Financing industrial districts in Italy, 1971-91: A private venture?

Business History

Volumn 47, Issue 4, 2005, Pages 569-593

  Spadavecchia, Anna ^a  

^a UNIVERSITY OF READING   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

FINANCIAL PROVISION; INDUSTRIAL DISTRICT;

EASTERN HEMISPHERE; EURASIA; EUROPE; ITALY; SOUTHERN EUROPE; WORLD;

EID: 23344438788     PISSN: 00076791     EISSN: 17437938     Source Type: Journal    
DOI: 10.1080/00076790500133066     Document Type: Review

References (127)

1. I wish to thank Giovanni Federico for these points. See also V. Zamagni, 'Italy', in M.S. Schulze (ed.), Western Europe: Economic and Social Change since 1945 (Harlow, 1999), pp.321-35.
2. See for instance the Italian GDP per capita as compared to other countries in A. Maddison, Monitoring the World Economy, 1820-1992 (Paris, 1995).
3. The brief definition mentioned in the text captures two key elements of the Marshallian discussion of IDs, namely the concentration of firms in the same locality and the division of labour among such firms, see Principles of Economics (London, 1890, Ninth Variorum edn. 1961), vol.1, p.271;
4. and also The Early Writings of Alfred Marshall, 1867-1890, edited by J.K. Whitaker (London, 1975), vol.2, pp.197-8. However, there are various definitions of IDs emphasising various features of this model of business organisation.
5. For a definition more attentive to socio-economic features see G. Beccattini, 'Sectors and/or Districts: Some Remarks on the Conceptual Foundations of Industrial Economics', in E. Goodman, J. Bamford and P. Saynor (eds), Small Firms and Industrial Districts in Italy (London and New York, 1989), pp. 123-52;
6. for a definition placing more emphasis on the division of labour see M.J. Enright, 'Organization and Coordination in Geographically Concentrated Industries', in N.R. Lamoreaux and D.M.G. Raff (eds), Coordination and Information. Historical Perspectives on the Organization of Enterprises (Chicago, IL, 1995), pp. 103-42.
7. P. Guerrieri and C. Milana, L'Italia e il commercio mondiale (Bologna, 1990), pp. 102-10.
8. The area including North-Eastern regions is called 'Third Italy' as it displays a pattern of industrialisation characterised by SMEs, which makes them stand apart from the industrial triangle, the North-West and from the under-industrialised South. See A. Bagnasco, Tre Italie. La problematica territoriale dello sviluppo italiano (Bologna, 1977).
9. M. Bellandi and G. Dei Ottati, 'Per una ≪ rilettura territoriale delle trasformazioni dell'economia italiana ≫: cronaca di un progetto', in G. Becattini, M. Bellandi, G. Dei Ottati and F. Sforzi (eds), Il caleidoscopio dello sviluppo locale. Trasformazioni economiche nell'Italia contemporanea (Turin, 2001), pp.29-39.
10. A. Rinaldi, Distretti ma non solo. L'industrializzazione della provincia di Modena (1945-1995) (Milan, 2000), p.32.
11. G. Conti and G. Ferri, 'Banche locali e sviluppo economico decentrato', in F. Barca (ed.), Storia del capitalismo italiano dal dopoguerra ad oggi (Rome, 1997), pp.429-65.
12. The possession of land is considered of particular importance in the transformation of the agricultural family into an entrepreneurial unit as the sale of the land provides the initial capital to invest in the family business. See for instance M. Paci, La Struttura Sociale Italiana (Bologna, 1982), p. 118;
13. Bull and Corner point out a similar dynamic behind the emergence of family business in the second half of the nineteenth century, whereas Colli refers more broadly to family capital. A. Bull and P. Corner, From Peasant to Entrepreneur (Oxford, 1993), pp.144-5;
14. A. Colli, The History of Family Business, 1850-2000 (Cambridge, 2003), p.57.
15. A. Saba, Il modello italiano (Milan, 1995), p. 132;
16. in other studies the argument of the importance of self-financing is implicit, see for instance G. Fuà and C. Zacchia (eds), Industrializzazione senza fratture (Bologna, 1983);
17. Bagnasco, Tre Italie.
18. For an overview of the extent of state intervention in the Italian economy see F. Padoa Schioppa Kostoris, Italy, the Sheltered Economy: Structural Problems in the Italian Economy (Oxford, 1993).
