Survive or Die? A Decade of Tough Competition for Foreign Affiliates

A New WP can be downloaded here:

Survive or Die? A Decade of Tough Competition for Foreign Affiliates


Firms’ survival and internationalization are key elements to assess a country’s competitiveness. In this paper, we draw on these two strands of literature and study how firms’ characteristics affect demographic dynamics. We focus on foreign direct investors’ survival probability, modelling it  conditional on both parent company and affiliates’ set of characteristics. The novelty of our approach is twofold: on the one hand, we generalize the base model used in business demography disentangling the effect of affiliates and parents. On the other hand, we stress the technological level relationships between affiliates and their investors.
For the empirical assessment, we use an original longitudinal database (2004 – 2012) for Italy.
We show that, larger affiliates of large investors compete better and survive more. Being part of networks of affiliates in the same country and/or sector also decrease the risk of exiting markets. When the investors have a higher (lower) technological level, their affiliates’ failure probability increases (decreases). When the investor is more advanced than its affiliates, it considers the investment abroad like a cost-saving, low skills investment. The investor will easily disinvest, moving to a more convenient economic context. Affiliates with a higher level of technology, instead, are considered strategic to the parent company, due to skills, talent or competencies.


Working Papers – Works in Progress

Working Papers

Works in Progress



 Working Papers (Unpublished)

Assenza T, Delli Gatti D., Grazzini J, Ricchiuti G. (2016) `Heterogenous Firms and International Trade: The role of productivity and financial fragility’, CESifo Working Paper Series 5959, CESifo Group Munich

Giovannetti G., Marvasi E. and Ricchiuti G., (2015) `The Heterogeneity of Foreign Direct Investors: Linking Affiliates to Parent Productivity’,  WP13/2015 DISEI Università di Firenze

Randelli F. and Ricchiuti G. (2015), `The Survival of Tuscan Firms’, WP02/2015 DISEI Università di Firenze

Nerozzi S., Pipitone V., and Ricchiuti G. (2014), `Social Capital and Firm’s Productivity in Italy: a Multilevel Approach’, WP28/2014 DISEI Università di Firenze

Gori M. and Ricchiuti G., (2014) `A Dynamic Exchange Rate Model with Heterogenous Agents‘, WP15/2014 DISEI Università di Firenze

Naimzada A., Ricchiuti G. and Tramontana (2012) `A Note on Taxation and Long Term Equilibrium in a Model of Endogenous Lifetime and Economic Growth’, mimeo, Università di Firenze

Bellanca N. and Ricchiuti G. (2007) ‘Public policy and tragic choice: when policy can reach happiness’ presented at the International Conference Policies for Happiness, Siena, 14-16 June, mimeo

Bertoli S. and Ricchiuti G. (2005) “Theoretical and Empirical Issues in Assessing Exchange Market Pressure for Developing Countries”, FEDRA Working Paper, Dipartimento di Statistica, Università degli Studi di Firenze

Ricchiuti G., Rossi A. and Wenke D. (2005) “Child Trafficking in Africa and Europe: a Multi-Country Analysis”, , mimeo UNICEF – Innocenti Research Centre, presented at the Childhoods Conference 2005, Oslo, (Norway) 29 giugno 3 luglio 2005

Naimzada A. e Ricchiuti G. (2004) “Un Modello Caotico di Determinazione del Tasso di Cambio in presenza di Interventi sul mercato dei Cambi e afflussi di Capitale”, working paper n.82, Dipartimento di Economia Politica, Università degli Studi di Milano-Bicocca, novembre 2004

Ricchiuti G. (2003) “Empirical Evidence on the North-South Trade Flows: an Augmented Gravity Model”, mimeo, Università degli Studi di Firenze,

Ricchiuti G. (2003) “Gli effetti dell’apertura del Conto Capitale sul tasso di cambio reale”, Università degli Studi di Firenze, mimeo

Ricchiuti G. (2002) “Diversificazione delle esportazioni e crescita in Paesi Ricchi di Risorse Naturali”, Università degli Studi di Firenze, mimeo

Ricchiuti G. (2001) “Argentina: dalle politiche populiste alla crisi del currency board”, Università degli Studi di Firenze, mimeo


Works in Progress

Filistrucchi L., Ricchiuti  G., Sarycev A. `A two-sided monopolist when demand is unknown’

Foddi M. and Ricchiuti G. `Productivity, Social Capital and Internationalization of Firms: a Multilevel Analysis’



Unemployment in Egypt

A new working paper, developed with Eleonora Bertoni (Unito). Comments are welcome.

