A stage and eclectic approach to industrial district development: two policy keys for ‘survival’ clusters in developing countries

Abstract

This article analyses the history of Italian industrial districts (IDs) to identify lessons to help small and medium‐sized enterprise (SME) clusters in developing countries to move to higher stages of development. Transforming the 1990 seminal work of Brusco on distinct models of SME clustering into a stage approach, this article identifies a sequence of different maturity stages which the IDs passed through: initial craft production; industrialization through large firms; the fragmentation of production followed by the growth of smaller specialized units; and, finally, new routes to innovation and competitiveness. These phases help explain how development is a stage process which needs to be carefully considered and not rushed, through attempting to cross too many stages at once. Realistic steps are always necessary to create an effective base for growth. Furthermore, a theoretical framework is presented, which identifies three factorial levels that have intervened in the ID development process over the past 50 years. Economic, policy and social factors are identified and presented as drivers that work together to produce the structural changes that explain an effective development process. The final section emphasizes the relevance that this kind of analysis can have on the policy‐making schemes being applied in developing countries, with special reference to less developed types of clusters.

Notes

Personally, I would add that the dependence on (a few) large enterprises can be considered as a less optimal condition in respect of Italian traditional and new competitive IDs because it tends to create rather hierarchical relations and a weaker endogenous development in the cluster (Humphrey & Schmitz, 2000). Moreover, large firms can leave the cluster whenever better conditions arise outside. That is why also strategically I prefer focussing on the Italianate trajectory as a better organizational solution for SME clusters.

Some of the main theorists within the relevant literature share different streams. Nevertheless, the following distinction and the relative labels seem useful to address the targets of this work.

On the importance of individual dynamism for the development of small firms (not taken in clusters) there are other important contributions, such as those discussed by Hjalager (1993), Cowling (1999), Kantis et al. (2002).

Other aspects can also be taken into account, such as geographic localization, size of urbanization, historic specificities, etc. All of these factors matter and are likely to explain part of the development of local production systems. But these seem to be rather specific and, in a quantitative type of analysis, would be more likely to be considered dummy variables. These explain some processes, but not in all cases.

This experience allowed me to observe several key‐features of ID competitiveness (e.g. joint actions, external economies, active entrepreneurship, etc.) at work all the time in ‘survival clusters’, which make me take a positive view on the development perspectives of these types of SME clusters.

Public investments grew about 350% versus 140% for private investment during the period 1954–1962 (Cohen & Federico, 2001, p. 100).

Although In Brusco's analysis, local institutions found their role through the ‘industrial districts Mark II’ (i.e. the following step, from the late 1980s onwards), in our view they are part of that first identification of the industrial districts as such, especially in the notorious cases of Emilia‐Romagna and Tuscany. There, their constitution and expansion dates back to the 1970s and 1980s.

These are Law 44/1986, then amended by Law 95/1995, on Firms Creation and Law 46/1982, then amended by Law 317/1991, on Innovation.

Author's interviews of entrepreneurs in the furniture cluster in Forli, Emilia‐Romagna, November 2002.