1. Introduction
The wood sector can significantly contribute to the rural development of Italy, particularly in its internal and marginalized areas, which are characterized by agro-forestry due to their hilly and mountainous terrain. This industry not only supports local economies through job creation and income generation but also promotes sustainable land management practices [
1]. In regions where agriculture may be less viable due to terrain or climate, the wood sector provides an alternative source of livelihood, helping to reduce rural depopulation and preserve cultural heritage. Furthermore, the sustainable management of forests contributes to environmental conservation, combating soil erosion, and enhancing biodiversity. Indeed, policymakers are increasingly attentive to forests, given the wide variety of ecosystem services they provide. The European Union (EU) has shown growing interest in forests.
The EU has recognized the importance of forests, including the economic valorization of forest resources and biodiversity conservation as crucial components of the overall Rural Development Programs (RDPs). This approach was reinforced by the 2021 “New European Forestry Strategy 2030”, based on the European Green Deal, which highlights forests as key in combating climate change. Nevertheless, while forests are expected to contribute to an increase in the supply of sustainable, renewable materials and energy through so-called “wood mobilization”, at the European level much attention is paid to the gap between wood potentially and actually harvested [
2].
In Italy, the financial emphasis on forestry measures within RDPs has grown since the 2007–2013 programming period. The latest Strategic Plan, aligned with the National Forestry Strategy approved in 2022, allocates around half a billion euros for forestry infrastructure to ensure environmental protection and to manage silvo-pastoral activities, preventing the cultural abandonment of mountainous areas [
3]. Additional financing instruments, such as supply chain contracts, have also been introduced to support forestry sector development [
3].
Despite renewed interest and some authors highlighting Italy as a forestry country [
4], there are still knowledge gaps regarding the Italian forestry sector and its potential development. While the Italian forest surface continues to grow, there are no specific studies on Italy’s position and trends in the global market for primary and secondary processed-wood products. Consequently, there is a lack of an adequate knowledge base to inform strategies for promoting the development of the sector and the regions most involved in it. On the other hand, the development of these rural areas is closely tied to the performance of the Italian market in the global trade of wood products. Although the association between forest resources and the trade balance of wood products appears to be non-systematic, Koebel et al. [
5] found that, at a comparable level of forest resource (as hectares per inhabitant), Italy, Germany, and Austria benefit from a favorable trade balance of wood products. This suggests that Italy’s competitive position could improve with enhanced productivity of its forest resources, even though other industry-specific variables also play a crucial role. Historically, traditional exports of wooden products have benefited from maintaining the productive function of forests, essential for sustaining settlements in high hills and mountainous rural areas. Conversely, the abandonment of forestry production in many inland areas has contributed to their depopulation.
Wood products have been a key component of international trade, with the market reaching a value of over USD 310 billion in 2022 [
6]. Traditionally, trade in wood products such as roundwood, sawn wood, wood-based panels, paper, paperboard, pulp, and wooden furniture has been regionally concentrated. In 2019–2020, Europe held nearly 50% of the global export value, while North America and Asia each accounted for about 19% [
6]. However, the landscape has evolved over the past two decades due to the rise of Asian countries, the Russian Federation, and Eastern European nations [
7,
8]. This shift underscores the importance of forest-products trade in addressing scarcity and enhancing welfare in the forest sector.
Several researchers have extensively analyzed international wood-products trade using descriptive indicators of competitiveness. Studies have either examined overall trade patterns or focused on specific countries. Hashiramoto et al. [
9] noted significant shifts in the global wood-products trade since the late 1990s, with traditional exporters like the USA, Canada, and several European countries losing market shares to emerging exporters such as China, Vietnam, Indonesia, Turkey, and Poland. Long et al. [
10] corroborated these findings, highlighting the growing prominence of China and other Asian countries in global wood–forest-product competition. North American and European countries remain core players, but developing Asian nations are gaining significant influence. The complexity of the trade network for resource-based wood–forest products is much less than that for deeply processed products. Liu et al. [
11] studied the evolution of the global wood-products trade, analyzing changes in network indicators for 235 countries from 1988 to 2021. Their results revealed that the number of countries participating in the global trade is increasing, and trade relationships among countries are deepening. The core countries in the global trade include North American and European nations, but some developing Asian countries with abundant forest and labor resources are gradually gaining leading positions and jointly controlling the global wood-products market. Rossato et al. [
12] focused on the wood-pulp sector, comparing the comparative advantages of major producers. They found that, while most countries demonstrated comparative advantages, Finland, Canada, and Sweden appeared as leaders, with China showing a comparative disadvantage. The wood-pulp industry significantly benefits the export economies of Brazil, Finland, Canada, and Sweden.
