Building industrial districts: do subsidies help? Evidence from post-war Italy

Abstract/Summary

The ‘historical alternatives’ approach advocates research into the role of national institutions and public policies in the resilience, or decline, of industrial districts. Policies in support of small and medium-sized enterprises (SMEs) were launched in various western economies in the second half of the twentieth century. This article focuses on the paradigmatic Italian case, and investigates the impact of government financial subsidies for SMEs on firms located in a southern and a north-eastern district, between 1971 and 1991. This discussion deepens our understanding of the role of national policies in the re-emergence of industrial districts in the decades of the ‘Second Industrial Divide’. Furthermore, it indicates the importance of firms’ utilization of subsidies and their ecosystem as complementary to the policy’s effectiveness.