Author(s)

A. Federici

Abstract

This paper analyses the phenomenon of macro vulnerability linked to trade openness, underlining the role of policy tools in reducing exposure to external shocks. Vulnerability as a method of analysis does not override traditional approaches, offering instead a new lens to examine the dynamics of development. Vulnerability can be defined as the \“continuous forward looking state of expected outcomes”: while well being and poverty are ex post outcomes, vulnerability is an ex ante condition that could potentially lead to a negative outcome. The main result of the empirical analysis is that the regions of the South of Italy have experienced a worsening of their macroeconomic well being. This has to be related to the limited ability to cope with higher degrees of uncertainty as well as poor use of adequate policy tools that are able to mitigate the repercussions of trade shocks on the domestic economy. This output implies the need to adopt new, specific and forward looking macroeconomic policies able both to support the process of trade liberalization and to limit risk exposure and enhance the response capabilities of the population. Keywords: vulnerability, volatility, international trade, regional development, Italian regions. 1 Introduction The aim of this paper is to detect empirically the phenomenon of macrovulnerability linked to trade openness, underlining the role of policy tools in reducing exposure to external shocks: to this aim an ad hoc methodology will be developed to offer a preliminary answer to this issue.

Keywords

vulnerability, volatility, international trade, regional development, Italian regions.