analysis for a projected delocalization. In the majority of the emerging countries this power, compared to that which is exercised in the economically advanced countries, is insignificant : insofar as the defence of the rights of the workers is frequently held to be secondary to the primary need of industrialization.
Such an analysis is often followed by a comparison between the role played by the public administration of the territory where the delocalization is intended and the public administration of the enterprise’s country of origin. A slow and muddled bureaucratic apparatus naturally entails added costs for the entrepreneur, who could find, for example, a public administration like the Italian one, towards which, enterprises, both national and foreign, certainly do not foster benevolent opinions. In fact, a modern and rapid bureaucracy represents also a “business culture” which allows the programming of productive strategies with ample breathing space, which are, sometimes able to fill the gap of scarce profit.
Therefore, the delocalization represents the “meeting point” of two needs: that of the entrepreneurs, interested to remain competitive in the market, and that of the countries which intend to reap the opportunities of globalization to rapidly transform from a developing country into an industrial reality.


The phenomenon of the Special
Economic Zones (ZES)

At the present moment, more than 300 “Special Economic Zones” (ZES) (5) exist in the world, distributed over 50 countries. The first to sense the opportunity of introducing ZES was the Chinese leader, Deng Xiaoping when, in the 1980’s, he decided to free the Chinese People’s Republic from the fetters of the actual communism and from the autarchic isolation. The transformation of the maritime belt (that with a better commercial vocation) compared to the internal regions (still anchored to an archaic agricultural model) became the hub of the Chinese economic strategy, creating many “clones” of Hong Kong, ready to welcome the large amounts of capital coming from the“hated capitalist world”. Consequently, 14 ZES were created, which began to guarantee specialized workers with a salary of 200-300 Euro per month (while apprentices earned between 50 and 70 Euro), and foreign investors were guaranteed an exemption from company income tax during the first 3-5 years of activity (6) .
In less than two decades, through the ZES, a zone where, still now, a kind of “Social Capitalism” (or, if preferred, “Capital Socialism”), came into existence, in which more than 250 million technical and non-technical workers often work with or for foreign businesses. Today, almost 90% of the foreign investments are concentrated here and a rate of growth two times superior to the national average is registered. (If, in the ZES, only 20% of the Chinese population lives, it is also true to say that 70-80% of the entire country’s wealth is produced there).
In parallel in Europe, the creation of ZES (Poland, Bulgaria, Latvia, the Czech Republic, Romania) is determining an anomalous and unbalanced economic-productive polarization: insomuch as an analogous experience does not exist in the founder countries of the EU. Theoretically, the opening of the EU to include 27 countries could register the objective difficulty for countries like Poland to conform to the rules of the market by means of the progressive closure of the ZES, seen as a further opportunity of development. Furthermore, the resistance to the reorganization project of the ZES has the support of the western consumers, who, even though they are not inclined towards a delocalized economy, they definitely do not wish to give up the acquisition of low priced goods.



