Keynote lecture at the I Workshop d’Economia Valenciana (http://www.econval.org), 4th November 2016, University of Valencia, - reporting hard facts on the key transformations affecting Italian clusters in the last decade; - describing three evolutionary trajectories out of the traditional industrial district model, based on fresh evidence on the experience of the Belluno eyewear, Riviera del Brenta footwear and Montebelluna Sportsystem districs (ID); - suggest the determinants of the most resilient ID trajectories within Global Value Chains (GVC)

1. Els clústers industrials italià:
reptes i perspectives de futur
valentina.demarchi@unipd.it
I Workshop d’Economia Valenciana
Universitat Politècnica de València
4/11/16

2. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
Agenda
• The (persistent) relevance of IDs for the Italian economy
• The key transformations that affected IDs in the last 15-20
years and how they affected the Marshallian configuration
• Interpreting the change: key trajectories of ID evolution in
Global Value Chains
• The determinants of trajectories of ID resilience in the global
economy

3. I Workshop de la Economia Valenciana 4/11/16 Valentina De Marchi
The Italian anomaly of
the ‘70s and ‘80s
• Traditional sectors
• Low technological content
• Small or micro enterprises
BUT
• High growth rates
• Leadership in international
markets
• Flexibility, innovation,
customization

4. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
(Marshallian) industrial districts:
backbone of the Italian economy (1)
Industrial districts
• A population of firms (mostly SMEs)
• Specialization in a specific business field
• Limited territorial area
• Division of labour and inter-organizational
relationships
(Marshallian) Industrial districts
• Interpenetration between production and
social structures

5. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
(Marshallian) industrial districts:
firms and employment growth (2)
Source: Elaboration on ISTAT CENSUS data
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
0
200
400
600
800
1000
1200
1400
1600
1800
1961 1971 1981 1991 2001
Local firms (bars, left axis) and employees (lines, right
axis) in the gold jewellery IDs
AREZZO ALESSANDRIA VICENZA

6. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
(Marshallian) industrial districts:
innovation (3)

7. I Workshop de la Economia Valenciana 4/11/16 Valentina De Marchi
1970 (Tecnica) 1974 (SIDI) ‘70 (Alpinestar)
1982 (Roces) 1982 (Lotto)

8. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
A persistent relevance for the
Italian economy…
Source: Intesa San Paolo (2015). 2014 data
Source: ISTAT Census 2011. 2011 Data

9. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
…But under different premises
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
0
200
400
600
800
1000
1200
1400
1600
1800
1961 1971 1981 1991 2001 2011
Local firms (bars, left axis) and employees (lines,
right axis) in the gold jewellery IDs
AREZZO ALESSANDRIA VICENZA
Source: Elaboration on ISTAT CENSUS data
See also: De Marchi, Gereffi, Lee (2014), European Planning Studies

10. Local clusters in global chains:
understanding the key
transformations at stake

11. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
IDs at the globalization challenge: why
the Marshallian configuration is fading out
MARSHALLIAN IDs
Interpenetration
between
PRODUCTION and
SOCIAL structures
a) LARGER FIRMS
EMERGING
(higher
concentration)
b) DECREASING
NUMBER OF
FIRMS AND
EMPLOYEES
(reduction in the ID
population)
ExternalInternal
1. Global competition of intermediate and
final goods & international organization
of productive activities
2. Rising importance of global lead firms
and concentration of distribution
activities
3. Increasing presence of immigrant
entrepreneurs and workers
4. Local entrepreneurship shortage

12. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
1. Global competition of intermediate and final
goods & riorganization of productive
activities at the global level (1)
Source: OSEM (2008). Survey data
Share of firms of the Montebelluna ID that have
delocalized production activities, by size class

13. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
2. Rising importance of global lead firms and
concentration of distribution activities
• Global lead firms focusing on higher value-added activities
(mostly retailing) orchestrating production across global
chains:
! IKEA – With 31.9 billion sales in 2015 (+114.1% as of 2005) is by far the largest
furniture retailer worldwide. Its home-furnishing articles are realized mostly
by 978 suppliers (subcontractors) based in 50 countries (just 13% of
employees working in production units).
! Wal-mart, Nike, Apple, LVMH,….
• Estimates suggest that now 80% of world trade depend on
such global chains (UNCTAD, WIR 2013)
• Increasing relevance of groups and medium/large sized
companies within the IDs

14. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
Prato
Textile
Bassano
Furniture
Belluno
Eyewear
Montebelluna
Sportsystem
The fading out of the Marshallian model: an
increasing heterogeneity across and within IDs
Source: Intesa San Paolo (2015) “Economia e Finanza dei distretti industriali”. Note: size of the circles indicate firms’ turnover in
2014

15. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
The fading out of the Marshallian model: an
increasing heterogeneity across and within IDs (2)
Bassano
Furniture
Livenza
Furniture
Source: Intesa San Paolo (2015) “Economia e Finanza dei distretti industriali”.
Note: size of the circles indicate firms’ turnover in 2014

16. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
Is there still a ‘ID effect’ or which IDs
are still characterized by a ID effect?
Turnover variation
(median values)
International competitiveness
and innovation (2014)
Share of
Exporters
Patents every
100 firms
Source: Intesa San Paolo (2015) “Economia e Finanza dei distretti industriali”. Note: median values reported

17. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
2.ReductionintheID
population
High Decline Hierarchization
Low Reproducing ID
1. Concentration at firm level
Low Med/High
MARSHALLIAN
Out of the Marshallian configuration:
is it possible to identify trajectories?
See also: De Marchi and Grandinetti (2012), Studi Organizzativi;
De Marchi and Grandinetti (2014), Competition & Change

18. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
High
Low/null
Low/null High
Is it possible to identify trajectories?
An application to the Veneto region
Decline
Source: Our elaboration
based on Movimprese and AIDA data
FOOTWEAR
MARBLE
SPORTSYSTEMLEATHER
GLASS
FURNITURE (TV)
CERAMICSFURNITURE (VR)
JEWELLERY
EYEWEAR
0%
10%
20%
30%
40%
50%
60%
0 500 1,000 1,500 2,000 2,500 3,000
Hierarchization
Reproducing ID
2.ReductionintheIDpopulation
(numberoffirms,2004-2014)
1. Concentration (turnover, HH index on 2014 data)
-
-
-
-
-
-

19. Investigating the determinants of
the trajectories: lessons from
selected Veneto IDs

20. I Workshop de la Economia Valenciana 4/11/16 Valentina De Marchi
Footwear
(Riviera del
Brenta)
Eyewear
(Belluno)
Sport System
(Montebelluna)

21. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
The Belluno eyewear: few home-grown global
lead firms driving to hierarchization
Belluno
eyewear
Var firms 04-14 -49.8%
Var. employment 04-14 28.0%
Turnover by top firm 46.9%
Activities mostly
performed locally
Pre-production,
production & post
production activities
Upgrading trajectories
Vertical Integration,
control of retailing
activities
Key local companies
Global leaders
(Luxottica, Safilo)
Global lead firms Homegrown
Firms
Incidence on
ID turnover
Large
(turnover >50mil)
7 97.5%
Medium
(10-50mil)
6 0.7%
Small
(<10 mil.)
81 1.8%
Source: Own elaboration on AIDA data.
Note: data refer to 2012 and to limited liability
companies only.
ID composition, by size

22. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
The Montebelluna sportsystem: evolution via
diversification, innovation, branding (1)
Belluno eyewear
Montebelluna
Sportsystem
Var firms 04-14 -49.8% -12.6%
Turnover by top firm 46.9% 27.9%
Activities mostly
performed locally
Pre-production,
production & post
production activities
Pre-production (some
post-production)
Upgrading trajectories
Vertical Integration,
control of retailing
activities
Product diversification,
internationalization of
sourcing, branding (OBM)
Key local companies
Global leaders
(Luxottica, Safilo)
Internationally recognized
OBMs; global leaders
(Geox); suppliers of
services, machineries
Global lead firms Homegrown Homegrown and foreign

23. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
The Montebelluna sportsystem:
diversification (2)
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2008
Winter shoes Technical shoes Other (shoes+clothing)
Source: Own elaboration on OSEM data
Apre-ski boots, trekking
shoes, ski boots,…
Football, tennis, moto
shoes, rollerblades,…
ID turnover by market segment, ‘85-’08
City shoes, clothing

24. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
The Montebelluna sportsystem:
key actors of the change (3)
A number of capable OBM renowned on global markets (niche),
developing global supply chains and retaining selective relationship
with other ID firms
KIBS or other specialized suppliers, relying on the ID as context for
sperimentation but working mostly for global firms

25. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
The Riviera del Brenta footwear: evolving
by manufacturing for global brands (1)
Belluno
eyewear
Montebelluna
Sportsystem
Riviera del Brenta
footwear
Var. firms 04-14 -49.8% -12.6% -2.4%
Turnover by top firm 46.9% 27.9% 21.2%
Activities mostly
performed locally
Pre-production,
production & post
production activities
Pre-production (some
post-production)
Production
Upgrading
trajectories
Vertical Integration,
control of retailing
activities
Product diversification,
internationalization of
sourcing, branding (OBM)
From OBM to
OEM (producing
for global brands)
Key local companies
Global leaders
(Luxottica, Safilo
Internationally recognized
OBMs; global leaders
(Geox); suppliers of
services, machineries
Capable OEMs
Global lead firms Homegrown Homegrown and foreign Foreign
Source: De Marchi, Gereffi, Grandinetti (2017) Routledge

26. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
The Riviera del Brenta footwear: manufactu-
ring capabilities attracting global brands (2)

27. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
What the key determinants of the different
ability to find a suitable position in the new
global context?
Decline Hierarchization Reproducing
Global
leadfirms
Homegrown (inside-out)
Present Present
Foreign (outside-in)
Local
dynamicactors
Capable OEMs
(manufacturing cap.)
Present
(variety)
Highly-specialized
suppliers (specialized
manuf. cap.)
Capable OBM (post-
production capab.)
Capable local institutions

28. Trajectories of evolution in Italian IDs:
what lessons for local development?

29. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
ID reproducing (on different premises) in
global markets: getting back to the firm
• Italian ID transforming out of the Marshallian model:
! Shrinking population & local relational fabric
! Increasing importance of larger firms
• Globalization spurring increasing heterogeneity
across (and within) IDs:
! Decline, hierarchization, reproducing trajectories
• Moving the focus from the system to (key) firms:
! Global lead firms
! (Variety of) local dynamic actors

30. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
Local clusters in global chains:
still a role for (manufacturing) SMEs?
• Variety of (dynamic) SMEs necessary for ID resilience
! Integrating local and global knowledge & supporting
(selective) local relationships
! Beyond the (solo) ‘local lead firm’
• Finding a suitable position in GVC via different roles,
depending on key assets (manufacturing – OEM;
branding & retailing – OBM; innovation - specialized
suppliers)
• Back to manufacturing (again)?
! Innovation-production nexus
! Anchor for global lead firm presence
! Diversification and new markets development

31. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
Evolving evolutionary trajectories:
what roles for policy making?
• Different trajectories, which may evolve over time
! tailored policies supporting the achievement of thriving trajectories
! Role of (entrepreneurial) district institutions
• Vulnerable actors
! enabling consolidation (e.g., via network contracts)
• Global knowledge integration (vs. over-embeddedness)
! supporting integration with ‘beneficial’ global actors
• Supporting reproducibility of key assets attracting (local and foreign)
companies
! Maintaining (e.g., ‘make’ skills training)
! Communicating & nurturing (e.g., context for global awareness & trust
recreation

32. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
Veneto region and Comunitat
Valenciana: space for comparison?
• Several commonalities opening up space for
experiences exchange:
! Manufacturing and ID relevance
! Embedding in Global Value Chains
! Entrepreneurship (in diversified sectors)
! Innovation capabilities
! Reproducing IDs and local dynamic actors

33. I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi
References
• De Marchi, V., Grandinetti R. (2012). "Dove stanno andando i distretti industriali? Un tentativo
di risposta a partire da un'indagine in Veneto", Studi Organizzativi, 2, 142-175
• De Marchi V., Lee J., Gereffi G. (2014), "Globalization, Recession and the internationalization
of industrial districts: evidence from the Italian gold jewellery industry", European Planning
Studies, 22(4): 866-884.
• De Marchi, V., & Grandinetti, R. (2014). “Industrial Districts and the Collapse of the
Marshallian Model: Looking at the Italian Experience”. Competition & Change, 18(1): 70-87.
• De Marchi V., Grandinetti R. (2016) “Lo Sportsystem di Montebelluna: il distretto dalle sette
vite”, Economia e Società Regionale, 34(1)
• De Marchi V., Gereffi G., Grandinetti R (2017) “Describing the change: evolutionary
trajectories of industrial districts in global value chains”, in De Marchi V., Di Maria E., Gereffi
G. (eds) “Local clusters in Global Value Chains: linking actors and territories through
manufacturing and innovation”, Routledge
• Intesa San Paolo (2015) “Economia e Finanza dei distretti industriali”
• OSEM (2008) “Rapporto OSEM 2008 e previsioni 2009”
• UNCTAD (2013) “World Investment Report 2013. Global value chains: investment and trade
for development”