Diversity, Not Specialization: The Ties That Bind the (New) Industrial District

Abstract

Whatever they are exactly, industrial districts are also a worldly success and a conceptual innovation. In Italy, the map of district agglomerations of small and medium-sized firms specializing in particular branches of light industry is no longer limited to the triangle marked by Venice, Florence, and Ancona in the Adriatic Marches. New agglomerations are spreading, as though by contagion, down the shores of the Adriatic and the Mediterranean, now and again obstructed in their march south by the detritus of failed, heavy industrial complexes. Quite apart from this expansion of the districts’ homeland, district-like agglomerations are emerging in some patches of the South of Italy. Looking at the economic map of Europe, the economic agronomist sees a “hot banana” of thriving districts curving from London, through Switzerland and the Southwest of Germany into Northern Italy. In the developing economies districts are identified as a motor of growth in countries as different as Chile, Brazil, and India.

The advance of the industrial district as a concept has at least kept pace with its progress in fact. Discussion of economic growth in both the advanced and developing countries is dominated by what is often called the Washington consensus — concern for opening economies to free trade, getting exchange rates and other prices right, and (lately) building the institutions needed to do this. But insofar as it is not, debate gravitates toward the creation and expansion of “clusters” — the business name for districts. In the European Union in particular fostering clusters is often seen as a way of encouraging economic competitiveness without giving in to US pressure to give markets free reign. In theoretical debates about economic growth and international trade too agglomerations, often explicitly identified with districts, have come to play a central role (although, as we shall see, with surprisingly subversive effects).