19. See for instance the report by the study centre of the Bank of Italy commissioned by the governor Menichella, which shows that firms with less than 100 workers employed almost 37 per cent of the national workforce in 1947. P.F. Asso and G. Raitano, 'Trasformazione e sviluppo del credito mobiliare negli anni del governatorato Menichella', in F. Cotula (ed.), Stabilità e sviluppo negli anni cinquanta, vol.3: Politica bancaria e struttura del sistema finanziario (Rome-Bari, 1999), pp.309-589.
20. See G. Scimone, 'The Italian Miracle', in J. Hennessy, V. Lutz and G. Scimone, Economic Miracles (Leavsden, 1964), pp.179-82. The author considers the proliferation of small firms as one of the bases of the Italian 'economic miracle'.
21. D. Menichella, 'Memoria sottoposta dall'IRI all'esame della Corporazione dell previdenza e del credito' (Rome, 1937), published in F. Cotula, C.O. Gelsomino and A. Gigliobianco (eds), Donato Menichella. Stabilità e sviluppo dell'economia italiana 1946-1960, vol.1: Documenti e discorsi (Rome-Bari, 1997), pp.128-52.
22. This article does not investigate the evolution of the economic and political reasons behind the support to SMEs in the framework of the national industrial policy or the regional policy. For a discussion of the economic reasons see A. Spadavecchia, 'State Subsidies and the Sources of Company Finance in Italian Industrial Districts, 1951-1991' (unpublished Ph.D. thesis, University of London, 2003), pp.94-163 and bibliography therein.
23. For a critical discussion of the political reasons see L. Weiss, Creating Capitalism. The State and Small Business since 1945 (Oxford, 1988), pp.104-58.
24. Weiss, Creating Capitalism.
25. I b i d.
26. M.J. Piore and C.F. Sabel, The Second Industrial Divide: Possibilities for Prosperities (New York, 1984), pp.29-30 and 228-9;
27. C. Sabel and J. Zeitlin, 'Historical Alternatives to Mass Production: Politics, Markets and Technology in the Nineteenth Century Industrialization', Past and Present, Vol.108 (1985), pp.133-76.
28. G. Lizzeri, Mezzogiorno possibile. Dati per un altro sviluppo (Milan, 1983);
29. G. Federico and R. Giannetti, 'Italy: Stalling and Surpassing', in J. Foreman-Peck and G. Federico, European Industrial Policy: The Twentieth-Century Experience (Oxford, 1999), pp.124-51 and bibliography therein.
30. A. Del Monte, 'The Effects of Regional Policy on the Industrial Development of the South of Italy', Mezzogiorno d'Europa, Vol.4 (1984), pp.563-83;
31. R. Garavini, F. Calistri and O. Cilona, La quarta Italia (Rome, 1988).
32. The sources of finance of British IDs have received more attention than those of their Italian counterparts. See for instance P. Hudson, The Genesis of Industrial Capital (Cambridge, 1986). Several works have provided evidence of the existence of inter-firm circuits of credit within the cluster in addition to bank-industry relations.
33. Recent works include A. Popp, Business Structure, Business Culture and the Industrial District (Aldershot, 2001), passim and p.226;
34. J. Smail, 'The Culture of Credit in Eighteenth-Century Commerce: The English Textile Industry', Enterprise and Society, Vol.4 (2003), pp.299-325;
35. L. Newton, 'Regional Bank-Industry Relations during the Mid-Nineteenth Century: Links between Banks and Manufacturing in Sheffield, c.1850 to c.1885', in A. Godley and D.M. Ross (eds), Banks, Networks and Small Firm Finance (London, 1996), pp.65-83. However, this work has limited implications for Italian IDs in the second half of the twentieth century, due to the all too evident historical contrasts and the different importance of commercial credit and bank capital in the two countries since their industrialisation. Commercial credit played a key role in the industrialisation of Britain.
36. In Italy and other continental European countries, bank capital was of fundamental importance in promoting industrialisation, see A. Gerschenkron, Economic Backwardness in Historical Perspective (Cambridge, MA, 1966), pp.11-16;