Dimensions of the phenomenon

What are, on a world level, the dimensions of the delocalizing phenomenon? To establish the real extension is not an easy task due to a hidden fragmented production which escapes any survey.
Notwithstanding these limitations, almost all the analysts are in agreement with the estimation that 30% of the world industrial production and above all, the 80% of the activity obtained with new licenses (practically, 30% of the workers on the planet employed in the manufacturing sector) is realized in delocalized companies. Therefore, we are dealing with a reality which significantly influences the globalized world economy, but which, however, is differentiated in an important way in the various territorial realities.
In Italy, the Institute of Foreign Commerce (the ICE), annually presents a report on Italian multi-nationalism. In the 2006 Report, an opposing bi-directional delocalization is underlined. According to the ICE, in 2006, Italian businesses that have invested (totally or partially) in delocalized activities abroad (active delocalization) were 5,789. They have created around 17,200 enterprises where 1,120,000 people are employed (with an average between white and blue collar workers of circa 70 productive units for each delocalized company). This small to medium economic reality has invoiced a total of circa 322 billion euro. The great majority of these enterprises operate in wholesale commerce (46%) and in the manufacturing sector (31%), while only 14% are employed in the logistics and services sector.
The 2006 data, even though pointing up a reasonable vitality in the delocalized Italian businesses (+8.2% as the number of companies compared to 2001 and +13.9% turnover in 5 years), they show and eloquent delay compared to the other European countries. The Italian multi-nationalism is, in fact, quantitatively equal to half that of the French and is approximately a third compared to the German and the British.
Also the facts regarding the passive delocalization in Italy are worthy of interest. Based on the 2006 ICE Report, the number of Italian companies controlled (totally or in part) by foreign enterprises are about 7,000 (0.55% of the national total). These productive entities are characterized by elevated technological levels, considerable turnover (394 billion euro, which corresponds to around 17% of the total Italian industrial production) and substantial job levels (approximately 858 thousand of salaried people.
According to the ICE, the scarce interest shown towards our meridian is determined by various factors: the shortcomings in the infrastructures, inefficiency of the political and administrative apparatus, a fiscal regime which is not favourable to foreign enterprises, excessive level of costs of certain services, a low professional level of personnel intended for managerial activities and, finally, the presence of a particularly intrusive reality of organized crime. A great number of these aspects have contributed to check the flow (in regions like Campania, Calabria and Sicily) of investments coming from both Italian and foreign enterprises.
The passive delocalization is a basically static phenomenon even though it does not lack contradictory signs. On the one side, 40-50 units of the foreign businesses which abandon our country every year seem to have become a constant figure. On the other side, the resumption of foreign investments in Italy, in 2006, has been recorded. According to the United Nations Conference on Trade and Dev elopement (UNCTAD), these have reached the 30 billion dollar mark. A substantial figure if it is compared to the 2004 one (17 billion), but certainly, still inferior to those recorded by countries like France (88 billion dollars) or the United Kingdom (circa 170 billion).
The comparison between the two delocalizations (active and passive) show how for every company started in Italy by a foreign society, more than two are started by Italian enterprises outside of our territory.
However, this fact has undergone radical changes during the last 20 years. The following graph shows, in fact, that if the active delocalization in the manufacturing sector registered a medium annual increase of 55% ( it went from the 700 companies of 1986 to the approximate figure of 5,500 of 2006); vice versa, the passive delocalization reached a medium annual increase of only 4%.

Therefore, it appears clear how, if up to the 1980’s, Italy was (for the extreme competitiveness of our businesses) a country where delocalization was advantageous, while (if one excludes large companies like the FIAT), the transfer abroad of the production of our businesses represented a risky choice with a not always attractive profit margin, subsequent to a practically unaltered passive delocalization an active one succeeded, (Italians who become ‘delocalizers’ in exponential climb (7) .


Delocalization/unemployment ratio

Delocalization is a phenomenon, to a great extent, outdated by the facts, if it is understood as a simple movement abroad of parts of the production of minor value and at higher cost level. The term and the idea of delocalization leave a negative mark in the collective imagination which is followed by immediate reactions on the part of the workers, public opinion, and the politicians and, in some cases, from the entrepreneurs themselves (8) . With the objective of feeding a cultural climate more attentive to the choices of “internationalization” rather than mere “delocalization”, it is appropriate to speak in terms of “intra-industrial re-allocation”, indicating with these terms the new positioning in the division of the international markets, guarding new frontiers and, at the same time, transforming and enriching the territory of the industrial plant (9) . In this regard, it is interesting to point up how the localization of the productive processes has contributed to the constitution of the well-known phenomenon of industrial ‘districtization’ (10) .
As has been underlined by the Demos Observatory survey on Social Capital, delocalization often draws general attention when the doubt emerges (for some, almost a certainty) that the phenomenon negatively affects both the economy and the Italian labour market. Scientific investigations which are able to thoroughly analyse the “delocalization/unemployment” ratio are not very numerous and for the major part are based on indirect parameters (not always reliable) and on research done mainly in the United States, where for over 50 years delocalization has been present. For a long period in the United States, (where the changeability of the labour market causes, every week, a million people to lose their job, but where another million are able to find one with little difficulty, the eventual unemployment induced by the delocalization is seen as a natural evolution of the productive system without significant effects on the robust United States model.
However, the moment that delocalization touched the sector of “services and of the innovations”, the attention of the media climbed, since more than 500 thousand qualified positions (management of call-centres, ideation of software and hardware, research and development structures, etc.,) literally, fled abroad (11) .

