Paolo Gurisatti

 

1. Introduction

Traditional theories focus on the assets endowment of a territory as the critical issue of local development.

In different ages, in line with mainstream interpretations of these theories, public policies have been oriented to reduce factors costs (labour and capital), to improve the quality of local infrastructures, to nurture external economies (through investments in urban functions), to invest in local “commons” for competitiveness, attractive conditions (like those mentioned in Richard Florida’s three “T” theory), etc. However the final aim of all these policies has always been the same: to provide each territory with a factors endowment sufficient to prime a process of quantitative growth in GDP and employment, in line with the most updated experiences of industrial organisation.

No specific pattern of development has been addressed by these policies and a good combination of factors, which ensures the long-term sustainability of the local economy, never has been considered a target.

In this perspective, local development dynamics comes out of a sort of black box, not controlled by the local stakeholders and depending on natural forces.

The most favourite tool of this kind of approach is public direct investments in infrastructures (i.e. ASI – Aree di Sviluppo Industriale) accompanied by fiscal/financial incentives to private agents, accepting to move first into the developing territory. The evaluation of these interventions consists in measuring the assets variation in time, the quality of funding allocation and the achievement of some results in term of workplaces created

The key characters, in this local development policy approach, are public bodies (investing in basic territorial assets) and first private movers exploiting the advantage of low cost resources, in an inflationary perspective, investing in industrial assets and technical competences. They change during time, but their roles are the same.

Fabrizio Barca challenged this kind of approach, at the European level, in 2011 (see his paper: The place-based approach of European Regional Development Policies). But still the discussion about local development policies is open. In Italy as well as in other regions of Europe.

During a first phase (1960-1984), the Italian economic authorities assigned large industrial corporations (mainly State owned corporations) the task of investing locally, in specific areas, enriched with basic infrastructures, paid by national agencies like Cassa del Mezzogiorno.

During a second phase (1985-1994) Italian authorities decided to charge a specific set of local development agencies with the responsibility of investing in immaterial assets: technology transfer platforms, business innovation centres, science and technology parks, etc.

During a third phase (1995-2015) Italian authorities shifted their attention to local representative groups of agents, temporarily engaged in investment strategies on local assets (called Patti Territoriali, Distretti Produttivi, Reti di Imprese), limited central interventions, in line with EU recommendations, and shifted to a new perspective.

Instead of using the traditional tool of a direct local investment, Italian authorities converged on the European methods of open calls for projects, co-financing, reimbursement of autonomous investments organised by local agents (public and private).

During the first phase we invested mainly in “hard” factors like manufacturing plants and infrastructures, with a typical top-down approach. During the following phases we shifted our attention to “soft” factors like services, R&D projects, knowledge management platforms, etc. in a bottom-up approach.

In both these cases we achieved poor results, mainly in the Southern regions of Italy, but also in several Northern territories (North-East in particular). Even though we invested a lot in different kinds of local assets, productivity rates remained under the UE average trends, the capacity of priming endogenous local development tracks diminished and several territories declined or remained in a re-integration state.

The investment in local factors/assets endowment did not solve the problem of local development in Italy “per sé”. For this reason Fabrizio Barca and others started to address the issue of collective patterns of actions that provide some territories with the capacity of better using/combining the assets available, driving them to a more productive use of resources and factors. On equal terms, territories having endowed the same amount of resources performed in completely different ways in terms of employment, salaries, innovation flows, export rate, etc.

Paola Casavola and Carlo Trigilia published a book (in 2012) about the different performances registered in the Sicilian territories and cities.

Why these differences? What is the “p” (pattern) factor, which differentiates virtuous territories from others? How to prime sustainable local development processes, in line with a more ambitious and effective policy approach?

ECLT Cà Foscari, thanks to the methodology developed by David Lane and his team, in two recent UE funded projects (INSITE and MD) suggests an original approach to the item, which is identified by the acronym IBLD – Identity Based Local Development. Lane’s claim is the following: we cannot understand why different territories, apparently endowed with the same kind of assets and factors, diverge in their performances if we do not pay attention to the narratives and interpretations local agents use in order to describe the evolution of their action. Different narratives mean different identities and coherent action possibilities.

Beyond any other documentation and analysis concerning the investments achieved in specific territories, in specific windows of time, and the possible effects of these investments on local beneficiaries (human agents and organisations), it’s critical to collect information about the “logic of action” followed by the key agents, protagonists of the investment experience described. Furthermore it’s important to register the attributions used in order to qualify agents’ features or artefacts’ functions, the events, which characterise the evolution of any specific experience and the cascade of unattended consequences produced by similar actions in different contexts.

This kind of information is critical in eliciting the “narrative structure” (the “p” factor, the pattern of action in David Lane’s language) that better represents the course of action (plot) performed by local agents in each territory or social environment. And to reconstruct the set of different interpretations, which emerge in the stories, told by the protagonists of a specific social experience. These interpretations are hidden in administrative papers, interviews, publications, new and old media materials, etc.).

By elaborating all these data, new task forces, including participative designers, policy makers and dynamic evaluators, can overcome the problems of interpretation encountered by traditional theories and problems of effectiveness of local development traditional policies.

Quoting Leo Tolstoy, David Lane summarises the situation as follows: “All happy families are alike; each unhappy family is unhappy in its own way.”

The same narrative structure can be instantiated/enacted in completely different ways and different attributions to the same token or agent can change the meaning of a story and introduce a completely new narrative in an apparently invariable context. By monitoring these instantiations, with a completely new set of tools (see MD results), it’s possible to develop a new family of local development policies and even to better interpret deviations from the desired ideal plot of many of the experiences implemented in the past.

ECLT suggests to analysing all the interesting stories (which move away from the ideal narrative structure or model chosen by policy makers as the driver for local development good processes) enacted in specific territories, clearly keeping in mind the point of view of the narrator. In the same agent artefact space several different patterns are contemporary enacted every day and intertwine in a complex collective action, whose direction is understood only ex-post. Not always the intentions and actions of agents belonging to the same community are leading to a generative relationship scheme.

Real world is continuously transformed by agents’ interpretations and a narrative approach is the only available tool for dynamically evaluating these interpretations and their continuous intertwining. By an ethnographic approach to narrative production Lane and his team at ECLT aims to design a new policymaking, in line with a narrative theory of action (see final reporting of the INSITE and MD projects).