Numerous studies have explored the competitiveness of individual countries, with particular emphasis on China due to its significant advancements in manufacturing and exporting wood products. Han et al. [
13] assessed the competitiveness of Chinese wooden furniture compared to other leading trading countries using indices such as Balassa’s Revealed Comparative Advantage (RCA), Market Share (MS), and Trade Competitiveness (TC). Their results showed that China transitioned from a comparative disadvantage to a high comparative advantage, maintaining a strong position in the labor-intensive wooden furniture industry. These findings were confirmed by Chao et al. [
14].
Fewer studies have focused on European countries, with some exceptions being Germany [
15] and Slovakia [
16]. Dieter and Englert [
15] analyzed the competitiveness of the German forest industry in the international timber market, concluding that, while Germany does not specialize in wood products, it remains a leading player in the global forest industry, with above-average export growth for semi-finished wood products such as pulp, paper, paperboard, sawn wood, and wood-based panels.
Palus et al. [
16] examined the trade competitiveness of Slovakia’s wood-processing industry compared to Visegrad group countries using indicators like the Trade Specialization Index, Export/Import Ratio, Standard Grubel–Lloyd Index, RCA, and Vollrath’s Revealed Competitiveness. They found that Slovakia had a revealed comparative advantage in most products, with increasing intra-industry specialization corresponding to the level of value added to products.
Despite Italy’s historical importance in the forestry sector and as an exporter of secondary processed wood products, specific studies on Italy are lacking. Since Italy’s leadership in some wood product markets has shown signs of declining competitiveness in recent years [
17], this paper aims to fill a knowledge gap by analyzing Italy’s competitiveness in the global wood products market from 1996 to 2019, focusing on wooden furniture and wood panels.
Moreover, we considered intra-industry trade, which has never been investigated for the products considered here, not only for Italy. The analysis ends in 2019 to avoid distortions caused by the COVID-19 pandemic and the Russia–Ukraine war (To illustrate, if the value of world trade in wood products was USD 244 billion in 2019, it rose to USD 310 billion in 2022, but decreased to USD 236 billion in 2023. A similar fluctuating trend is observed for trade flows of furniture and panels. After 2019, trade values surged but returned to pre-pandemic levels by 2023. Taking the three-year average for 2020–2022 would give a distorted view of trade flows, which could only be accurately interpreted with data from at least 2024, which are currently unavailable [
6]. Other authors following the same criteria have made a similar choice, defining 2019 as “the most recent normal year before the shocks caused by SARS-CoV-2 pandemic and by the Russia-Ukraine war” [
18].
Several methods may be adopted to assess the competitiveness of a country in international trade. In this paper, to identify the changes that occurred in Italy’s competitive position compared to those of the main competing countries on the international market, we first analysed the trends in Market Shares of the main international exporters as a prerequisite for choosing the countries to include in export–import flow matrices [
19]. Then, using Balassa’s RCA index, RSCA, and Trade Competitiveness (TC) indices, we examined the changes in Italy’s comparative advantages against more competitive countries. Moreover, using the Grubel–Lloyd index, we also investigated Intra-Industry Trade (IIT), which refers to the trade involving the exchange of similar goods, never studied for the products considered here, not only for Italy. As documented by an extensive literature [
20,
21], thanks to the intensification of north–south shipments in the manufacturing sector in recent decades, quality differentiation plays an important role in international trade. By combining these multiple indices, this study not only provides a detailed and comprehensive picture of Italy’s competitiveness in a sector that has been somewhat neglected by the literature, but also establishes a robust framework for other researchers to replicate the analysis for other countries.