The explanation of such a high percentage of unemployed workers “reabsorbed” into the productive circuit is to be found in the presence, in the United States economy, of a passive delocalization (foreign enterprises which invest in the USA) and that the saving in capital obtained by the American companies through the active delocalization is, to a great extent, reintroduced into the internal productive system. When the Delta Airlines transferred its call centre to India, it was forced to lay off 1,000 employees in the Company’s reservation offices. Subsequently, through the saving in capital of this operation of out-sourcing, new commercial activities were opened, creating 1,200 new jobs.
Furthermore, the United States experience shows that an impulsive and rash answer to delocalization provokes reactions in the global economy which are transformed into real “boomerangs” on employment.
Professor Daniel Drezner, (University of Chicago), is accustomed to recalling a “bitter” anecdote. In the past, to save American sugar producers from bankruptcy, heavy customs duties and restricted quotas on the importation of this product were introduced. Within a brief period, the internal price of sugar in the United States increased 350% compared to the price on the foreign market, to the great joy of farmers and sugar refineries. This price increase, however, forced the confectionery producers to delocalize, with the result that as many as 10,000 people (both in the farming and confectionery sectors) lost their jobs.
The extraordinary capacity of the American economy and society to react to apocalyptic events, such as delocalization, must not, however, be interpreted in an excessively enthusiastic way. Certain effects of delocalization risk, as Nobel Prize winner, Professor Paul Sameulson sustains, if not appropriately governed, to alter the productive and social structure irreparably. For example, for some time the average American seems to be uninterested in professions connected with both the industrial sector and the sector of applied technology.
The surveys confirm how, for a long time now, in the States, almost 40 thousand lawyers reach qualification every year, (there are around 1 million, in total) while there is a notable lack of engineers, researchers, chemists and informatics scientists ( 40% of the scientists and engineers with a research doctorate in local universities were born abroad). 4% of the world population resides in the United States; it produces 20% of the world PIL, but 50% of the planet’s lawyers practice there (each one earning, on an average, more than three hundred thousand dollars per annum), since any small litigation is good for starting a court case.
As far as Italy is concerned, the absence of a constant and effective monitoring permits no knowledge as to the exact influence of delocalization on employment. The analysis of some statistical data allows us to draw up an evaluation which is not influenced by emotional or ideological components.
The first element to study concerns the progress of the employment from the moment active delocalization assumed important dimensions in our Country. If, theoretically, the transfer abroad of production had, in 10 years, led to the transfer from Italy of 630 thousand jobs (of which only 50 thousand compensated by the foreign companies operating on our territory) we would have seen a not indifferent worsening of the employment level. In reality, the number of employed increased by around 1 million and a half units (the rate of unemployment in 2006, was recorded at 6.8%).
Therefore, the internationalization of our production, in a certain way, (notwithstanding the substantial “stagnation” of the passive delocalization), would have contributed to the growth of the productive system and the maintenance (if not improvement) of the employment levels.
However, the optimistic reading of this data must be supported by a comparative analysis with the two aspects which seem to characterize our active delocalization. In fact, the phenomenon prevalently concerns the manufacturing sector and the geographic areas of North Italy. It follows that only in this productive and territorial reality, one should, theoretically, verify negative effects on employment. On the contrary, in productive spheres generally defined as “Services”, we observe an increase of almost two million employed. In particular, the sector of “Services to businesses” registers a progress of almost 800 thousand units, while the “Tertiary” sectors of more than half a million. The fact that the increase is more or less homogenous for all zones of the Country is significant.
Therefore, it seems by now that the tendency of the Italian economy is that of the ‘tertiarization’ which has been manifested with an increase both in terms of enterprises (+23.9%) and of personnel (+24.7%), against a strong reorganization of the industry, in the course of 10 years, both in terms of companies (3.6%) and of the employed (less than 9.6%).
The tertiarization has induced, (or forced), a substantial section of salaried employees, (which can be estimated to be around 3.5% of the labour force), to “change their professional and employment typology”.
In light of these facts, one could state that the delocalization in Italy does not seem to have affected the total number of the employed workers, but has contributed (together with other macro-economics) to appreciably change – especially, in certain zones - the “profile” of the Italian productive system. It has brought us to a professional migration (at times, also territorial) which, in other realities (like the United States, for example), might appear to be ordinary and accepted by the majority of the social and productive components, but for our society it represents an unusual socio-economic event which is not always appreciated or digestible.
In the past, Italy has certainly been characterized by massive professional migration, both internally and towards foreign countries. Between the 50’s and 70’s, for example, millions of people transferred from the South to the North and from small centres to the metropolis, but these macro-phenomena were provoke, above all, by the complete absence, in the home territory, of employment opportunities and by the need to find higher salaries, and not certainly from the knowledge that the company (where, often, one had worked for 10 years) must, so as not to close down activities, dismiss employees and transfer production abroad in order to remain competitive on the market.