The comparison between different development patterns in different territories is an opportunity for testing ECLT approach, theory and tools. This kind of comparison has just been attempted in four Italian case studies, connected to the third phase of local development policies mentioned above, and more recently to an Italian policy for ASI in eight Southern regions.

In the following chapters we summarise the general premises of these case studies, in order to introduce the Basque partners to the Italian debate about local development and start an interaction about the possible innovation represented by the IBLD approach.

In chapter 2 we highlight the role of territories, local environments and communities, in the theories of economic development, showing why in Italy a bottom-up approach to local development policies became dominant in the last couple of decades, as an alternative to traditional top-down approaches and patterns implemented by national State agencies and UE institutions; furthermore we discuss why during the time Italian authorities shifted their attention to “soft” assets instead of “hard” infrastructural basis.

In chapter 3 we try to explain why the Italian debate gave so much importance to the active role of territories (defined as productive aggregations of agents, more than geographical or political and administrative systems) and how this debate has deeply influenced the industrial policy implementation, beyond traditional investments in physical infrastructures; furthermore we show how the Italian scholars of industrial economics and regional development, often engaged in concurrent experiences of local development, referred to the narrative of industrial districts and the so called Third Italy as a breakthrough in the mainstream theory of economic development.

In chapter 4 we explore the connections between this theoretical evolution and the implementation of Italian policies for industrial change and local development; we confirm that the results achieved by these policies in different phase of the Italian pattern of growth are poor, mainly after the 1992 crisis.

In chapter 5 we comment some experiences which move in new directions and challenge the traditional top-down approach followed during the so called First Republic (ended in 1992), but also during the Second Republic; and we highlight the influence of the convergence towards EU standards.

In chapter 6 we introduce the IBLD perspective as an emerging item, quite useful not only to better understanding the experiences of the past, but also to orient the present policy making in European regions characterised by a strong local identity, like the Basque Country and some other territories of the North-East part of Italy.

 

2. The ‘productive territory’ as an emerging concept, towards a new idea of local development.

Regional policy was initiated after the Second World War with the aim of reducing persistent imbalances in Western economies even after their conversion into an efficient domestic market, and has been used more recently by the EU as a tool for integration into the single market.

It is a policy that belongs to the stock of macro-economic interventions and is based on a ‘quantitative’ ratio.

Even now a large part of the resources invested to support the regions regarded as ‘backward’ is still in the form of fiscal and financial incentives for the mobility of business and capital, for training the labour factor and for the construction of infrastructure.

There have of course been developments over the years, both in the manner of identifying those areas deserving of public support, and the criteria for assigning the resources.

Since the second half of the 1990s, for example, a line of intervention that moves regional policy towards a more ‘qualitative’ ratio has made its appearance.

Some scholars and policy-makers have actually claimed that geographical imbalances are determined not by an unequal distribution of ‘standard factors’ (theory of compared advantages), but by marked differences in the ability of local actors (regional, but more often local institutions and businesses) to ‘create specific innovative resources’ (theory of competitive advantage).

According to neo-classical economic theory, differences in income and employment are determined by a ‘delay’ in adopting the ‘most evolved model’ of economic and social organisation by regions poor in ‘standard resources’ (B. Ohlin, 1933). According to more recent theories, however, there is no ‘optimum model’ (of balance), but simply a series of equivalent and non-comparable ‘hybrid’ models (M. Porter, 1990).

Each of these interpretations obviously has profound implications for regional policy, as each moves the operational axis towards quite different aims and means of intervention. It is only in the context of the most recent view of the economic system that districts, or clusters, or local production systems are recognised as a key resource; as the useful base for activating processes of innovation and encouraging new ways of participating in economic life that are themselves guarantees of lasting development (see below, the concept of ‘productive citizenship‘ compared to the more traditional local ‘citizenship’).

Despite some exceptions in Italy and Europe, the ‘quantitative’ paradigm is still dominant. Regional policy is still mainly inspired today by a view of development that attributes responsibility for the ‘backwardness’ of some regions and localities to the cost or relative scarcity of ‘standard’ fundamental factors (capital, labour, infrastructure). And investments in the mobility of resources are still today the favoured operational tool for combating such backwardness.

The most worrying aspect of this situation is that regional policy continues to lack the aim of geographic equalisation (G. Viesti and F. Prota, 2004) and does not seem able to reinforce the ‘native ability to create innovative resources’ that is indicated on several sides as the real source of endogenous development and competitive advantage.

On the basis of indications given by authoritative economists like F. Perroux, H.W. Richardson, G. Myrdal, S. Kuznets, A. Lamfalussy, and G. Fuà in Italy, albeit now many years behind, policy-makers try to promote development by balancing the shortage of factors with various types of transfer from the centre (‘top down’ approach), rather than improving the factors effectively available ‘on site’ (‘bottom up’ approach).

In places where capital is scarce they encourage the establishment of businesses and capital from outside, through tax breaks, discounts on the cost of property purchases, etc.

In places where labour is too expensive with regard to productivity, they act to provide training or a reduction in social burdens.

In places where, finally, the local system is in difficulty because of its excessive distance from ‘central’ markets, from the means of communication or from ‘cognitive’ infrastructure, they ensure public investments in roads, telecommunications, science parks, training organisations etc.

All these interventions, even if they probably prevent the differences between the different geographic contexts increasing (as S. Holland, 1976, and more recently G. Viesti and F. Prota, 2004, suggest) they are not related to any appreciable effect of empowerment in the target regions.

In this scenario there is therefore space for new theoretical hypotheses and new models of regional policy, aimed at overcoming the shortcomings of traditional economic theory and the not particularly encouraging results of the public policies implemented to date.

As mentioned, the theory of economic development has recently put into question the very idea of a ‘standard’ direction and ‘compared advantage’, shifting attention to the growing outputs and the reasons why industry is concentrated in specific sub-national areas (M. Porter, 1990, P. Krugman, 1996). The industrial economy has undermined the notion of economies of scale (S. Brusco, 1975), salvaging rather the concept of ‘external economies’1 (G. Becattini, 1989) and other factors essential to the flexibility of production (M.Piore, C.Sabel, 1984) and innovation, such as the creation of tacit knowledge and networks of relationships (E. Rullani, 2004, P.Perulli, 1999).