37. M. Collins, Banks and Industrial Finance in Britain, 1800-1939 (Houndmills, 1991), pp.22-32;
38. J.S. Cohen, 'Financing Industrialization in Italy, 1894-1914: The Partial Transformation of a Late-Comer', Journal of Economic History, Vol.27 (1967), pp.363-82.
39. J.E. Stiglitz and A. Weiss, 'Banks as Social Accounts and Screening Devices for the Allocation of Credit', Greek Economic Review, Vol.12 Supplement (1990), pp.85-118.
40. J.E. Stiglitz and A. Weiss, 'Credit Rationing in Markets with Imperfect Information', American Economic Review, Vol.71 (1981), pp.393-410;
41. D.J. Storey, Understanding the Small Business Sector (London, 2000);
42. D.M. Ross, 'Information, Collateral and British Bank Lending in the 1930s', in Y. Cassis, G.D. Feldman and U. Olsson (eds), The Evolution of Financial Institutions and Markets in Twentieth-century Europe (Aldershot, 1995), pp.273-94, and bibliography therein;
43. F. Carnevali, 'Between Markets and Networks: Regional Banks in Italy', in Godley and Ross, Banks, Networks, pp.84-100.
44. Saba, Il modello, p.132.
45. G. Dei Ottati, 'Trust, Interlinking Transactions and Credit in Industrial Districts', Cambridge Journal of Economics, Vol.18 (1994), pp.529-46.
46. Saba, Il modello, pp.136-7.
47. See Gerschenkron, Economic Backwardness, pp.11-16;
48. Cohen, 'Financing Industrialization in Italy'.
49. Conti and Ferri, 'Banche locali', pp.429-65;
50. G. Ferri and M. Messori, 'Bank Firm Relationships and Allocative Efficiency in Northeastern and Central Italy and in the South', Journal of Banking and Finance, Vol.24 (2000), pp.1067-95.
51. A similar line of research has been undertaken to investigate the role of bank finance in the production of woollen goods, J. Cuevas, 'Banking Growth and Industrial Financing in Spain during the Nineteenth Century', Business History, Vol.44 (2002), pp.61-94.
52. F. Carnevali, 'Finance in the Regions: The Case of England after 1945', in Y. Cassis, G.D. Feldman and U. Olsson (eds), The Evolution of Financial Institutions and Markets in Twentieth Century Europe (Aldershot, 1995);
53. Conti and Ferri, 'Banche locali'.
54. From the Bank Reform Law of 1936 until the wave of privatization started 1992-93, the Italian banking system was fragmented geographically, meaning that banks could operate on a smaller or wider territory according to the size of their deposits. It was also fragmented in market terms as banks could collect and lend money on the short-term market only (less than one year), and Medium Term Credit Institutions could collect and lend money on the medium-/long-term market only (more than five years). The two markets are closely connected, as banks are among the establishing partners of the Medium Term Credit Institutions and finance them by purchasing their bonds.
55. Mediocredito Centrale, Bilancio 1955 (Rome, 1956), p.13;
56. Banca d'Italia, Bollettino 1964 (Rome, 1965).
57. ABI, Credito speciale all' industria (Rome 1963), pp.193-4.
58. Banca d'Italia, Bollettino 1964 (Rome, 1965).
59. K. Allen and M.C. MacLennan, Regional Problems and Policies in Italy and France (London, 1970), pp.55-7.
60. For the implication of the abandonment of size limits for eligible firms in Southern Italy see S. Conti, 'Industrialization in a Backward Region: The Italian Mezzogiorno' (unpublished Ph.D. thesis, University of London, 1979), p.126;
61. M.F. Dunford, Capital, the State and Regional Development (London, 1988), p.149;
62. Federico and Giannetti, 'Italy'.
63. C.W. Calomiris and C.P. Himmelberg, 'Government Credit Policy and Industrial Performance (Japanese Machine Tool Producers, 1963-91)', The World Bank, Policy Research Working Paper no.1434 (Washington, 1995).
64. Garavini et al., La quarta;
65. for an updated account of the evolution of the Barletta ID see M. D'Ercole, 'Il distretto barlettano della calzatura', in G. Viesti (ed.), Mezzogiorno dei distretti (Rome, 2000).
66. Istat, Rapporto Annuale. La situazione economica del Pease nel 1995 (Rome, 1996). Using the Sforzi methodology, the Istat report identified 199 IDs.