The change (often compulsory) of the professional profile inevitably brings about social unease: in the sense that the average Italian worker has, in general, a relation towards the company which is not exclusively employment. In fact, for him, sociological, psychological and cultural aspects connected to work are certainly not of minor importance. One has to think of the spirit of belonging to the company, of the social and psychological dynamics connected to the role assumed, of the inclusion of one’s own family nucleus in a specific cultural and territorial reality. The Italian employee takes on a position which is generally thought to be rigid. In reality, it concerns a person who normally refuses the idea that the global economic development can affect his own “existential microcosm” (which has often been built with great fatigue).
The presumed difficulty of the worker to accept perturbing derivatives from the evolution of the labour market is, in part, confirmed by a FIM.CISL (labour unions) survey of October, 2006. To the question “whether it was right, at the same salary, to increase the hours of work to save jobs in companies which were threatened by delocalization”, 65% of the interviewed replied in a decidedly negative manner.
Subversive groups of the Marxist-Leninist matrix have certainly not remained indifferent to the social unease connected with delocalization. These groups, who need to gain support from the workers in difficulty have, for some time, included, among its strategic priority objectives of struggle, both the policies of labour and the so-called SIM (Imperialist State of the Multinationals). For example, groups like the Red Brigades, more than once raised the question of the problem of delocalization, in their claims to terrorist actions.
It is sufficient to recall, for example, what was written in the pamphlet which was circulated after the assassination of the journalist, Walter Tabagi (killed by the Red Brigades on 28th March, Milan, 1980). The “dominant class” was, already then, accused of “breaking the working class of the employees of the Press through the computerization of the photo-composition of the newspaper, Corriere della Sera and the multi-nationalization of the information”. According to the RB ideology, the delocalization had not produced a “redistribution of work and profits to the poor countries”, but was a system for “the entrepreneurial class to keep the profits unaltered through unemployment and the search for lower labour costs”. This theme has become a constant one from 1983 (the wounding of Professor Gino Giugni) and was always present in the documents claiming the assassination of Ezio Tarantelli (professor of Political Economy and President of the Institute of Economy of Labour) of 1985, of Massimo D’Antona, (professor of Labour Law and Advisor to the Minister of Employment) of 1999 and, finally, of Marco Biagi (professor of Labour Law and Consultant to the Minister of Welfare) of 2002. If the scope of the “armed propaganda” is to obtain also the approval of the “social class of reference” the presence of a strong social unease among many who fear the consequences of the delocalization, could favour the adhesion (or support) towards organizations that are thought able to defend the rights of the workers by resorting also to the armed struggle.


