Southern Italian Firms in the ’90s - This paper deals with the evolution of manufacturing firms in the Italian Mezzogiorno in the last ten years and its perspectives for the future. It discusses the reasons for the peculiar downsizing process that invests the industrial structure,
finding that it represents a reaction to liquidity and financial constraints, which are particularly severe in this area. While it allows small firms to recover a finan - cial equilibrium, downsizing affects negatively the industrial performance. Two main possibilities of facing these constraints are considered at work: the first is represented by the opportunity of a significant expansion on the foreign markets, and the second is represented by a growing integration with the underground sector of the economy. While the two solutions may be combined, each of them has different effects on the downsizing propensity of the firms. Finally, some evidence on the relevance and the meaning of these opportunities as well as some implications, are discussed.