Social science has finally put into doubt the idea that the actors are intent, albeit unconsciously, on ‘maximising’ some mathematical function of productivity and assuming ‘rational’ behaviours (J.G. March and H. Simon, 1966, M.Crozier, 1978).

So, on the basis of these considerations, a start has already been made on reviewing the operational aims of regional policy (G.Viesti and F.Prota, 2004), which is also leading to innovative experiences.

The fact is that the concepts of district and innovation can only be fully appreciated inside a view of the economy and of development that contrasts with the bases of traditional economic theory. Such a view, for example, suggests that development should spread by ‘hybridisation’ rather than by ‘imitation’ and that every area is different. Productivity, according to this view, depends more on the organisation of ‘cognitive’ work and on innovation than on the optimum organisation of ‘energetic’ work (E.Rullani, 2004).

On the basis of a similar approach, the integration of ‘backward’ areas into the domestic or global economy is not achieved through processes of compensation or the transfer of resources, but by ‘working’ on differentiated resources through processes of innovation (I.Nonaka and H.Takeuchi, 1997) that exploit the specific mix of knowledge available on a local scale.

Imitation, or the cloning by transfer of already tried and tested models (in the so-called ‘advanced’ areas), is excluded by definition, not only because it is incompatible with an evolved conception of the economic system, but also because it is based on the hypothesis of the permanent ‘productive’ subordination of some areas and towns to others (theory of structural imbalance).

The concept of the locality itself takes on new aspects in this view of the economy: it is the space in which agents and artefacts interact to produce new ideas (invention) and new market systems (innovation) (D.Lane, 2004). The locality ceases to be a mere geographic or administrative zone, within which the actors are called on to assume a passive role as users of good practices, models and standards set by the government or the ‘centre’ (which is assumed to be more ‘advanced’).

With the reduction of distances, made possible by the innovation of transport and communication systems (P.Krugman, 1996), and thanks to the extraordinary increase in productivity achieved in the commodity and manufacturing industries (E.Rullani, 2004), the physical locality and ‘energetic’ work no longer offer particular advantages, while the virtual conditions (atmosphere, institutions), the ‘communication networks and ‘cognitive’ work (by definition less tied to the physical size of the area) become crucial. In the new view the factors are as diverse as the knowledge.

In conclusion, if the district (the ‘productive’ one, which is the real object of interest for regional or local policy) is the result of processes of learning and innovation, of ‘constituent’ processes, with which local agents comply, motivated by the production of specific knowledge and new system identities, government action must necessarily shift from the compensation-distribution of resources to the recognition of emerging processes ‘from below’ and to the production of ‘institutions’ geared towards increasing productivity and the insertion of such processes in the global context.

In the new view of development and the economy, the resources lacking at a local level are mainly ‘cognitive’ and ‘institutional’ rather than material or financial. So it is not financial instruments or tax breaks that can contribute to growth (mobility of ‘standard’ factors), but instruments aimed at supporting the local production of ‘distinctive’ factors, sophisticated services and ‘experiences’ (J.H.Gilmore and B.J.Pine, 2000) recognisable in the rest of the world.

The move to a new theory of development and innovation (and possibly also knowledge) is therefore preliminary to the recognition of the ‘productive territory’ as a resource for regional policy. And the possibility of initiating a new era in public development policy depends on the diffusion of a new interpretative paradigm among the policy-makers.

We now find ourselves in the midst of a period of transition in which it is difficult to distinguish the effects caused by an old theory and an old policy and the shortfalls and defects of an emerging theory and practice. The ‘territories’ have only recently been identified as a resource, as an advanced instrument of economic development and democratic participation.

The regional policies planned in Brussels, but also in Rome and Paris, do not take sufficient account of this (despite the conferences and projects launched with the support of the OECD or the ILO), while the experiments under way at a local level do not offer indications of use for an overall review of public action.

In Italy, for example, it is possible to find traces of a new regional policy in numerous sub-national interventions that promise to improve local small business networks and districts (Il capitale dal volto umano by G.Becattini, 2004). But in this case, too, the results are still of too little significance.

In the following paragraphs we endeavour to explain how and why the concepts of productive territory and district have become an important reference for an attempted review of regional development policies in Italy; and the way in which operational experimentation and theoretical review, launched in the 1970s, merged in a particularly ‘productive’ way in some Italian experiences, at the beginning of this century, allowing institutional innovations capable of assuming a paradigmatic value.

If local factors cannot be considered “standard assets” then it makes sense to talk about a variety of capitalisms (R.Dore, 1990), to foresee the crisis of the National State in a globalised economy (K. Ohame, 1995) and to concentrate analysts’ attention to the rise of metropolitan areas (Brookings Institutions, 2014).

And the role of local societies becomes more and more important as D. Acemoglu and Robinson, as well as D. Lane and S. Van der Leeuw, underlined recently.

In this context the following antinomies become key components of emerging possible interpretations:

• government top-down policies, led by national elites and international organisations (OECD, IMF, World Bank, Unido, ILO) who codify and control the recipes of local development, opposed to bottom-up territorial projects designed by local agents, free to combine in a totally original and autonomous way the available resources;
• direct State investment in “hard” assets (infrastructures and technical equipment) opposed to “soft” investments in immaterial assets (knowledge intensive business services, commons, R&D support) and other external economies and environmental conditions favourable to attract or to create unique resources or combinations of resources, which ensure a self-sustainable pattern of local development;
• distributive coalitions (M. Olson, 1982) aligned with a top-down approach to local development policies opposed to productive coalitions oriented to create autonomous constituencies and openly interact with higher administrative levels.

As already commented above, a synthetic view of the most important items and changes, occurring in the field of development policies in Italy and Europe, is contained in F. Barca’s paper of 2011.

In Italy a new wave of bottom-up policies (named “Programmazione Negoziata” – Negotiated Planning) was issued by the Romano Prodi government in 1996 and supported by the President of CNEL (National Council for Economy and Labour) Giuseppe De Rita, by the sociologist Aldo Bonomi (head of Aaster) and by Fabrizio Barca and the political scientist Carlo Trigilia (later Ministers of Cohesion). This wave was oriented to a high level of decentralisation, giving local representative bodies the power of designing local development processes, later “negotiating” with central authorities in order to have the funding needed to proceed towards local targets.

