In Italy, price-based competitiveness measures are not always an accurate predictor of trade outcomes. This paper offers a more comprehensive assessment of Italian competitiveness, focusing on the role of innovation and the evolution of Italy's export market share. Overall, Italy maintains a high-quality export mix, and the adaptability of small-scale specialized firms is still a source of strength. But, small firm size is becoming less of an asset, and even the most innovative sectors are

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... ed down by the structural barriers that have depressed productivity more broadly. Italy's future competitiveness will depend on full implementation of a comprehensive structural-reform agenda. JEL Classification Numbers: F14; F41; O30; O31