The performance of Italian industrial districts and large enterprise areas in the 1990s

Abstract

On the basis of economic and population census data and of foreign trade statistics, in this paper we analyse the changes that occurred in the 1990s in the different local production systems that make up the mosaic of the Italian economy. The results of the study show that personal and household goods and light engineering, often made in industrial districts, contributed positively to the Italian balance of trade. Moreover, employment and other economic and social indicators show that industrial district provinces performed better than large enterprise provinces, so refuting the usual interpretation that district small and medium-sized enterprises are responsible for the recent slow down of the Italian economy. Some cues for policy intervention close the paper.

Acknowledgements

The authors thank Fulvio Coltorti, Lelio Iapadre, Stefano Menghinello and an anonymous referee for their comments on an earlier draft of the present paper. We also thank those who took part in discussions following the presentation made on the 8 September 2004 in Artimino (Prato) at the Incontri pratesi sullo sviluppo locale. Finally, a special thanks goes to Roberto Chimentelli for his help in collecting and processing data. The authors take full and sole responsibility for the contents of the present paper.

Notes

1. On industrial district model see Becattini (2004), Becattini et al. (2003). On Italian industrial districts see Pyke et al. (1990) and Cossentino et al. (1996).

2. The distinction between LEPs, IDPs, RPs and “mixed” (LEP/IDP) is made on the basis of the number of manufacturing workers, bearing in mind the size of the firm. It has been consider LEPs or, alternatively, IDPs, whose share of manufacturing workers, respectively, in establishments employing more or fewer than 500 workers, was, according to the 1996 census, higher than the national average. The others were considered RPs; only two provinces (Mantua and Parma) proved to have the features of both large firm and district areas at the same time: these were called “mixed”. As regards the statistical details of the methodology used, we refer to Becattini and Coltorti (in this issue).

3. “Personal and household goods” include textiles, clothing, leather tanning, leather products and footwear, the wood industry, tiles, furniture, jewellery, musical instruments, sports items, toys and other manufactured goods. “Light engineering” includes metal products, mechanical and electrical engineering. The food industries include food, drinks and tobacco. Heavy industry includes paper making, coke manufacturing, oil refineries, chemicals, the manufacturing of rubber articles and plastic materials, the manufacturing of cars and other means of transport, metallurgy (iron, steel and non-ferrous metals). For the classification of manufacturing products used here see also Bellandi (1999).

4. For a more extended account of the Italian post-war development, see Becattini and Coltorti (this issue).

5. On the industrial districts of Tuscany, see Dei Ottati (1996, 2006). On the Prato district, see Becattini (2001) and Dei Ottati (2003).

6. For the identification of LEPs with low industrialization see Becattini and Coltorti (in this issue). Many of these gave rise to the phenomenon, so-called in the debate regarding southern Italy, “cattedrali nel deserto” (cathedrals in the desert, or, in other words “white elephants”).

7. See Rullani and Romano (1998).

8. In this regard see, for example: Becattini and Coltorti (in this issue), Gallino (2003) and Nardozzi (2004).

9. The 1977 law on industrial reconversion and the spasms of industrialization in Sardinia should be borne in mind.

10. The first legal recognition of industrial districts was made with law 317 as recently as 1991 whereas a policy which heeded, rather than centred on, industrial districts came in the late 1990s.

11. In truth, econometric studies have not yet obtained a precise unequivocal measurement of this growth, see Cingano and Schivardi (2004).

12. From the study by Grubel and Lloyd (1975) on intra-industry trade onwards, however, it would seem that it is no longer inexplicable, as it was when reasoning was based on broadly defined industries (mechanics, chemical, etc.).

13. See Ciocca (2004).

14. We do not believe at all that GDP is a good indicator of the general welfare, as will be seen later, but we are obliged to use it from existing statistical and macro-economic practice. Furthermore, it allows us to make a comparison, albeit a very rough one, with the economic development of countries with a similar level of industrialization.

15. See Dal Bosco (2004).

16. On damage of the “twins deficit” see Ciccarone and Gnesutta (1993).

17. See Fortis (2004) and Iapadre (2004).

18. See ISTAT (2002) Becattini and Menghinello (1998), Becattini (2000).

19. The local systems of the Veneto, for example, use imported textiles and clothing to a greater extent than Emilia Romagna. See Marchi and Solinas (2004).

20. In particular, among the district provinces, increases greater than 15% were recorded in Pesaro Urbino, Reggio Emilia and Trento.

