ELABORATION OF A TYPOLOGY OF EUROPEAN INDUSTRIAL DISTRICTS: METHODOLOGICAL ASPECT (ITALIAN CASE)

Abstract:

The article is devoted to the traditional and new factors of the successful development of some of the Italian industrial districts. Both best practices and new theoretical and methodological approaches of Italian scientists are considered. Also methodical approach of comparative analysis for searching the factors of the industrial districts development is offered. On this methodical base the article makes an attempt to compare industrial regions of different European countries with the purpose to determine the types of ID-development.

Key words: Italian industrial district (ID), ID-typology, ID-development, comparative analysis.

In spite of some difficulties and problems one of the most advanced results in the research of the current issue (in practice and in theory) refer to Industrial Districts (ID) of Europe, first of all including Italy. It is very useful for other industrial districts in the world to know the main factors of ID-success. In order to search for such factors we have to use comparative analysis and compare different objects with each other in order to create the types (models) of such development. Recently the comparison between few regions located in the different part of the world is becoming more popular [9]. But primarily we have to clarify the theoretical basis of ID-functioning.

We have already investigated the industrial districts theories in our personal publications [3].

More important in theory is the case of the Italian scientific school:

1. the first phase of the industrial districts theory developmentis refers to the founder of the theory of "industrial districts" A. Marshall and borrowing his terms "industrial district, region, agglomeration", famous Italian scientist G. Becattini (classic Italian school) developed his theory of the Italian industrial districts [2];
2. then G. Becattini together with the followers (Marco Bellande and L.De Propris) focused on criticizing of the ignoring of the local peculiarities [3]. Researchers are trying to answers the important question: how industrial districts should "respond" to changes in the globalized economy?;
3. the study of innovations in the space is associated with the rediscovery (reconsideration) of the concept «district» - today the region is of interest not as a municipality but as a spatial innovation system, a network cluster of economic entities, «localized knowledge spillovers».

We have to add that the concept «localized knowledge spillovers» (LKS- concept) is the most criticized. It is most fully represented in the works of S. Breschi and F. Lissoni [cit. 8]. The idea of the concept is that for companies operating in the vicinity of the source of knowledge, it is easier and faster to innovate than for rival firms located elsewhere. The authors recognize that knowledge flows are agglomerating force but question the strategy of uniting all flows under one "roof" of LKS.

In the context of the knowledge economy the modern district is characterized as follows (new factors) [3]:

1. there is a balance of cooperation and competition of its subjects;
2. within the region between its subjects intangible communication (information, financial, etc.) dominates;
3. the boundaries between firms are leveled;
4. the boundaries of the district labor market are revised;
5. the migration of knowledge takes place.

Lublinski A. E. compares the theory of A. Marshall and M. Porter (table 1) using another signs.

The essence of comparative method of analysis (CA) is the following: during the analysis of similarities and differences of systems many factors affecting the development of the system are revealed. CA allows to draw the picture of the divers development, to get new knowledge about the system and built it’s typology.

The logic of CA can be presented like this [4]:

Stage 1 -initially, we "build a model" of a system (for example, the region as a system), using the available empirical data (population, total production, etc.), i.e. we describe the system as they are.

Table 1

Stage 2 - we highlight a set of additional, more detailed features and patterns of development of the system for further comparisons based on the characteristics of the current stage of development of the world economy. Each system is presented as a set of parameters by which it can be compared with another system.

Stage 3 - final step is identifying factors of development and the construction of a new model of the same system.

M. Enright offers another means of analyzing clusters (table 2.)

Table 2

Next we perform the comparison in accordance with the method described above.

Italian economy has its own peculiarities.

Based on the traditional approach they can be determined as the following [2, 3]:

1. Italian economy is characterized by the developed north with many industrial companies and the less-developed (weak) south agriculture- based, with the high unemployment rate, it depends on government subsidies;
2. the economy is composed of many small and medium-sized family- owned companies;
3. almost 70% of the Italian GDP is achieved in the service sector; tourism plays a very important role for the economy;
4. mentality and traditions (south mentality, attitude to life and work is very different from the north part of the country);
5. the main peculiarity of the Italian economy are industrial districts.

Italy is famous for its positive economic experience in the field of the “industrial districts” as global players and initiators of global trends. Italian district is socio-economic unit on the local territory with the strong relationship between people and medium and small businesses involved in the same production (definition by the Italian Institute of Statistics) [3]. Italy represented to the world the economic phenomenon of the "Third Italy" (the most famous region is Emilia-Romagna).