About the concrete achievements of this approach the debate is still open, with a number of analysts in a critical position (first of all Nicola Rossi) against the initiators (F.Barca, G.Viesti and P.Bianchi).

New theories of innovation, challenging the idea that “bottom-up” is always better, furthermore emerged around the item.

For example Nonaka and Takeuchi suggested a “middle-up-down” organisation as the best choice for guiding innovation processes in companies and even local communities. Lane and Van der Leeuw proposed the idea of “sandwich emergence” as a good alternative to traditional visions of innovation processes (see reporting of ISCOM) and empathised the importance of connections between local agents and global scaffolding structures.

Even Fabrizio Barca, who was one of the initiators of the bottom-up policy, argued in 2011 that a multi-level governance flow should be preferred at the European level in substitution of bottom-up projects, in order to better perform investments with structural funds.

Also around the item of “hard”/”soft” investments the discussion was intense. After the original favour given to soft/light investment in KIBS (Knowledge Intensive Business Services), by public agencies (approach supported by Patrizio Bianchi at Nomisma and others in Sviluppo Italia), some doubts emerged about the efficacy of a too soft policy, investing in good practices, technology audits, technology transfer platforms, consulting services, business angels services, etc. Even though the European debate about de-industrialisation gave priority to knowledge creation and a competitive advantage driven by white collars, the rate of productivity of all these new competences remained low (in Italy at least, as demonstrated by figures).

Finally the shift of attention towards local agents and productive coalitions did not contrasted enough the tendency to the rise of “opportunistic distributive coalitions”, around national and European calls for projects, in order to enhance the chances of having a grant funded by central authorities, beyond any bottom-up real need for specific investments and local agreements.

With all these suggestions in mind the authors of this report started a process of re-interpretation of the Italian policy making, in order not only to check the quality of accredited theories and national mainstream practices, but also to experiment alternative tracks. Here we present some results of this process.

In the next two paragraphs we present an analysis of the models influencing Italian industrial and local development policies and an analysis of some experiments carried out in four different areas of the country.

 

3. Models of Regional Policy

Prior to the 1970s, Italian economists and policy-makers focused their attention almost exclusively on the geographical ‘macro-imbalance’ between North and South and on the so-called ‘depressed areas’ of Central-North East Italy.

The South has long been considered a homogeneous ‘macro-region’ (it is still widely considered the primary objective of European regional policy), with structural shortages in its endowment of ‘basic capitalist factors’ (environmental resources such as land and infrastructure, capital and labour).

The ‘depressed areas’ are identified according to a view of development that places the big ‘Fordist’ factory at the end of the development chain, as the most ‘advanced’ possible result of technical-scientific knowledge and the capitalist model.

In a similar context, ‘liberal’ intellectuals and politicians like R.Romeo, P.Saraceno, V.Lutz and G.Fuà draw the ‘confines’ of the backward regions according to their distance from the Fordist model, through analysis of the indicators of per-capita income, study of the sectorial distribution of employment (a high percentage of agriculture and public administration are interpreted as being synonymous with traditional, unproductive labour, a residue of the pre-capitalist world) and evaluation of company size crossed with the sectorial classification of the industry (as an indicator of greater or lesser backwardness compared to the ‘advanced’ reference model).

Such ‘confines’ serve to identify the administrative structures that should benefit from state aid and the physical or administrative areas in which the ‘mobility’ of factors is to be organised.

Emphasising the role of the state in the formation of a critical mass of sufficient resources to make the big modern industry system take off, and accepting the suggestions of F. Perroux on ‘centres of development’, Italian regional policy experts have long upheld that investments should be concentrated in some parts of the South (and the North) as the first stage in a process of expansion based on flows of demand that are ‘transferred’ from the big leading firms to the surrounding area.

‘Marxist and Neo-Keynesian’ intellectuals and politicians like A.Graziani, L.Meldolesi, M.De Cecco and E.Pugliese, on the other hand, have long contested this view, interpreting the backwardness of the South and part of the North as the ‘necessary and permanent’ result of national unification3. None of them ever questioned the idea of the single line of development toward the big Fordist industry, or at least until the end of the 1970s. If anything, these experts maintain that the big political question to answer (regarding regional imbalances) is the role of the state and its function in favour of the ‘capitalists’ rather than the ‘entire citizenry’. In their opinion, regional differences can be overcome by the same state, but with different aims (see also S.Holland, 1976).

Regional policies were for long defined through a ‘quantitative’ approach, in a cultural context where the state and the techniques of macro-economic analysis were seen as being capable of pre-defining the best possible and building ‘rational’ routes toward big Fordist industry. Whatever the political and cultural beliefs of the scholars and policy-makers involved in national integration, all agree on the possibility of objectively defining the ‘confines’ and aims of public development policy.

A current of independent thinking has more recently moved against this ‘statist and rationalist’

logic. It made its appearance around the middle of the 1970s and became dominant in the mid-80s. Its roots are based in quite new epistemological premisses. A. Bagnasco and G. Becattini (but also E. Rullani in Veneto) are its main proponents.

According to this, the reasons for geographical imbalance cannot be traced either to the lack of ‘standard’ factors or to the schematic ‘Marxist’ contrast between capitalist logic and collective logic in the use of the central state.

The geographical imbalances derive rather from the persistence of different ‘institutional endowments’ in the different ‘local communities’ in Italy that have resisted (for historic and cultural reasons) attempts at administrative and economic homogenisation by the state.

It is no mere chance that these authors focus on the characteristics of geographical areas that differ both from the centres of ‘big industry’ in the North West, and the ‘backward’ countryside populated by ‘proto-capitalist’ small businesses in the South.

By analysing the situation in Central-North East Italy and some parts of Lombardy itself4, these authors manage to put into question the idea that the entire Italian nation is homogeneous, but not uniformly following the same single, well-marked line of development, which should in all cases lead to the Fordist model of ‘big industry’.

Their innovative analysis gives rise to a theoretical context within which the district as an instrument of local and regional policy takes on not only full theoretical legitimacy, but is actually opposed to Fordist ‘big industry’ as a model of industrial organisation.