21. The shift and share analysis of manufacturing workers by type of province and cluster of products confirms a positive competitive effect of the district provinces during the 1990s, especially in the period 1991–1996, see Dei Ottati and Grassini (2004).

22. The slower spreading of large-scale distribution in the district provinces (the reduction of retail sales staff in the decade between censuses is 8% in the district provinces compared with almost 15% in LEPs) deserves a specific study.

23. In 1991 the respective shares of manufacturing workers of the total in the district provinces and those of large enterprise were 37% and 39%.

24. Manufacturing workers decreased by more than 20% between 1991 and 2001 in the following LEPs: La Spezia, Milan, Savona, Turin, Avellino, Palermo and Rome.

25. A reduction of more than 10% in manufacturing establishments is found in the following district provinces: Como, Prato, Pistoia, Varese, Vercelli, Biella.

26. An increase of more than 15% in establishments occurred in the following LEPs: Caltanissetta, Caserta and Siracusa.

27. On the inability of small firms to grow as a cause of the Italian economic depression, see Ciocca (2004) and Onida (2004).

28. This supports Brusco's position (Brusco, 1990) and, more generally, that of the industrial districts scholars (see Becattini & Bellandi, 2002) in distinguishing clearly between small district firms and others.

29. On groups of firms in the industrial districts see Dei Ottati (1996), Brioschi and Cainelli (2001).

30. By analogy with the term “monopolistic competition” we could talk here about a phenomenon of “competitive concentration”.

31. Iron and steel production, tube manufacturing and the manufacturing of transport vehicles showed a decrease of more than 20% workers.

32. Workers in services to business increased by more than 100% in the following district provinces: Ancona, Brescia, Macerata, Modena, Pesaro Urbino, Reggio Emilia, Varese and Vicenza.

33. Of the LEPs, a reduction of population higher than 7% in the decade 1991–2001 occurred in Trieste and Genoa. Within the same type of provinces, however, Bolzano showed an increase of more than 5%.

34. Among district provinces a population increase of more than 6% occurred in Bergamo, Brescia, Reggio Emilia, Treviso and Verona, while in the RPs only Trento increased its number of residents by more than 6%.

35. In some southern regions the natural population change continues to be positive. In the rest of Italy, however, only Trento and Bolzano have positive changes. See ISTAT (2003, pp. 248–249).

36. However, we have to note that negative migrant population changes are higher in LEPs with low industrialization than in highly industrialize ones.

37. Recently the European Council of Lisbon established for 2010 the objective of an average employment rate for the Union equal to 70% (ISTAT, 2003, p. 163).

38. We refer to Europe prior to 1 May 2004.

39. In 2002, among the district provinces, the total activity rates of Modena, Ravenna and Reggio Emilia exceeded 70%. Of the RPs, only Forlì has such a high activity rate (71.1%) and of the LEPs, only Bolzano (71.3%).

40. In 2002, for example, among LEPs, activity rates under 52% were recorded in Caltanissetta, Taranto, Caserta, Palermo and Siracusa.

41. The mixed provinces showed the best employment performance, but these data, since they refer only to two provinces (Mantua and Parma) located in the most developed regions of northern Italy, we think they are actually incomparable with those referred to other province types, which comprise respectively 36 (LEPs), 32 (IDPs) and 30 (RPs) provinces located in many regions of the country.

42. See previous note.

43. In 2002, for example, total unemployment rates went below 2.5% only in Bergamo, Lecco, Modena and Reggio Emilia among district provinces and at Pordenone and Bolzano among LEPs.

44. In 2002, total unemployment rates exceeded 22% in the LEPs of Caltanissetta, Naples, Caserta and Palermo and in the RPs of Agrigento, Catania, Catanzaro, Vibo Valentia, Cosenza and Reggio Calabria.

45. Furthermore, Becattini and Coltorti (in this issue, Table 11) shows that 63% of district provinces rank into the first two welfare classes compared to 48.3% of LEPs and 37% of RPs.

46. For previous decades see Becattini and Coltorti (in this issue).

47. It would become even more so if the data relating to 2003 and 2004 were considered. These have not been included because they were not available at the time of writing.

48. See Traù (1999) and Dei Ottati (1996).

49. On competition and cooperation in the industrial district, see Becattini (2004) and Dei Ottati (1994).

50. On conceptual aspects of the “district effect”, see Becattini and Musotti (2003), Dei Ottati (2006). On empirical evidence of the “district effect” concerning the Italian industrial districts, see Signorini (2000).