The practical experience of the "industrial districts" was successful. The Italian Institute of Statistics ISTAT defined 100 districts and assigns them special criteria: specialization in certain industries (textiles, furniture and ceramics, leather and footwear, agriculture); high concentration of small businesses in one area of the country (specially not urban areas); use of specific regional "know-how" and local resources [2].The process of definition of ID was prepared by ISTAT and it is quit complicated, consist of 3 steps: identification of municipalities; its aggregation into larger areas called Local Labor Market Areas (LLMAs); identification of ID on the based on formulas. In traditional terms of districts Italy's economy (he firs ID-type) is as follows (table 3).

New element was introduced in 2014 by Unioncamere: for the first time Unioncamere wanted to measure performance of ID through the construction of a synthetic indicator based on the dynamics of the following variables:

Number of registered enterprises;

Number of employees;

Value of exports;

Value added;

Sales.

Table 3

*Core business - “traditional” sector (for example, furniture production in the district specializing in furniture production). Non core business - “support” sector of the traditional sector.

In the top twenty of the best performances 18 districts are located in the Center and North and only two in the South, one of them is District Aerospace of Puglia region. The future of Italy is defined by innovative industrial districts. Second place is confidently taken by District Aerospace of Puglia region (Province Puglia). The field of Puglia region specialization is aerospace. Puglia presence in the aviation industry starts from 1934, when a group of wealthy Apulian founded the SACA to provide technical and logistical assistance to the airline ALA,in those years began connections with Greece and Turkey, with direct flights to Brindisi (important city of Puglia Region). Early 1970s Alenia in Foggia realized one establishment devoted to composite structures and a new plant in Grottaglie, dedicated to large assemblies in composite for a new Boeing aircraft. In 2006 began the new wave of promotion of the district informally defining its strategy and initiating a gradual development activities and aggregation of the current members [7].

As areas of specialization Puglia ID operates in: production equipment and machined parts; heat treatment of aluminum and steel; components in com

posite materials, spatial components; steering and monitoring based on space technologies; planetary exploration; advanced sensory systems.

As a system the structure of the cluster is represented by the following elements (the second (innovative) ID-type):

• Group 1 - Large Enterprises (AleniaAeronautica, Agusta Westland, Avio, SSI, ElsagDatamat, DEMA, TELCOM);
• Group 2 - Research Institutions ( Public and Private ) (University of Salento, University of Bari, Polytechnic University of Bari, Aeneas, CNR, consortium Optel, consortium Cetma, Laser Center, Citadel Research);
• Group 3 - Institutions and Associations (Confindustria Puglia, AIAD ( Aerospace and Defence Industries Association ), Province of Brindisi, Municipality of Brindisi, C.I.S.L. Puglia, U.I.L. Puglia, C.G.I.L. Puglia);
• Group 4 - Small and medium-sized enterprises (SMEs).

Sverdlovsk region of Russia is a historically leading industrial region with

the 40% of all industrial production in Russia:

• region has a strong industrial diversification, high qualified specialist, strong research base and experience.Sverdlovsk region has a strategic geographical location, it is situated in the hub of the intersection of the main transport flows which connect Europe and Asia;
• it is defined as a third transport hub of Russia. Investment climate of the region is favorable which is confirmed by the numbers of international investment projects in the different industrial field, for example, production of electric locomotive (Siemens AG and Group SINARA), cement production (Dyckerhoff and Sukholojcement), titanium component production for the airplane industry (The Boeing Company and VSMPO-AVISMA) etc.;
• in the area of the concentration of specific industrial resources the process of Clusters formation is taking place. Industrial companies, laboratories, universities and scientific centers join into organization, developing mutually advantageous innovation programs, which have access to the financial support from the main government fund.

One of the bright example of such kind of cluster is “Titanium valley” cluster and its innovation program development:

• The core of «Titanium valley» is a VSMPO-AVISMA S.P.A company, the worldwide leader in titanium production - 35% of the world share. About 70% of the production output is being exported, supplying: 40% of all needs for Boeing company; 60% for concern EADS, 100% for Embraer, 95 % for BF Goodrich.
• The innovation level of this cluster reached 40% and future growth is expected. «Titanium valley» cluster is one of the 6 territories of Russia who got a status of Free Economic Zone. Total area 584,4 ha., including first section 295,4 ha., second section 289 ha. Government contribute to the project through the infrastructural development (state-private partnership).

To analyze and summarize differences and similarities of two industrial regions (Puglia Industrial District and Titanium valley) and to highlight factors of its successful development we build comparative SWOT Analysis (Table 4).

The experience of both districts can be considered as successful. Thus comparing two industrial regions we can see more similarities than differences. Looking at the weaknesses and threats of one region, another should include the actions in the strategy of its development in order to avoid these weaknesses and threats.