The analyses of S. Brusco (1975, 1983) and G.Becattini on industrial economics, along with papers by important foreign authors such as C.Sabel, M.Piore (1984) A. Saxenian (1994) and many others (including M.Porter, 1990), all lead in the same direction: the imbalances, or rather the differences of existing models in Italy, depend on ‘qualitative’ and not ‘quantitative’ factors, on ‘micro’ elements rather than ‘macro’ elements and especially on the determination of the real actors to invent new models of growth (innovation) rather than passively adopt those (in theory ‘better’ ones) already in existence.

Such analyses also show that the emerging model in Terza Italia is perfectly consistent with the international ‘Second Industrial Divide’.

This line of analysis is firmly interwoven with other research paths and produces an authentic revolution in industrial organisation analysis:

• in the first place the organisational research (F.Butera, M.Regini and E.Reyneri, H.Braverman) and the line of studies into the collapse of ‘Taylorism’ and the scientific organisation of labour (joined by the analyses of E. Rullani and P. Perulli on the breakdown of the Fordist paradigm) lead to the theory of the ‘network’ as an alternative efficient organisational structure to the hierarchy (O.Williamson, G.Lorenzoni);
• in the second place a line of sociological and political-science research, which looks at communities, political sub-culture and social capital (A.Bagnasco, C.Trigilia, R.Putnam, A.Pizzorno, and by many other such as A.Pichierri, P.Messina, I.Diamanti), proposes the local dimension as relatively autonomous from the national one and, if possible, more fertile from the point of view of innovation, participation and social integration;
• in the third place, economic theories that concentrate on the varieties of capitalism and on the international division of labour (M.Porter, R.Averitt, R.Dore, F.Onida, M.Salvati and others), suggest seeing development as the precise placement of specific local contexts in an international division of labour that is an integration of dissimilar rather than a competition between homogeneous systems;
• even the non-linear theory of innovation (N.Rosenberg, D.Lane, C.Antonelli) is productively interwoven with the theory of the district and production locality, as resource for development, and contributes significantly to the criticism of traditional political and theoretical positions.

In conclusion, the new approach to questions of regional development, centred on concepts of networks, local production systems, districts etc., opens up a deep fissure in the organisation of traditional theories and has important effects in the preparation procedures for regional policies.

The success of Italian local small business systems is so obvious that it has led to a genuine ‘hunt’ for the district, the local labour system or cluster capable of endogenous development, not only in Italy but also in other countries. A host of researchers, development agency executives and policy-makers is busy in a dual process of analysis and concrete intervention.

As explained in the subsequent section, those responsible for industrial policy, veterans of an inconclusive campaign of interventions in favour of national sectors and factors, perceive the hypothesis of districts as a possible way out of their own inconclusiveness, but are unable to achieve it precisely because of their unwillingness to overturn the dominant ‘cognitive and administrative’ paradigm.

Alongside the evolution of economic theory, it is therefore possible to trace a kind of evolution of industrial policy and of ‘policy’ in a strict sense, without which any intervention on the ‘productive territories’, otherwise defined as ‘constituent processes of new productive territories’ (P.Gurisatti, 2004), is not even conceivable.

 

4. Industrial Policies in Italy. Reasons of recurrent failures.

At more or less the same time that the ‘mutations’ described so far took place, Italy went through at least three different stages of industrial policy, marked by very different conceptual approaches and operational practices.

4.1 In the 1970s an industrial policy ‘by sector’ prevailed.

This was aimed at converting the ‘mature’ sectors of the economy with slow-growing demand (textiles-clothing, iron and steel, paper and other commodities industries) and launching new sectors marked by fast-growing demand (the so-called advanced sectors, such as civil electronics, industrial automation, chemicals, transport and communications infrastructure etc.).

The mainstay of that policy was the big Fordist company. The state assumed the right to set the aims of business through ‘sector studies’ (carried out by the scientific and technocratic elite of national agencies such as the ENEA, the CNR and the universities) and assigned big, protected, national (mainly public) business the task of translating the aims indicated by the scientific elite into concrete investments. It is easy to find a view of the international division of labour behind this policy, based on ‘product cycle’ (B. Conti, 1975) or ‘single development path’ concepts, and a view of innovation as a linear process (transfer by cloning, from the centre to the periphery, of inventions formulated in the laboratories of the research centres, universities and big companies).

The sector policy based on this premise did not produce the desired results: it was unable to curb the national deficit in the balance of trade, unable to create processes to replace imports and ended up removing financial resources (through the big national banks and government securities) from private investments. The case of Olivetti is typical of the outcomes of such a policy. This big, national, civil electronics company, supported by the Italian state for many years, has now definitively disappeared from the market, without having made any contribution to the consolidation of an Italian civil electronics industry.

4.2 In the 1980s an industrial policy ‘by factor’ prevailed.

This second type of policy was aimed at objectives that may be likened to those contemplated by the ‘Washington Consensus’. The idea of the single development path and the complementary consideration that Italy should necessarily disinvest in traditional sectors and invest rather in ‘rapid growth sectors’ was abandoned.

On the basis of the success obtained by Italian-made goods and by the industrial clusters of the home construction system and mechanics, it was decided to limit the spending for industrial conversion and to concentrate government actions on the ‘horizontal factors’ of production (research, training, infrastructure, subsidised finance for companies etc.) that also benefited the advanced businesses in traditional sectors. The mainstay of this second policy was public investment in ‘external economies’ and, in particular, in real services for small business (P. Bianchi, 1985).

The state relinquished its role as a guide for the development of new sectors and chose to intervene in the context outside the business by means of specialist service agencies (training, services, subsidised finance, local support organisations, logistical networks for transport and exports etc.). From the theoretical point of view the idea had become prevalent that industrial policy should not be directed toward productive businesses, but to services and the post-industrial component of the economic system (S.Vaccà, Genco, Cozzi, E.Rullani, 1984).

The conviction remained, however, that such policy can be exercised through incentives for base factors and the transfer of resources. In relation to what was agreed in ‘concert’ with the social parties and with the EU, the governments that succeeded one another from 1984 to the middle of the ’90s, chose to share this policy with the social agencies. In practice this translated not so much into the construction of new public service agencies, as into the ‘concerted’ management of public investment in ‘factors’ outside the business on the part of structures belonging to the associative system.

