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Industrial Districts and Economic Decline in Italy

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  • Paolo Ramazzotti

    (University of Macerata)

Abstract

The paper argues that the so-called canonical view of the Italian industrial district (ID) depicts it as a system whose economic and social vitality requires the interaction between two major sub-systems: a community of people and a community of firms. A range of circumstances - including insufficient aggregate demand, competition from low-cost coun- tries and technological change - have determined inconsistencies between the rationales of these two sub-systems. As a result, lead firms have emerged that substitute the ID as coordinating instances. In the pursuit of their goals, they tend to prefer cost scrapping to quality enhancement, thereby determining a competition that further undermines the ID as a system. The paper contends that this outcome is not the only possible one. An alternative would require the regulatory - as opposed to merely permissive - action of pub- lic actors in that it would have to change the incentive system that leads firms to choose short-sighted strategies.

Suggested Citation

  • Paolo Ramazzotti, 2008. "Industrial Districts and Economic Decline in Italy," Working Papers 45-2008, Macerata University, Department of Finance and Economic Sciences, revised Oct 2008.
  • Handle: RePEc:mcr:wpdief:wpaper00045
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    References listed on IDEAS

    as
    1. Ottati, Gabi Dei, 1994. "Trust, Interlinking Transactions and Credit in the Industrial District," Cambridge Journal of Economics, Oxford University Press, vol. 18(6), pages 529-546, December.
    2. Brian J. Loasby, 1994. "Organisational Capabilities And Interfirm Relations," Metroeconomica, Wiley Blackwell, vol. 45(3), pages 248-265, October.
    3. Francesco Brioschi & Maria Sole Brioschi & Giulio Cainelli, 2002. "From the industrial district to the district group: An insight into the evolution of capitalism in italy1," Regional Studies, Taylor & Francis Journals, vol. 36(9), pages 1037-1052.
    4. A. Arrighetti & F. TraĆ¹, 2006. "Struttura industriale e architetture organizzative. Ipotesi sul "ritorno" della gerarchia," Economics Department Working Papers 2006-EP02, Department of Economics, Parma University (Italy).
    5. Lombardi, Mauro, 2003. "The evolution of local production systems: the emergence of the "invisible mind" and the evolutionary pressures towards more visible "minds"," Research Policy, Elsevier, vol. 32(8), pages 1443-1462, September.
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