The Role of Institutional Factors in Fostering the Development of Industrial Districts in Italy

This paper aims at analysing the role of institutional factors in fostering the agglomeration of SMEs in Italian industrial districts. The main findings are: the availability of strong family institutions and a social environment reducing individual opportunism have played a significant role in nurturing local development through industrial agglomeration. There is no clear evidence, apart from the case when a more restrictive definition of industrial district is adopted, of a positive influence of a larger endowment in relational capital. Local government intervention, as measured by the proxy utilised in the study, does not appear to have played an important role in fostering industrial districts development. Apart from providing some empirical support to the thesis of the relevance of social institutions in promoting industrial agglomeration in Italy, the spatial econometric analysis revealed positive and significant spillover effects across neighbouring areas, an evidence consistent with the existence of a contagion process