Introduction or preface

Germany and Italy are the only two developed countries to retain high levels of specialization in mechanical engineering, and both play a leadership role in the international markets. Based on the empirical evidence produced by an analysis of the financial statements of a sample of Italian and German mechanical engineering firms in the 2007-2009 period, the paper identifies the key trends shared by the two countries and highlights the main differences. In fact, compared with Italy, Germany has more large firms and a sectoral innovation system, although the analysis points out many other significant differences, in particular, the average size of the companies and their levels of profitability. While this latter probably is due to structural differences, the country effect should not be disregarded and, in the case of Italian firms, it probably depends on the reluctance of the banking system to provide adequate financial support, on the lack of a sectoral innovation system, and on longer payment terms.