Conclusions and prospects

To be objective, the analysis of the phenomenon must, however, be based on scientifically tenable evaluations, insomuch as they are the only ones which allow us to re-dimension certain cliché on delocalization.
To think that transfer abroad of production can be progressively reduced – in such a way as to return to a no longer delocalized world – is like imagining “to turn back the clock of history”. An assertion, which finds wide agreement among those who hold that delocalization is still destined to further development, is that the difference in the costs of producing goods among the various zones on the planet does not seem to be, in any way, compensated by the increases of the production in the industrialized countries.
Furthermore, the eventual hyper-production is no longer absorbable by the economically advanced countries, with the predictable consequence of a strong penetration into the markets of the emerging countries (which had remained, up to all the years of the 80’s,) on the margins of free exchange. The activation of these new commercial networks is based, nevertheless, on a fundamental “element”: the possibility for the emerging countries to transform the “need” of goods into a “demand” for these same goods (the “need” of a refrigerator must be transformed into a market “demand” for a refrigerator).
The eventuality that low income countries are transformed into potential “consumers of goods” is, obviously, feasible only if these areas reach a robust economic development (with a foreseeable increase of the PIL per head). This last eventuality can be realized only through the transfer of part of the industrial production to the developing countries. Therefore, delocalization is, in actuality, a socio-economic system, linked and coordinated in its various phases, based on the symmetric needs of all the protagonists of the process (industrialized and emerging countries).The evolution of the ‘localizative’ dynamics must, necessarily, pass through a rapid change of the dynamics and of the subjects involved. The homogenizing process of the cost of labour, for example, between the various interested countries evolves always more rapidly. In this way, a territory passes, with surprising speed, from being a territory of interest for foreign companies, to a country where delocalization to “more advantageous” zones initiates. Italy, for example, to pass from a delocalized country to a country which delocalizes has taken, at least, 20 years, while countries like South Korea have, literally, shot ahead.
If the 30 countries of the Organization for Economic Cooperation and Development (OCSE) have maintained two thirds of the world production of goods and three fifths of the total exportation, this is also due to the productive delocalization. If, in countries like Italy, vast industrial sectors remain protagonists of the international scenario, this is rendered possible also by the realization (abroad) of goods at always more competitive prices: it is the externalization of production which allows many Italian enterprises to concentrate energies and resources in the creation of avant-garde products, which are then sold – thanks to reduced prices obtained through delocalization – all over the world.
Delocalization, therefore, is a phenomenon which must be analysed in a global key, always facing costs and benefits, and not as a phenomenon able to provoke only loss of competitiveness and reduction of the labour force. To those who fear this, it is sufficient to remember that the contraction in employment is, generally, absorbed by the system channelling the production into goods of high technological and intellectual content and on certain new emerging sectors.
If, in theoretical terms, certain strategies could circumscribe recourse to delocalization, a large part of them are not workable, due to the high social and economic cost and the scarce incidence of the phenomenon. The first hurdle is represented by the difficulty of applying countermeasures “shared” by all the European countries because of the fear of discordant interests between the various components of the European Community.
The second unknown quantity concerns the attention that the political and economic authorities should address, not only to the factors which could slow down delocalization, but also to those strategies which induce, in our Country, the renewal of investments abroad (renewal of the phenomenon of the passive delocalization). Notwithstanding these encumbrances, a series of solutions can be listed and examined, in synthesis, both their feasibility and, where possible, quantifying the incidence of the solutions on the phenomenon of delocalization:-
A) Consistent reduction of the production costs and labour force in countries like Italy: to make this strategy function, the costs should be reduced by 50% and be accompanied both by a non-inflationist increase of the production and by a protection policy of the buying power of the salaries. The contraction of the salaries would put a burden both on the consumption – with the consequent crisis for those sectors (e.g. the “tertiary”) which had compensated the loss of jobs caused by the delocalization – and on the entire community with a contraction of the revenue for the treasury and for the coffers of the Institute of Social Security:
B) The transfer to countries like Italy of foreign workers with wages not much superior to those earned in their country of origin. The toll to pay would be an increase, out of all proportion, in the clandestine emigration and of the “work for which no earnings are declared”- The arrival of the “regular” worker would affect the cost of manpower only to the extent of 10 to 20%, with risible effects on the degree of competitiveness of the companies which continue to operate in our Country.
C) Intervention of National and Community bodies in support of the production of goods which, otherwise, due to elevated costs, would remain excluded from the international market. This support would provide that the differential between the price of goods produced in countries like Italy and the price realized in delocalized areas would be covered by means of a contribution taken out of the National or Community budget. In the intentions of the political authorities, this support would allow the businesses to recuperate the levels of competitiveness in such a way as to be able to compete on the market with balanced prices.