67. About the Sforzi methodology see also S. Brusco and S. Paba, 'Per una storia dei distretti industriali italiani dal secondo dopoguerra agli anni novanta', in Barca (ed.), Storia del capitalismo italiano, pp.265-333.
68. As mentioned in note 4 there are various definitions of IDs. The methodology referred to in the text captures the Marshallian concept of concentration of similar industries in the same locality, source of external economies of scale, and division of labour, source of economies of specialisation. For the discussion and implementation of the Sforzi methodology on the Barletta and San Mauro IDs see Spadavecchia, 'State Subsidies', pp.223-33.
69. P. Crestanello, 'La trasformazione in 10 distretti industriali durante gli anni '80', in R. Varaldo and L. Ferrucci (eds), Il distretto industriale tra logiche di impresa e logiche di sistema (Milan, 1977), p.253.
70. L. Segreto, 'La storia, le storie. Imprese e imprenditori a Reggio Emilia dal 1945 agli anni Settanta', in G.L. Basini and G. Lugli (eds), L'affermazione dell'industria. Reggio Emilia 1940-1973 (Rome-Bari, 1999), pp.293-482.
71. Crestanello, 'La trasformazione', p.246.
72. M. Fratianni and F. Spinelli, A Monetary History of Italy (Cambridge, 1997), pp.235-9 and 250-51;
73. Rinaldi, Distretti, p.176.
74. R. Garavini, F. Calistri and O. Cilona, La Quarta Italia (Rome, 1988), pp.240-42.
75. S. Brusco, G. Cainelli, F. Forni, M. Franchi, A. Malusardi and R. Righetti, 'The Evolution of Industrial Districts in Emilia-Romagna', in F. Cossentino, F. Pyke and W. Sengenberger (eds), Local and Regional Response to Global Pressure: The Case of Italy and its Industrial Districts (Geneva, 1996), pp.17-36.
76. Concerning the changes in the industrial structure of IDs in Emilia Romagna see A. Rinaldi, 'The Emilian Model Revisited After Twenty Years Later', Business History, Vol 47 (2005), pp.244-66.
77. S. Brusco and S. Paba, 'Per una storia dei distretti industriali italiani dal secondo dopoguerra agli anni novanta', in Barca (ed.), Storia del capitalismo italiano, pp.265-333;
78. Crestanello, 'La trasformazione', pp.247-50.
79. Brusco et al., 'The Evolution of Industrial Districts', p.30.
80. Crestanello, 'La trasformazione', pp.247-50.
81. Brusco and Paba, 'Per una storia', p.290.
82. Garavini et al., La quarta, p.356.
83. Unioncamere, Imprese ed istituzioni nei distretti industriali che cambiano (Milan, 1995), pp.288-90.
84. G. Viesti, Come nascono i distretti industriali (Rome-Bari, 2000).
85. Ibid., pp.49-55.
86. F. Siracusano, and C. Tresoldi, 'Le piccole imprese manifatturiere nel Mezzogiorno: diseconomie esterne, incentivi, equilibri gestionali e finanziari', in Banca d'Italia, Il sistema finanziario nel Mezzogiorno, Numero Speciale dei Contributi all'analisi economica (Rome, 1990), pp.103-43;
87. M. Bagella and A. Caggese, 'Struttura del capitale, finanziamenti agevolati e redditività delle imprese manifatturiere italiane', Rassegna Economica, Vol.59 (1995), pp.813-37;
88. M. Bagella, L. Becchetti and A. Caggese, 'Financial Constraints on Investments: Evidence from the Direct Revelation of Italian Firms', Rivista di Politica Economica, Vol.86 Nos.11-12 (1996), pp.35-62;
89. R. Faini, G. Galli and C. Giannini, 'Finance and Development: The Case of Southern Italy', in A. Giovannini (ed.), Finance and Development: Issues and Experience (Cambridge, 1992), pp. 158-214.
90. Including food processing, wood, furniture, paper, publishing, photography and rubber. Sectors such as metal and mineral processing, oil refining and construction have not been included.
91. The different closing dates for the collection of data are due to the availability of records. Having collected records of 32 companies in the Barletta ID, it seemed unnecessary to collect records starting after 1984, as these would offer only seven years of analysis. The smaller number of records available for the San Mauro Pascoli ID suggested the extension of the closing date to 1988.
92. G. Foster, Financial Statement Analysis (Englewood Cliffs, 2nd edn. 1986), pp.2, 24.
93. R. Faini, 'Incentivi e piccole e medie imprese nel Mezzogiorno', Ricerche Economiche, Vol.39 (1985), pp.318-36.