Table 4

Comparative SWOT Analysis similarities and differences (based on the research of the article and using data from reports)

Strengths similarities Presence of large companies based on the principle of global networking for the design and production of components and subsystems Skilled workforce

High concentration of universities and research centres

Massive investments in production Key location

Strengths differences Puglia industrial district has more experience being historical ID and «Titanium valley» is a new formed cluster. Puglia ID has much more companies- members

Cluster «Titanium valley» being «young» is more flexible, using just best-practice and latest innovations

Weaknesses similarities Gap between university’s education and practice

Difficulties to invest in RD from the side of SMEs

Concentration of sales to a few customers

Shortage of specialist

Low level of internationalization of

SMEs

Weaknesses differences «Titanium valley» operates in very specific field, may be difficult to find new members

Lack of a proper aeronautical supplier chainfor Puglia ID

High share of not certified companies for Puglia ID

Unwillingness to start a joint projects of strategic cooperation between operators belonging to different stages of the production chain in Puglia ID

Opportunities similarities Entrance of the new payers, partners and companies

Efficiency not only at factory level (intra plant efficiency) and enterprise (intrafirm efficiency) but also at the level of the network of business partners (inter firm efficiency)

Establishment of the new industrial objects

Presence of international technical experts

Relevance of spill-overs Availability of public resources deriving from structural funds Active usage of the key location Opportunities differences Startupmetadistrict National Aerospace

Threats similarities High mobility of employees and dispersion of human capital.

Political situation inside and outside of country may cause the closure of projects

Threats differences

Puglia ID:

Protection of innovation is not high Capacity emerging in China, India and Russia

Calculated on the base of [3, 7].

Following factors of development of industrial region can be specified for ID-typology:

• concentration of industries in one area;
• formation of core of priority industrial sectors;
• the rationalization of costs;
• a combination of large and medium-sized enterprises;
• interaction with global industrial leaders.

References

1. Enright M. The Globalisation of Competition and the Localization of Competitive Advantage: Policies toward Regional Clustering// Paper presented at the Workshop on Globalisation of Multinational Enterprise Activity and Economic Development, University of Strathclyde, Glasgow, Scotland,1998.
2. Frolova E. A. Development of the Industrial Districts in the context of Globalization (Italian case) // IY International conference Geography of WE. Moscow: RUDN, 2013. Pp. 338-343.
3. Frolova E. A, Frolova E. D. Changes in industrial districts development in conditions of knowledge spillovers (Italian case) // Economy of region № 3, 2014. Pp. 182-191.
4. Kolganov A. I., Busgalin A. V.. Economichesky komparativistika (Comparative Economics). Moscow: INFRA-М, 2005.
5. Lublinski, A. (2003), “Does Geographic Proximity Matter? Evidence from Clustered and Non-clustered Aeronautic Firms in Germany Available at: https://www.google.ru/search?client=
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9. National Observatory of Industrial Districts. 2014. “Report 2014 of National Observatory of Industrial Districts.” Accessed March 10, 2015. Available at: http://www.osservatoriodistretti.org/
10. National Observatory of Industrial Districts. 2014. “Report of Puglia Aerospace Industrial Districts.” Accessed April 1, 2015. Available at: http://www.osservatoriodistretti.org/node/353/distretto-aerospaziale- pugliese
11. Pelyasov A. N. Synergy in Space: regional innovation systems, clusters and knowledge spillovers. Smolensk : Oecumene, 2012.
12. Shelomentsev A. Comparative estimates of Kamchatka territory development in the context of northern territories of foreign countries // Economy of region №2. Pp. 89-104.

Фролова Елена Александровна,

мастер менеджмента и инженерии, ведущий ИТ-консультант, консалтинговая компания Reply-consulting e-mail: e.frolova AT reply.it Милан, Италия

РАЗРАБОТКА ТИПОЛОГИИ ИНДУСТРИАЛЬНЫХ РАЙОНОВ ЕВРОПЫ: МЕТОДОЛОГИЧЕСКИЙ АСПЕКТ (НА ПРИМЕРЕ ИТАЛИИ)

Аннотация:

Статья посвящена традиционным и новым факторам успешного развития некоторых итальянских индустриальных районов. Рассматриваются лучшие практики и новые теоретические и методологические подходы итальянских ученых. Также предлагается методологический подход проведения компаративного анализа для выявления факторов развития индустриальных районов. На этой методологической базе в статье предпринята попытка сравнить индустриальный районы Европы с целью определения типов их развития.

Ключевые слова:

Итальянский индустриальный район (ИД), ИД-типология, ИД-развитие, компаративный (сравнительный) анализ.

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