The question of the strategy of the compensation of the prices through support grants – like the one applied in Europe with the Common Agricultural Policy (PAC) – leads to certain reflections. With the PAC, certain “help” was planned for the farmers (equal to almost 40 billion euro per year, circa half of the EC budget), sometimes paid on the basis of the quantity of the goods produced. Such support has led certain entrepreneurs to produce quantities of goods superior to market demand, with the consequent reduction in price and the increase of the unsold dead stock (12) . Notwithstanding that the number of agricultural workers has notably decreased, the flow of the Community “help” has prevented the delocalization of the agricultural entrepreneurs. But it was a done by a distorted interpretation.
D) Increase of the social safety valves for the companies which, due to the scarce competitiveness, would have been forced to reduce the labour force. If through the means of State or Community contributions, it is sought to support the enterprise by having the entire community take responsibility for a portion of the production costs, with the social safety valves, likewise, it is attempted to impede that the company is forced to expel the wage earners from the productive system. In the first case, the intervention means increasing the income of the company; in the second case, the expenditures are reduced by trying to contain the costs of the work. The effect on the market is the same: the price of the goods remains competitive because part of the work costs is absorbed by the Community (naturally, through the increase of taxes) and the company no longer needs to resort to delocalization. If the economic advantages for the entrepreneur are undoubted, also the “benefits from a social point of view” are not less (reduction of unemployment as well as social and union conflict, guarantees for the worker to remain in the productive circuit etc.). It is necessary, however, not to forget that if through the social safety valves, a concrete support to the business system is offered, the intervention has its strategic significance only if limited in time and circumscribed to precise circumstances of the market ( ref: the intervention in Italy in the crisis of the automobile sector). If, vice versa, they become interventions of unlimited time, there is the risk of provoking “drugged” competitiveness with the exclusive objective of preventing recourse to delocalization (with burdens on the economic budget and without real prospects of industrial development).
E) Reinstatement (or exacerbation) of custom duties for imported
products coupled with a worsening of the fiscal pressure and to the emanation of penalizing regulations for the enterprises that delocalize (neo-protectionist policy). Theoretically, this strategy reveals itself as one of the most effective insomuch as, besides avoiding the recourse to delocalization, it does not “weigh” on the public budget as happens, instead, with the support grants and the social “safety valves”. In fact, customs duties weigh, exclusively, on those who import the merchandise and leads to the avoidance of delocalization because the goods produced abroad cost more than those produced in one’s own country. Such advantage is only theoretical since the long term effect of this strategy on the principal components of the economy has been, at times, devastating.
In the first place, it is necessary not to underestimate the fact that the burden of the custom duties falls directly on the consumers, who risk paying a higher price which, often, serves only to protect the entrepreneurs who are not able to impose themselves on a free market. Finally, it is opportune not to forget that any protectionist policy negatively affects commercial interchange. If, in fact, the exacerbation of the custom duties discourages the tendency to delocalization, at the same time, it determines a reduction of the commercial interchange.
F) Identification – for a further encouragement – of “non-delocalizable”
productive sectors. All efforts should be directed towards the “non-delocalizable” productive sectors, steering clear of the myopic strategies which have often characterized our past. In fact, it is necessary to avoid making projects – destined to create short-term benefits for the economy, but in the long term become “delocalizable” – co-exist with others which, even at reduced profits for the enterprise, over time, represent the uniqueness of our Country (13) .
Other strategies can be of “support” to the modification of the trend both of the active delocalization and the passive one. Among them, we can cite a monetary policy of the Central European Bank which quotes the exchange of the Euro compared with the Dollar at levels of competitiveness. Also the creation in the European ambit of “ZES of the third millennium” – exclusively destined to experimentation and research – could induce technological advanced countries to invest and delocalize to Europe.
On innovation and experimentation: Italy has shown its limits, putting itself at the lowest levels of the classification in the research sector. If, in fact, we are at the second place in Europe for the number of companies employed in technological innovations, the position reached for the number of patents is quite different. According to information of the Patent Observatory of the Polytechnic of Turin in Italy, on an average 4 patents for every million inhabitants are registered every year, a trend which is far from the European average (18) and the United States (25). If this comparison is made with countries like Switzerland (136) patents, every million inhabitants and Finland (94), it appears clear that – with the exception of rare cases – the level of backwardness of the Italian research system cannot be denied. The phenomenon of the delocalization needs, however, regulations: In the first place, political regulations, and later, commercial, economic and legal ones. The internationalization of the markets has, up to now, created benefits for only some countries and has rendered, even stronger, the gap with the populations which – due to lack of know-how and infrastructures – are still anchored to obsolete productive and commercial systems. With the desire of these last to be part of the evolution of productive and technological processes, the industrialized countries should develop the future balances in the development of the various opportunities furnished by delocalization.