ITALY - JAPAN: THE EXPORT RACE

According to the latest figures released by the World Trade Organization (WTO) and reworked by ISTAT, in 2024 Italy reached a historic and strategically important milestone in the context of the global economy, ranking sixth in the world in terms of value of goods exports, surpassing Japan.

This achievement, enshrined in WTO and ISTAT data, signals a structural evolution of the Italian System towards value-added-intensive models, confirming its ability to compete on a global scale despite the size fragmentation of enterprises and using quality as its main levers, specialisation and industrial resilience; this is ensuring good results even in adverse macroeconomic contexts.

Evolution of Italian exports

The structure of Italian exports is highly diversified, with a preponderance of the instrumental mechanics sector (35 percent), a sector in which Italy is recognised as a global leader in terms of manufacturing capacity and know-how.

Fashion, agribusiness and automotive represent further pillars of exports, thanks also to the perceived quality of “Made in Italy.”

The figure confirms a “vertical specialisation” that allows the country to preside over high-margin market niches. In addition, the growing contribution of the pharmaceutical and chemical sectors reflects a trend towards technological reconversion and greater sophistication of industrial supply.

More specifically, Italy recorded exports of more than 660 billion euros, thanks to a differentiated product composition. (see Tab. 1)

The causes of overtaking Japan

Italy’s overtaking is partly explained by exogenous factors that penalised Japan, including:

• The slowdown in Chinese demand (Japan’s main partner)
• The devaluation of the yen, which has increased the cost of energy imports
• A Japanese production structure that is less flexible and more exposed to technology-intensive sectors but subject to cyclical slowdowns

Tab. 1 -Sector % share of total exports

Instrumental mechanics 35%

Fashion and design 20%

Agribusiness 15%

Automotive 10%

Pharmaceutical and chemical 8%

Others 12%

Winning industrial and trade strategies

Italian success is not the result of chance, but rather of the combined action of several elements:

• Capillary presence of specialised SMEs, with high capacity to adapt to international demand.
• Territorial industrial districts, which foster innovation, logistics synergy and local development. The district system generates economies of agglomeration, fosters technology transfer and production flexibility.
• Leveraging EU free trade agreements, particularly with Canada (CETA), South Korea, Vietnam and Latin America.
• Investment in sustainability and digitisation, also promoted through the NRP, Transition 4.0 and green economy in primis.

Geography of Italian exports

Export growth is supported by a strategy of geographic diversification.

In addition to the EU, Italy has strengthened exports to high-potential markets outside Europe: North America, the Middle East, Southeast Asia and Latin America.

This reduction in dependence on mature markets has enabled greater export stability in the medium term.

Global comparison

In the global ranking, Italy ranks sixth in the world with $720 billion in exports, surpassing Japan ($700 billion) due to a combination of growth and stagnation in Japanese exports. This ranking is the result of organic rather than episodic growth.

The top positions remain occupied by continental-scale economies (China, the U.S., Germany), but Italy’s performance is particularly remarkable considering its smaller population and industrial size. The data confirms the high productivity of Italian exporting companies and their ability to generate value. (see Tab. 2)

Tab. 2 - Country Export goods (2024, bn $)

China 3.500

United States 2.100

Germany 1.800

Netherlands 900

Hong Kong 850

Italy 720

Japan 700

Concluding remarks

The Italian case represents a successful economic paradigm in the 21st century, based on:

• Vertical specialisation
• Incremental innovation
• Strong national brand
• Flexibility of value chains

The data must be interpreted in light of economic models such as comparative advantage1 and the new economic geography2.

Italy excels in sectors where qualitative differentiation and supply chain efficiency play a decisive role.

The combination of “value added manufacturing”3 and resilience of the diffuse production structure (SMEs and districts) is a strategic asset.

In addition, the ecological and digital transition, supported by European funds (PNRR), has boosted export competitiveness.

NOTE

1. The economic theory developed by David Ricardo, states that countries should specialise in producing the goods for which they have a lower opportunity cost than other countries, even if they have a lower absolute cost in producing all goods. In other words, a country benefits from international trade by focusing on producing and exporting the goods in which it is relatively most efficient, even if it is not necessarily the most efficient in absolute production of all goods.
2. The New Economic Geography, promoted primarily by Paul Krugman, is a field of study that analyses how economic forces, such as economies of scale and costs of transportation, influence the location of economic activities and the geographic concentration of industries. In essence, it seeks to explain why firms and people tend to concentrate in specific geographic areas, creating industry clusters or specific economic regions
3. Value-added production refers to the process of transforming raw materials or components into products that have a market value greater than the sum of their individual parts. It involves adding features, functionality or other improvements to a product to increase its desirability and price to the customer.

Read more:

https://www.wto.org/english/res_e/statis_e/statis_e.htm

https://www.istat.it/statistiche-per-temi/economia/commercio-estero/

https://it.wikipedia.org/wiki/Teoria_dei_vantaggi_comparati

https://www.bancaditalia.it/pubblicazioni/temi-discussione/2007/2007-0624/tema_624.pdf