The paper is organized as follows:
Section 2 details the data and methods used.
Section 3 presents the analysis results, while
Section 4 discusses the policy implications of the findings for Italy.
2. Materials and Methods
In order to evaluate the competitiveness of Italy in the global market of wood and wood products, and to trace long-term trends, we used the data available in the UN Comtrade database considering the period 1996–2019 [
6]. The product classification is based on the Harmonized International System (HIS), a worldwide six-digit code framework grouping and categorizing exported merchandise and goods [
6].
Table 1 displays the list of detailed codes for the categories of products that were specifically analyzed, including furniture and panels. The main leading exporting countries have been selected for each assortment. Moreover, since comparative advantages are related to the relative factor endowments [
22] and per capita income is a widely accepted index for the relative abundance of physical and human capital, the selected nations are divided into four groups according to their per capita gross national income (GNI). Thus, the correspondence between belonging to a given level of income and a given geographical area becomes evident (
Table 2). Overall, we selected at least ten countries for each assortment. Then, for each country, we extracted export and import data to calculate the matrices and indices specified in the next short sub-paragraphs.
2.1. Matrices of Exchange Flows
To analyse the trade patterns of the main exporting countries of wood fuel, Hillring [
19] computed matrices to cross-analyse the data for exporting and importing countries. In these matrices, the exporting countries are at the top of the columns, while the importing ones are across the lines. Unlike Hillring [
19], we consider data in value and not in volume to make considerations relating the different assortments considered—very different from each other in terms of unit values. For each country, data refer to the 2018–2019 average value of imports and exports. The tables consider the 10 largest exporters, presented individually. The remaining are aggregated in the column ‘Exp-other’. The individual cells show the value of the imports by the country in the line from the country in column (We computed three kinds of matrices. The first reports the absolute values of trade flows; the second reports the percentage shares of the country’s total export flow to the countries in the rows; the third reports the percentage values of total imports of the country in the row from the exporting countries at the top of the columns. Due to space constraints, in the paper we report only matrices with absolute values).
2.2. Market Share Index
The Market Share (MS) index gives us an idea of the comparative advantage of a country in an economic sector. For a given assortment, it measures the countries’ market share in the global market and is calculated by:
where MS
ij is the market share, X
ij are the exports of the
i-th commodity of country
j, while X
iw are the world exports of the
i-th commodity.
2.3. Revealed Comparative Advantage Index
The Revealed Comparative Advantage (RCA) index, defined by Balassa [
23], measures the level of a country’s competitiveness in international trade in a commodity category. The index compares the weight of a given commodity on the total export of a country with the weight of the same good on the total world export. It can be calculated by
Xij are the exports of the ith commodity of country j; ∑iXij are the total exports of country j; ∑jXij are the world exports of commodity I; and ∑j∑iXij are the total world exports.
A country has a revealed comparative advantage in a commodity when the RCA index is greater than 1, while when the index value is less than 1 the country has a revealed comparative disadvantage.
Some authors [
13] have further specified the magnitude of comparative advantages and disadvantages. If the value of the RCA index > 2.5, the country has an extremely strong advantage; if 1.25 < RCA < 2.5, the country has a strong advantage; when 0.8 < RCA < 1.25, the country has a moderate advantage; values in the range 0 < RCA < 0.8 denote a weak disadvantage; finally, RCA < 0 is a comparative disadvantage. The RCA index has some shortcomings. Firstly, it has an asymmetric distribution ranging from 0 to +∞, with a demarcation value of 1 (or 100). Furthermore, including only export flows, RCA overlooks the international fragmentation of production processes. So, as in the study by Algieri et al. [
18], we have also computed other indices.
2.4. Revealed Symmetric Comparative Advantage
The Revealed Symmetric Comparative Advantage (RSCA) was proposed by Dalum [
24]. Its value ranges from −1 to 1 (with a demarcation value of 0). A value larger than zero indicates that country j has a revealed comparative advantage in i. A value less than zero points to a comparative disadvantage in product i for country j.
