Exports, imports and growth. New evidence on Italy: 1863-2004

The nexus between trade and economic growth in Italy has been widely debated byhistoriography. However, there are not long run analysis on this topic that cover the whole span fromUnification to present days. This paper contributes to fill this gap by investigating the relationshipbetween real exports, imports and GDP in Italy from 1863 to 2004 by using cointegration analysis andcausality tests. The outcome suggests that these variables comove in the long run but the direction ofcausality varies across time. In the period prior to the First World War import growth led GDP growththat in turn led export growth. Conversely, in the post-Second World War period we have a strongbidirectionality between imports and exports consequent on the increase in intra-industry trade. Wealso find a weak support for export-led growth and growth-led imports. This suggests that exportswere not the only or the main driver of economic growth. There was probably a multiplicity of factorsat work, among which high rates of capital formation and the expansion of internal demand probablystood out.