94. Siracusano and Tresoldi, 'Le piccole', p.133.
95. Ibid., pp. 127, 159.
96. J. Edwards and K. Fisher, Banks, Finance and Investment in Germany (Cambridge, 1994), p.60.
97. Siracusano and Tresoldi, 'Le piccole', p.136.
98. A. Fazio, 'Credito ed attività produttiva nel Mezzogiorno', Banca d'Italia, Bollettino Economico, No.5 (1985), pp.27-42.
99. F. Marzano and A. Murolo, 'The Role of the Credit System in the Development of Southern Italy: A Few Critical Observations', Journal of Regional Policy, Vol.5 (1985), pp.52-3.
100. N. D'Amico, G. Parigi and M. Trifilidis, 'I tassi d'interesse e la rischiosita' degli impieghi bancari nel Mezzogiorno', in Banca d'Italia, Il sistema finanziario, pp.305-43.
101. Faini et al., 'Finance', pp.199-200.
102. Siracusamo and Tresold, 'Le piccole', pp.113-19 and 125-7.
103. N. Rossi and G. Toniolo, 'Italy', in N.F.R. Crafts and G. Toniolo (eds), Economic Growth in Europe since 1945 (Cambridge, 1995), p.430.
104. A. Giannola, 'Mezzogiorno, Industrializzazione e Imprese', in Banca d'Italia, Il Sistema Finanziario nel Mezzogiorno, p.181.
105. The theoretical foundations of this argument are in G.J. Stigler, 'The Division of Labour is Limited by the Extent of the Market', Journal of Political Economy, Vol.59 No.3 (1951), pp.185-93;
106. and A. Leijonhufvud, 'Capitalism and the Factory System', in R.N. Langlois (ed.), Economics as a Process: Essays in the New Institutional Economics (Cambridge, 1986), pp.203-23.
107. Spadavecchia, 'State Subsidies'.
108. Siracusano and Tresoldi, 'Le piccole', pp.103-67.
109. The Bank of Italy sample allows the verification of this point also on the basis of the appropriate indicator. Siracusano and Tresoldi, 'Le piccole', pp.127, 159.
110. Siracusano and Tresoldi, 'Le piccole', p.112;
111. a different interpretation is provided in A. Del Monte and A. Giannola, Istituzioni Economiche e Mezzogiorno (Rome, 1997), p.288.
112. Ibid., pp.122-3.
113. CCF, 4351, Company Nvi, Sentenza di Fallimento del Tribunale di Forli, 28 May 1987; the company became public in 1983 and went bankrupt in 1987.
114. W.H. Beaver, 'Financial Ratios as Predictors of Failure', Journal of Accounting Research, Supplement, Empirical Research in Accounting: Selected Studies in 1966 (1966), pp.71-127.
115. D'Amico et al., 'I tassi', p.331.
116. CCB, 2169, Company Ser, Report to the balance sheet 1984 and 1985.
117. CCB, 3094, Company Smo, Report to the balance sheet 1979 and 1980.
118. CCF, 6934, Company Nrm, Report to the balance sheet 1986; CCF, 8146, Company Nal, Report to the balance sheet 1992.
119. The company was declared bankrupt in 1981. CCF, 5581, Company Nwi, Sentenza di Fallimento del Tribunale di Forli, 9 April 1981.
120. The 'apparent' exception of the 1971-75 sub-period is due to one company. This started the liquidation procedure in 1977 and as late as 1976 partners had financed the company (the contribution by directors was 95 million current lire, representing 20 per cent of the total liabilities of the company and equal to 70 per cent of the company's equities); CCB, 1786, Company Sma.
121. These issues are further discussed in A. Spadavecchia, 'State Subsidies, Investment Behaviour and Risk in Italian Industrial Districts, 1971-1991' (paper presented at the Economics and Business Historical Society Conference, Anaheim, 2004).
122. C. Sabel and J. Zeitlin, 'Historical Alternatives to Mass Production: Politics, Markets and Technology in Nineteenth-Century Industrialization', Past and Present, No.108, pp.133-76;
123. M.J. Piore and C.F. Sabel, The Second Industrial Divide. Possibilities for Prosperity (New York, 1984).
124. For an overview of the variety of pattern of development of IDs in the South see Viesti, Come nascono;
125. G. Viesti (ed.), Mezzogiorno dei distretti (Rome, 2000).
126. S. Brusco and D. Bigarelli, 'Regional Productive Systems in the Knitwear and Clothing Sectors in Italy: Industrial Structure and Training Needs', Centre for Business Research, University of Cambridge, Working Paper No. 51 (March 1997).
127. Crestanello, 'La trasformazione', pp.250-58.