'MADE NEAR ITALY': HOW NEARSHORING IS REDEFINING MANUFACTURING TRADE Exploring how proximity and trade dynamics shape Italian manufacturing strategies, 2008-2019

In a world where global supply chains stretch across continents and geopolitical shifts redefine market dynamics overnight, companies are increasingly rethinking their strategies for production and trade. Nearshoring has emerged as a powerful strategy—not just as a response to the pressures of cost and efficiency, but as a way to navigate the volatile pulse of modern economics. Italy, a nation historically at the crossroads of trade routes, finds itself in this strategic shift, navigating the complexities of bringing production closer to home. This thesis delves deep into the forces driving Italy’s nearshoring and offshoring practices from 2008 to 2019, a period marked by significant economic fluctuations and geopolitical events that have reshaped global trade patterns. The goal is dual: to define the driving forces behind Italy’s nearshoring decisions and to build a robust econometric model that quantifies the impact of these factors on international trade, with a spotlight on manufacturing imports. The present work begins by untangling the concepts of offshoring, reshoring, and nearshoring, setting the stage with a comprehensive look at the literature. Theoretical frameworks, including the gravity model of trade and Ghemawat's CAGE framework, are utilized to examine the non-economic factors, such as cultural, administrative, and geographic distance, that influence trade and production decisions. In the second part, attention shifts to the construction of the econometric model, meticulously designed to capture the differences of Italy's trade strategies and the complex interplay of factors influencing nearshoring. The model leverages an extensive dataset of Italian manufacturing firms engaged in international trade, spanning more than a decade of economic activity. Key independent variables—such as GDP per capita, geographic distance, time zones, shared currency, and regional trade agreements—are incorporated into the model to assess their influence on the nearshoring and offshoring behavior of Italian firms. The model's goal is to measure how much different factors influence the volume and direction of offshoring and nearshoring decisions. This approach helps clarify which factors are most important in driving Italy's trade and production relocation strategies. Finally, the third part of the thesis presents an analysis of the results, uncovering critical insights into the factors that have influenced Italy’s nearshoring and offshoring activities over the studied period. Monitoring shifts in nearshoring and offshoring across specific time frames and countries is essential for understanding broader implications on trade patterns and economic resilience. This thesis aims to demonstrate that by focusing on particular contexts, valuable insights can be gained to guide more informed decision-making and ensure competitiveness in an increasingly interconnected global economy.