2.5. Trade Competitiveness
Since RCA does not consider the imports, many authors have argued that it is biased, especially in the case of a great country. So, we considered the TC index that expresses if a country is a net exporter or importer in a sector. It is measured by the ratio between the export–import balance and total foreign trade of a given commodity:
where X
ij are the exports of the
i-th commodity of country
j, while M
ij indicates the value of imports. The index takes values between −1 and +1, and can also be expressed as a percentage. If the country is totally importing, the index value is −1, while if the country is totally exporting the value is +1.
2.6. Intra-Industry Trade Index
Given the state of the debate in the literature, in this paper we chose to analyze intra-industrial trade following Grubel and Lloyd [
25], who proposed two indices: B
ij and B
j.
Bij measures the intra-industry trade for a given good i, Xij and Mij are the values of country j’s exports and imports of good i. For a country j and a good i, the index measures the intra-industry trade as a percentage of the total trade of a good i. Its value can range from 0 to 100:0 when either Xij or Mij is zero, that is when there is no intra-industry trade, and 100 when Xij and Mij have the same value, so that all trade in the good i is intra-industry trade.
In addition to
Bij, Grubel and Lloyd [
25] proposed another index which refers to a homogeneous aggregate of goods traded by a country with a given group of other countries. This index, B
j, gives a summary measure of intra-industry trade in country j, at any given level of aggregation.
As Bij, Bj gives a measure of the total intra-industry trade of a country with respect to total trade. It can be calculated for a set of similar goods to highlight the extent of intra-industry trade in similar products, for example because they satisfy the same consumption needs, albeit with some differences, or because they belong to the same production value chain. In our analysis, since we considered aggregate products, we used Bj.
4. Discussion
Our findings confirm the results also highlighted by other authors about the significant changes in the competitiveness of the main exporting countries in the global market. The main outlet market has been confirmed to be the USA, while Italy, despite losing its market share and worsening its comparative advantages, is still one of the leading global exporters of furniture. For panels, Italy is confirmed as a net importer. Regarding other exporting countries, Canada and Germany continue to have a certain importance in the international market, but trade flows from Asian countries have significantly increased and intensified. China has become the leading exporting country in all product categories considered, and the importance of Vietnam and Malaysia has grown. Equally significant is the progress recorded by Russia and, in Europe, by Poland. These results suggest some considerations. First, the loss of importance of high-income countries compared to the low- and lower-middle-income countries in East and South-East Asia, Eastern Europe, and Latin America can be attributed to two different processes. Production and exports are occurring in countries close to each other and with lower labor costs, such as Poland and Turkey in Europe, and Mexico in relation to the U.S. In addition, there is a generalized transfer of production and exports from Western countries to South-East and East Asian countries due to the abundance of labor and low-cost raw materials [
11,
13]. At the same time, intra-industrial trade flows are intensifying among high-income countries, demonstrating their achievement of better positions in markets for higher value-added products. Italy, while maintaining an important position, suffers competition from Germany and Poland in Europe, and China, Vietnam, and Malaysia in Asia. As highlighted by Dieter and Englert [
15], our results reveal that Germany continues to be a leading player in the global forest-industry sector and an important competitor of Italy in the European context. However, given the values of the RCA Balassa index, its competitiveness is not based on a particular specialization in wood products. This supports the assertion by some authors [
30] that Germany’s position comes from policies that boost productivity, particularly labor productivity. Regarding Eastern European countries such as Poland and Asian countries, they benefit from lower production costs and a good endowment of forest resources. This is particularly significant for labor-intensive sectors, such as the wooden furniture and wood panel industries. Han et al. [
13] affirmed that China transitioned from a comparative disadvantage to a high comparative advantage in the labor-intensive wooden furniture industry. Similarly, Chao et al. [
14] found that Europe and America have fully developed their export potential, while markets with greater potential are mainly in Central and Eastern European countries. In contrast, the markets with pioneering potential are mainly in West Asian countries. Some countries, such as Vietnam, Malaysia, Cambodia, and Kenya belong to the “market with potential to shape”. These countries have rich forest resources and cheap labor on the supply side, and large domestic markets on the demand side. Once their domestic wood-processing production capacity scales up, they will impact China’s export of similar wood–forest products.