Unemployment in Egypt


Despite its recent economic development, Egypt employment inequalities among gender and between different age cohorts are still an unresolved issue. In this work we apply a Multilevel Generalized Linear Mixed Model to the Egyptian Labor Market Panel Survey 2006 (ELMPS 2006) and 2012 (ELMPS 2012). By exploiting the hierarchical structure of the survey data, we investigate how the interplay between individual characteristics and regional context conditions Egyptians’ individual probability of being unemployed. Moreover, we attempt to check if and how these same characteristics have changed between 2006 and 2012, that is, before and after the 2008 global financial crisis and the 2011 Revolution of the Arab world.


It can be downloaded here.

New Publication

Complexity with Heterogeneous Fundamentalists and a Multiplicative Price Mechanism


In contrast with the canonical models of financial markets with heterogeneous agents,, Naimzada and Ricchiuti, (2008, 2009) show that the interaction of groups of agents who have the same trading rule but present different beliefs about the fundamental value could be a source of instability. In this paper, differently from, Naimzada and Ricchiuti, (2008, 2009), we assume that the market maker employs a so-called multiplicative price mechanism (Tuinstra, 2002; Zhu et al., 2009). We show that the occurrence of heterogeneity has an ambiguous role: it may either stabilize or destabilize the market.

The article has been published on Economic Notes, and can be downloaded here

(the preliminary WP can be downloaded here)

Something New

Heterogeneous Fundamentalists and Market Maker Inventories (with A. Carraro)  (click here)

In this paper we develop an heterogenous agents model of asset price and inventory with a market maker who considers the excess demand of two groups of agents that employ the same trading rule (i.e. fundamentalists) with different beliefs on the fundamental value. The dynamics of our model is driven by a bi-dimensional discrete non-linear map. We show that the market maker has a destabilizing role when she actively manages the inventory. Moreover, inventory share and the distance between agents’ beliefs strongly influence the results: market instability and periodic, or even, chaotic price fluctuations can be generated. Finally, we show through simulations that endogenous fluctuations of the fractions of agents may trigger to instability for a larger set of the parameters.


A Dynamic Exchange Rate Model with Heterogeneous Agents (with M. Gori) (click here)

In this paper, we analyze a heterogeneous agent model in which the fundamental exchange rate is endogenously determined by the real markets. The exchange rate market and the real markets are linked through the balance of payments. We have analytically found that there exists at least a steady state in which the exchange rate is at its fundamental value and incomes of both countries are equal to the autonomous components times the over-simplified multiplier (as in the Income-Expenditure model). That steady state can be unique and always unstable when all agents act as contrarians, while when agents act as fundamentalists is unique but its stability depends on the reactivity of actors of the market. Finally, we show that the (in)stability of the economic system depends on both the reactivity of the markets and that of different type of agents involved.

Sulle Possibili Strategie di Uscita dalla Crisi

Appena uscito come Working Paper del DISEI il mio nuovo lavoro (divulgativo):

Sulle Possibili Strategie di Uscita dalla Crisi


La struttura dell’Euro sembra essere una delle giustificazioni del prolungamento della crisi europea. In questo scritto, riprendiamo e discutiamo quattro differenti modi di uscita dalla crisi proposti in letteratura su riviste e giornali in questi ultimi anni. Proviamo a porre l’accento sia sui costi economici che su quelli politici e, soprattutto, li leghiamo al tempo che deve intercorrere affinché possano essere realizzati.

[Pubblicato su Jura Gentium, vol X, 2013: 2]

Buona Lettura

Heterogeneity in managerial strategies and internationalization of firms: the case of Italy

E’ uscito nella rivista Economia e Politica Industriale, l’articolo:

Heterogeneity in managerial strategies and internationalization of firms: the case of Italy (con G. Giovannetti e M. Velucchi)


The recent empirical literature on firm performance has highlighted the multidimensional concept of managerial strategies. The paper analyzes the nexus between these strategies and performance based on specific entrepreneurs’ characteristics, corporate strategies, organizational capabilities and firms’ approaches to internationalization. Using a dataset obtained by matching and merging Capitalia, ICE-Reprint and AIDA surveys we investigate the possible non-linear impact of managerial strategies on firm performance in Italy. While the specific entrepreneurs’ characteristics do not seem to have a significant impact on firm performance, the mode of internationalization plays an important role. Important non-linearities arise when we singled out the role of skilled workers and managers in determining a firm’s success in highly competitive markets.