This work presents a territorial analysis of total factor productivity (TFP) in Italy from 1998 to 2006 using data at firm level. The territorial aspect is explored by dividing the TFP into the two components within-firms and between-firm, calculated for the entire sample and considering the sector to which firms belong, their innovative efforts, as well as their internationalization. The paper finds three main results. The first confirms the role of TFP as a key factor in explaining the recent slowdown of the Italian economy. The second result shows that a modernizing of the industrial system has taken place in Italy. This has limited the effects deriving from the slowing down of productivity. Finally, we show how this restructuring process has had differing results area-byarea, without, however. modifying the technological dualism of the Italian economy.
Keywords: Manufacturing sector, total factor productivity, italian regional divide.
Jel Code: L60, O14, R11