Nevertheless, neither did the national policy ‘by factor’ produce interesting results; instead it introduced the defects of state participation in the industrial system to the services system. The political/technocratic control of public spending ‘by factor’ (without even any political responsibility toward the electorate) produced distorting effects in the training and research sectors that may be compared to those of public intervention in the industrial sectors in the 1970s. Representative of this evolution were, for example, the management of training, the reform of research corporations and special chamber of commerce firms, and the management of European funds for training, research and innovation.

4.3 In the second half of the 1990s, and more recently with Italy’s entrance into the Euro-zone, a decentralised industrial policy ‘by locality’ began to emerge.

It was very similar to the ‘policy by factors’ of the ’80s, but was distinguished by the fact that it became the exclusive object of regional institutions. It must, however, be said that the geographic aspect of development was kept under constant attention in Italy, more than in other countries, for the reasons given above. Government thinking was strongly influenced not only by the existing asymmetries between the various economic macro-areas of the country, but also by the strength of the sub-cultures and local political organisations.

In the second half of the ’90s, however, there was more positive recognition of the importance of the local dimension in development, even beyond the restricted circle of ‘peripheral’ analysts and policy-makers of ‘Terza Italia’. In this context, industrial policy was directed toward the development of services and specific ‘external economies’ at a local/regional level, through ‘local agreements’ and policies for districts, innovation and local labour systems. Both in the North and South, priority was given to investment strategies ‘negotiated’ between companies, trade unions and local institutions.

The ‘local development’ actors were the mainstay: local agencies and business associations (in Veneto especially). The state definitively withdrew from focusing on the ‘sectors’ and from investments ‘in factors’. But the regions themselves, like new government development bodies, quickly abandoned the terrain of direct intervention in the economy in favour of negotiated agreements with the social parties at a local level. In other words, that orientation toward governance that is even now considered the most important change in public economic policy triumphed.

4.4 Despite the change of objectives (from the national dimension to the local) in structural development policy, neither did this third stage of industrial policy move far from the previous ones in terms of its ability to encourage innovation in industry and inject elements of endogenous development in less developed parts of the country.

There is actually an obvious explanation for the negative outcome that distinguishes all stages of industrial policy in Italy. In the last period as in the preceding ones, the ‘governing’ of investments has continued to be entrusted to the associative technocracy and a typically ‘top down’ operational approach. Innovation has remained entrusted to the main actors of a ‘paternalist’ policy, with less and less money and less and less power, but with no discontinuity between national and regional levels. In the entire post-War period in Italy, there has never been any serious investment in the ‘constitutional’ faculties of the producers and the ‘productive citizens’ at a local level.

The changes that have occurred in industrial policy choices, briefly recalled so far, are obviously also influenced by the macro-economic picture (which they themselves have to produce, though in different ways).

Starting from 1980, with Italy’s entrance into the EMS (European Monetary System) and the reduction in tariff barriers, Italian industry has found itself working in an increasingly open and globalised context. Since 1992 Italian industry has found itself working in a context of decreasing resources for public investments.

But the industrial policy crisis (and the possibility of its innovative re-launch starting from the first years of this decade) is mainly linked to conceptual problems and methodological definition.

An approach to development and a method of intervention based on the same premises prevails at all the above stages:

• centrality of the idea that the development path (aims of industrial policy) may be codified beforehand at a normative level and then ‘transferred’ (by administrative means) to the companies and local actors;
• centrality of scientific knowledge and the role attributed to the technocratic/administrative elite (identification of aims, best allocation of available resources, evaluation on the basis of objective criteria etc.)
• focus on targets to be reached (sectors, factors or local infrastructure) rather than processes (rules, relationships and roles for new market systems);
• focus on financial incentives rather than ‘real services’ and, in the case of real services, precedence given to the ‘agencies’ and syndicated organisations administered by the social parties in a system of protection, rather than to those based on the ‘risk’ of the company (effective competition or at least ability to contest).

In other words, all stages of industrial policy have been inspired by the same idea that the innovative experience cannot be other than the result of a ‘technical diagnosis’ (made by ‘expert or advanced’ external agents, through a top-down ‘paternalist’ approach). The idea is not even entertained that innovation may derive from the direct action and risk of the ‘productive citizens’ and the businesses. No one really believes that the role of government (governance) should be limited to ‘organising the space between agents and artefacts’ (particularly at a local level), despite the success of thinkers like M.Crozier (1988).

A view of knowledge as an asset that can be appropriated, codified and managed in the name and on behalf of the economic and social actors by the scientific and technocratic elite remains implicit at all stages of intervention in industry. Knowledge is not considered an asset that is distributed and constantly renewed by the social actors and neither is any thought given to entrusting the ‘productive’ citizens themselves with the task of defining the aims of industrial policy. The citizens and the businesses are perceived as the ‘object’ of policies organised by others (paternalist state or region, or representative association).

In conclusion, re-reading the parallel path of economic theory, regional policy and industrial policy, it is possible to track down elements that explain the unsatisfactory outcome of public intervention in development and regional imbalances. But the same path offers a key to positively reading the principles that gradually emerge as the possible basis for an alternative approach.

Some of these may be provisionally summarised as follows:

• development is propagated by hybridisation, it cannot be forecast, pre-defined ex-ante or transferred (‘cloned’) (E.Rullani, 2004);
• the cognitive role of scientific research, the productive role of the technocratic elite and the constituent role of the productive actors (citizens) have equal ranking (essential condition for generative relations) in constructing development (D.Lane, 1997);
• the aims of development are the result and not the premise of complex social processes (constituent processes that are similar to SCOT – Social Construction Of Technology by W.Bijker, 1998);
• the tools of governance are mainly cognitive (they consist in the creation of new mediators, as suggested by E.Rullani, 2004).

Even though the discussion about these items developed at the national level and influenced the international debate, for some reasons it became particularly important in the North-East of Italy.

Here in 2001, not only were there actors inspired by such principles – albeit unconsciously – but the right conditions also existed for a change in local development policy, which were not apparent elsewhere.