In a recent study, Algieri et al. [
18] examined the patterns of comparative advantages in manufacturing between 2001 and 2019 for 91 products, including articles of wood and furniture classified as “human capital or skill or low-technology products”. Their findings suggest “the production of these goods occurs in countries with a relatively lower human capital or technology endowment since they have a low-human capital or technology intensity” (cfr. pag. 657). In other words, lower-wage countries have, on average, lower technology or human capital endowments, and have a comparative advantage in goods produced by workers paid with lower wages (cost competitiveness) (cfr. page 629). To avoid losing further market shares, Italy should probably invest in innovating its industrial structure, given the small size of its companies. Furthermore, logistics, transport, and marketing structures need to be intensified, while existing ones need to be modernized and supported by a network of modern services to facilitate small businesses in maintaining their international customers. The modernization of production structures is not separate from a strategic change in the use of raw materials. As recently highlighted by Koebel et al. [
5], forest resource endowment is a significant determinant for explaining differences in the net trade of wooden products, including furniture. However, this variable is not sufficient to explain trade patterns of wood (finished) products. Industrial indicators like total factor productivity and average labor costs influence the trade performances of these products. The Italian forestry sector can provide a much greater contribution thanks to the exploitation of national wood production, currently underutilized. As demonstrated in a study conducted by Buongiorno et al. [
33], also considering Italy, international trade may be an important part of the world’s forest economy. Nevertheless, there is a poor ability to use abundantly produced raw materials for the socio-economic development of large inland areas, especially located in Southern Italy. Perhaps some agro-forestry policy instruments, such as supply chain contracts, could boost changes. An additional impulse towards the creation of supply chains in which forest owners can have an active role through qualified management of plantations could come from the application of the rules contained in the 2018 law on forests and forestry supply chains. The growing competition in international markets can be overcome through the diffusion of a broad set of innovations, among which are those aimed at promoting the transition of the Italian forestry sector towards bio-based forestry supply chains. From this point of view, it is important to point out that, alongside the most frequent types of innovations, i.e., those for the development of new methods of production, new goods and services, and new sources of supply, the exploitation of new markets and organizational-level innovations are some of the key pathways for reaching the knowledge-based bio-economy. However, to date, and not only in Italy, knowledge and analysis of the factors underlying its development are lacking [
34,
35]. In any case, a policy framework to support innovation and investment in new technologies and production methods is essential, but it cannot ignore the knowledge of the production structure and the problems of private forest owners [
36].
Given that the forestry sector is characterized by small private forest ownerships, wood mobilization is difficult due to the lack of interest of non-industrial forest owners in existing forest-wood chains. The formation of forest owner groups and the development of social networks may be some means for addressing fragmented ownership for the diffusion of knowledge and innovation [
37,
38]. The growing competition from emerging countries, above all from China, which has become the undisputed leader in the international market, can be countered only through policies that strengthen quality. As shown in the results of Luo et al. [
31], the anti-dumping duties adopted by the United States against China in 2015 to limit the imports of wooden furniture have prompted many Chinese firms to improve their product quality, stimulating the evolution of the furniture industry worldwide and consequently benefiting all market participants in the long term. The quality of Italian furniture must be adequately supported by marketing campaigns that could also benefit from public support. As highlighted by Giovannetti et al. [
39], there is a significant Chinese competitive effect on Italian exports, but this seems concentrated on traditional low-tech products, while traditional Made in Italy products with higher added value seem to resist this. Therefore, the shift of Italian specialization within sectors rather than between sectors seems to have protected Italian products from fiercer Chinese competition. Italy has moderately high and growing intra-industrial trade flows in the furniture sector, demonstrating competitiveness based also on product differentiation. Businesses must continue to invest in this path. Sustainable forest management certifications, such as those implemented by the Forest Stewardship Council and Program for Environment Forest Certification, could be a viable option for the wooden panels sector. Several studies have shown that consumers are increasingly interested in the sustainable behavior of businesses, from the production of raw materials to the final consumption goods [
40,
41,
42,
43].
