Industrial clusters and globalization an open challenge

by Paola Govoni

The seventh Milan European Economy Workshop on "Industrial Clusters, Globalization and Regional Policy in the EU" took place on 13-14 June with the participation of experts from 10 countries. The workshop was organized by the University of Milan, Dept. of Economics, Business and Statistics, in collaboration with CSIL, Centre for Industrial Studies, and Centro Studi Luca d'Agliano, and sponsored by the Italian Ministry of Education, University and Research in the framework of the National Programme "FIRB".

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Topics for discussion

The workshop discussed the results of recent researches on industrial districs in Italy and other countries, and their policies implication, as a contribution to assessing role and challenges of clusters facing dramatic and long-lasting changes in the industrial structure and composition.

Aim of this 'labour-intensive' workshop was to provide policy makers and economic advisors with suggestions about how to mantain and possibly enhance the competitive advantage of industrial clusters in a new globalized scenario. In fact, market opening, world-wide globalization and international fragmentation of production processes in the last two decades have started reshaping the traditional industrial districts in European and extra-European countries and they are deeply affecting SMEs and clusters in several traditional industries, especially manufacturing.

According to Marshall, industrial districts benefit from 'the concentration of specialized industries in particular localities' and from the close and creative interconnection between suppliers and buyers based on shared values and norms. The new global firm, however, relies on a wider network of distant suppliers, production partners, and distributors. This internationalized firm tends to shape a new type of cluster, where geographical proximity seems to be less important than it was before.

However, the idea that clusters are based on interconnections of spatially linked companies, suppliers, institutions, trade associations in a common or related industrial sector characterized by commonalities and complementarities and enyoying positive location-specific externalities is still shared by some researchers.

A further definition claims that 'cluster boundaries should reflect economic links and relations, and the existence of knowledge spillovers, and not be limited to a geographical dimension or political and administrative boundaries'.

Under a different view, industrial clusters are networks of productive agents that share knowledge, information, values and implicit or explicit norms, in a multi-level and multi-local dimension. In this view, one major topic for discussion is to assess if industrial districts are evolving in de-localized networks and how.

To policy makers it is crucial to understand the potential trade-off between measures aimed at strengthening local development and other measures aimed at encouraging firms' internationalization, including de-localization of some production processes. It is also important to understand possible complementarities between the two types of policies under certain circumstances.

Most of the existing cluster financial policy measures are aimed at promoting cluster formation and functioning (reducing labour costs and softening financing budget constraints), and concentrate on organizational and administrative aspects, focusing on innovation, recognizing its growth-enhancing role, and pointing to R&D and human capital costs. These measures may not be enough to deal with the highly increasing competitive pressure faced by SMEs and clusters in this era of globalization – or should we say – globality.

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