Such conditions were pointed out by local policy experts, such as P.Messina and C.Trigilia:

• the existence of an economic fabric of small businesses able to achieve levels of productivity and innovative efficiency following an ‘evolutionary path’ in contrast to the one codified by traditional economic theory and tried in many advanced countries in the capitalist west;
• the existence of a unique institutional system that leaves room for local ‘constituent processes’, which in other countries, and even in other regions of Italy, are prevented or forestalled by the efficiency of the government;
• the existence of a scientific community (in the field of socio-economic analysis) capable of instigating generative relations between different disciplinary spheres and, especially, of learning from the analysis of the real world;
• the existence of a virtual ‘federalist’ political system, despite the powerful centralisation of resources, for some time employed in the search for specific answers to problems of innovation and local development.

These elements have been interwoven in such a particular way since the last part of the ’90s that in Veneto they have begun generating an experiment in regional policy that includes interesting innovations, if seen in relation to the previously followed traditional paradigm of local development and industrial policy. In this specific region of the North-East area of Italy took place a political movement (Lega Veneta) whose target was a progressive independence from the national state. This movement highly influenced the strategy of local governments and trade associations, while the change in trade flows, towards Eastern (post-communist) regions of Slovenia, Romania, Hungary, Russia pushed part of the region (the Venice City Region as described by OECD in 2010) to a new metropolitan framework.

Summarising: the narrators are embedded in this environment and discussion. They participated to some policy making experiences in North-East Italy and they still engaged in the economic and political discussion of the region. They can provide ALC with privileged information about the local development and policy dynamics.

 

5. Some innovative experiments

The analysis proposed so far has inspired some attempts to go countertrend in front of the mainstream policy making system. The ECLT group was involved in at least four experiments based on the principles that revert the traditional top-down approach and seek, on the other hand, to reduce the limits encountered by the first naïve bottom-up policies.

At the core of these experiments there is the idea that local development policies should be designed in line with agents’ identity and their narrative approach to social and technical problems. These policies cannot address only the assets development target, but should organise the improvement of the generative potential, the dynamic evaluation of the social innovation processes, implemented by engaged citizens in a sandwich emergence framework, and follow-up the cascade of unattended consequences produced by the instantiation of a limited set of narrative structures available to local actors.

The first of these attempts was the “productive districts” policy of the Veneto Region, issued in 2003, and still under implementation after many years and adaptations. The second is the creation of a “technology district” in Trentino for the green building industry. Also this experiment is still on-going under the leadership of three local DIPOs: Habitech (300 SMEs consortium), GBC Italia (a national scaffolding structure connected to an international scaffold) and Nuova Manifattura (a start-up incubator). The third is the Green Communities project, aiming at creating an Italian network of sustainable mountain communities and furthermore at implementing a new local administration framework (aggregation of municipalities able to overcome the present problems in the Italian administrative system). The fourth is a bottom-up attempt to implement a new development pattern in the leather district of the Valle del Chiampo, in the North-East of Italy, and a new industrial policy for the Italian leather cluster. This last experiment is under implementation now.

David Lane and Paolo Gurisatti had the opportunity of participating to these experiments and here are their preliminary comments, useful for designing the ALC project.

 

The Veneto Region policy for “productive districts”

For the reasons mentioned above, in 2001 the Veneto region was nevertheless an advanced laboratory of the new industrial policy in Italy. This was a result not only of the conditions noted above, but also of three contingent factors:

• in the first place, there was a prevailing conviction in Veneto more than in the other regions of Italy that the resources available for continuity of the widespread economic model were by now exhausted. Crucial aspects such as congestion, migratory flows, the lack of that which in the local culture is identified as real innovation (high-tech sectors and products with a high content of scientific work etc.), which were discussed in the associations, led regional executives to ponder the possibility/necessity of suggesting a new game; one that would be less chaotic and less risky than that of the widespread company or the industrial zone in every village. This type of approach forced local actors to review the entire policy in support of small business after 2002;
• in the second place, the federalist push and the (economic and political) power of the trade associations, stronger in Veneto than the other regions, along with the prevailing laissez-faire ideology, led to a very loud call for change, at exactly the same time that various functions and spending responsibilities were being shifted to the regions (including backing for SMEs and innovation);
• in the third place, a coalition of researchers specialising in district analysis (with a propensity for theoretical innovation) and a big group of ‘district managers’ (with long experience in the field) quite unusually had access to the processes of policy-making and took part in the creation of a hegemonic cultural proposal to the local political class and the associations themselves.

These elements explain why the new law on ‘manufacturing areas’, approved by the Regione Veneto in 2003, took on the task of accelerating the processes of restructuring businesses in the direction of more competitive local networks and systems, explicitly setting the aim of supporting bottom-up ‘constituent processes’ in place of the traditional top-down distributive approach.

The provision called for a three stage game:

a) Self-organisation and self-nomination of the districts intending to play a productive role in the regional context; the choice of districts and the beneficiaries of the public aid was not to be entrusted to executives and experts who measure the existence of a district on the basis of objective parameters. A district in itself is not considered a partner of any particular interest to the administration; the Regione Veneto only recognises districts per se: networks of operators (aware of their size and strategic function in the regional economy) that are at least able to present the right ‘figures’ and draw up a clear view of their own evolutionary horizon. The regional government does not intervene to support areas that are not ready to co-finance their own proposal for strategic partnership with the administration.

b) Open calls for tender for projects that would meet the aims and conditions set by the districts. Unlike the other regions, in Veneto the demand for investment, expressed by the main actors in the district, is the basis for issuing open tender calls for projects. The offer may however come from any agent (local or external), provided it has the required characteristics, the ability to carry out the work and the necessary funds for covering at least 60% of the costs. The maximum public aid of 40% of the costs (or less) and the opening of tenders to individuals avoids the risk of a perverse meeting of agents that represent the demand and agents that organise the offer (thus preventing a situation whereby contracts are signed with agents that are at the same time controlled and controller, along with the risk of their becoming efficient structures only in their ability to ‘capture’ public financing).

c) Selection of investment projects (public or club assets) consistent with the specifications contained in the calls for tenders; in the end the projects and competitors that best comply with the specifications made in the questions within the call are rewarded. Unlike other regions, in Veneto investment projects made directly by the actors who formulate the district needs are excluded and supplier specialisation favoured instead; the discretionary powers of the councillor and the entire council remain high with regard to selection of the offers and the criteria for selecting and accrediting private promoters of the investment.