5. Conclusions
The aim of this study was to evaluate the changes in the competitiveness of Italy in the global market for wood products, focusing particularly on wooden furniture and wood panels, the final and intermediate products of one of the most important forest-wood supply chains, that of wooden furniture. The results of the analysis contribute to the literature on forestry industry trade in several directions. First of all, despite Italy’s historical importance as an exporter of secondary processed-wood products, specific studies on Italy’s competitiveness in the international market are absolutely lacking. Therefore, we used several measures of competitiveness for a cross-country analysis to compare the competitiveness of Italian forest products with that of the main exporting countries on the global market. The comparison of the obtained results reveals significant changes in trends in Italy’s competitiveness in international trade. While Italy remains a key player in wooden furniture, it still presents a considerable weakness with regard to wood panels, although it is showing slow improvement.
Regarding wooden furniture, the results show that Germany is a strong competitor of Italy in the European market, while in extra-European markets Italy maintains a respectable position. Both in the panels and furniture sectors, the country faces increasing competition from countries with lower production costs and better resource endowments. These results allow us to gain a cognitive picture of Italy’s position in the international market and to fill a knowledge gap by providing specific information on the existence of comparative advantages and the importance of intra-industrial trade. This has never been done in other studies.
The findings underscore the need for Italy to innovate in the forestry production system following a holistic approach. The entire production structure, from agro-forestry farms to industrial companies producing higher-added-value products, such as wooden furniture, requires in-house and contextual innovations. Modernization of industrial structure, logistics, and marketing systems, and investments in high-quality production, are essential to maintain and increase the competitive edge.
For the rural development of marginalized areas in Italy, particularly in the south, these results have critical implications. As has been repeated several times, the Italian agro-forestry industry and the production of wood raw materials have been continuously growing. Despite this positive trend, Italy is characterized by a low use of national raw material, so it is a net importer of panels, a very important intermediate input for the wooden furniture and wood-construction supply chains. By leveraging underutilized national wood resources, rural areas can stimulate local economies and create job opportunities. Investing in agro-forestry policies, such as supply chain contracts, can foster the active participation of local forest owners and enhance sustainable forest management. Moreover, supporting small businesses with modern services and infrastructure can help them maintain and expand their international market presence. Ultimately, the strategic modernization of the wood industry, coupled with sustainable resource management and targeted policy support, can drive the socio-economic development of Italy’s marginalized rural areas, fostering growth and resilience in these communities.
While this study focuses on the period from 1996 to 2019, providing an extensive timeframe to analyze macro-trends affecting Italy’s competitiveness in the global wood products market, it has certain limitations. The exclusion of data post-2019 means that the impacts of the COVID-19 pandemic and the Russia–Ukraine war have not been considered. Future research should update the time series once robust data from 2023 onward become available. Moreover, while MS, RCA, RSCA, and TC indices are widely utilized, further research should employ more sophisticated and targeted methodologies to provide a comprehensive assessment of the sector’s competitiveness. As suggested by Algieri et al. [
18], the Lafay Index and the Revealed Symmetric Augmented Comparative Advantage Index can control for intra-industry trade and re-export flows generated by the international fragmentation of production processes. These indices could offer a more detailed and accurate analysis of the wood-products sector’s competitiveness. Additionally, specific studies should investigate the factors influencing these changes in competitiveness. Further research could also suggest strategies that properly consider the variables most influencing trade flows in general, and intra-industrial flows in particular, which are increasingly important for generating trade in higher-added-value products between countries with similar levels of development. This would help to better understand the evolving trade dynamics and support the development of effective strategies to enhance Italy’s position in the global wood-products market.
Despite these limitations, the use of multiple descriptive indices, combined with intra-industry trade analysis, offers valuable insights into the complexity of trade relationships within the sector. Additionally, our cross-country comparison and the use of reliable data sources enhance the validity of our findings. Overall, this study contributes to a deeper understanding of Italy’s position in the international wood-products market and lays the groundwork for future research to further explore and address the evolving trade dynamics and challenges.