The industrial districts' contribution to change in the Italian economy

Between 1981 and 2001 Italy became a services-oriented economy. The loss of jobs in manufacturing was less pronounced in Italy’s organized industrial districts than in the rest of the country. The branches of manufacturing that typify the districts outperformed the others in terms of employment trends. In addition, the districts recorded larger employment gains in business services, including ICT-related services. In more recent years (2001-2004) these trends have weakened in the industrial districts, which now seem vulnerable to the repercussions of global economic transformation. Whatever the causes of this vulnerability, they do not include the size of district firms. The district mode of production is the one best able to cope with fragmented and variable demand, but it is not equally well suited to competing on mass markets. If market developments are one cause of the districts’ more recent problems, institutional factors also must be considered, in the light of the fact that after fifteen years of targeted industrial policy measures the districts are weaker, not stronger.