The first stage of this path is perhaps the most important. The private actors and the institutions that belong to a specific district, and see themselves as being part of the same evolutionary project, sign a ‘constituent agreement’. The law allows for such ‘agreements’ to be approved only if they represent a grouping of at least 80 private operators (connected to the same value chain) and various local agencies and institutions that have specific service roles in the main value chain or main supply chain in the area. In practice this involves drawing up an agreement for investment in common development factors, that must include at least the following:

• medium-term aims and identity – the constituent document must explain what medium – long-term aims are shared by the actors taking part in the evolution of the district and what linguistic, technical or value elements form the basis of the cooperation/competition relations typical of the district;
• division of work and manufacturing functions – the document must also explain which actors and structures are charged with presiding over a critical function of the local system (innovation, knowledge transfer, social relations, financing, commercial opening, management of landscape and infrastructure resources in the area etc.); it must also specify the productive roles of the actors and institutions involved, the level of integration of the activities and projects for investment in the development factors that receive greatest consensus in the local community;
• localisation and external relations – the document must finally specify which ‘area’ is nominated ‘capital’ of the activity and the above aims; in order to be a key partner for the regional administration, the district must not only show that it is the junction of a global, added-value network, but also that it is rooted in a ‘physical’ area and has a recognised ‘address’.

It goes without saying that the manufacturing areas or districts that are able to sign such an agreement have a good probability of being that ‘district in and of itself’ that represents the ideal partner for the regional administration. The self-organisation of the actors is a guarantee for the proponent and offers the regional organisations the chance to evaluate and select the most interesting proposals on the basis of information and documents that would be difficult and expensive to produce by unilateral administrative means (technical diagnosis).

The second stage has a key role in building consensus for the region’s industrial policy. The districts recognised by the administration can nominate their own ‘representative’ on the council of districts, which is the consultant body set up by the councillor charged with implementing the law. The council discusses not only the general aims of regional local development policy with the councillor, but also the priority of the investment plans and where spending will be concentrated.

The council also helps prepare calls for bids for the financing of operational projects. The approval of the ‘district agreement’ actually implies recognition of the local system as a possible beneficiary of regional funds, but does not automatically entail either approval of the projects or the attribution of funds to the signatories. The latter submit a strategic hypothesis to the regional administration for the local system to which they belong, and act in the name of and on behalf of the whole community, but they do not acquire any right to direct implementation (co-financed with the region) of such strategic hypothesis.

The calls for bids made by the regional administration establish what type of structure or grouping of actors may put themselves forward to carry out a certain investment project and to receive the regional financial aid. The ‘district representatives’ who take part in the council activities may therefore take part in formulating the calls for bids, helping the councillor to take in the requests made by the admitted districts, but cannot be the administrators of funds destined for the district they represent.

In the third stage a little competition is even envisaged, between the actors (competing teams or coalitions) participating in a certain ‘district agreement’ for the concrete pursuit of projects approved for financing. Given that all may respond to the calls for bids, within the limits set by these, it is possible that several actors (individual firms or groups of entrepreneurs and institutions) will express different, competing proposals for achieving the same aims recognised in the district.

This last stage is guided by the second principle according to which what counts is the technical expertise and the credentials of the proponent subjects, not the political consensus achieved in the district.

On the other hand, there is a kind of unwritten rule in the Italian districts that development of a particular solution is not built up by means of assemblies, but by a kind of competition: new entrepreneurs enter the market space and compete with each other to find the new solution and offer it to the local community. Private supply, even though a collective service, is the main strength of the district formula. For the first time this unwritten rule has been added to a bill aimed at increasing cooperation.

If the calls for bids are precise and sufficiently detailed, evaluation of the best offers and the signing of a contract between the Regione Veneto and the instigating subject is fairly quick.

The risk of consociation between local actors and administration, and a situation of crossed vetoes and reciprocal exclusions, is also avoided.

Competition can take place institutionally and with sufficient transparency, under the control and political evaluation of the council.

A pathway conceived in such a way, the year to year flexibility of the aims subject to approval, and the discretionary powers of the council and designated councillor are all new additions to Veneto law that make it more advanced than many previous attempts.

Up to here we have looked at the letter of the new law and the ‘will of the legislator’. The practical application of the law (see the executive regulation for the law itself) actually highlights the persisting differences between the innovative view that inspires some of the supporters of the new law and the cultural and political resistance that still typifies the behaviour of the associational system. It is precisely the conflict between different ‘views of the economy and of development’ that is probably behind the failure to reach some of the aims the law posited at the start and that were subsequently abandoned.

At this point it is nevertheless worth bringing forward a question: what are the implicit aims of the measure formulated by the Regione del Veneto and what were the possible problems it had to overcome at the beginning?

The new regional law deals mainly with the problem of overcoming some ‘technical and cultural’ discrepancies in state law 317/91. This is based on a bias that favours the ‘paternalist’ public actor and the scientific and technocratic elite. As mentioned previously, it calls for the ‘exogenous’ identification of districts, starting from statistical surveys, made by the qualified offices of the regional administration. The hypothesis that objective (scientific) parameters can be found for identifying the districts, which take away discretionary powers from the economic actors and from the administrators themselves, is implicit in such an approach. It is almost as if recognition of the districts and selection of the beneficiaries of incentive are a ‘scientific-technical’ fact and not a discretional choice of those responsible for industrial policy. But practical experience has shown that there are enormous difficulties in applying statistical-objective criteria in the choice of districts and local systems deserving of public aid, due to informative and especially cognitive shortfalls: the administration experts have serious difficulties recognising the already established districts and even more those taking shape.

Identification of ‘districts in themselves’ by the scientific and administrative system, the state and the regions also implies the idea that the interests and aims of the districts can be defined objectively, by economic and managerial science, and may be administered by a super partes ‘committee’ or a neutral technocracy. In this case, too, experience shows not only that super partes representation is practically impossible in the districts (due to the presence of different strategic hypotheses and coalitions within them), but also that there are no objective parameters for measuring the ‘common good’ that could be managed by a neutral management.

The Veneto law also poses the problem of avoiding some of the ‘management’ faults in laws issued by other regions. Public intervention has often been entrusted to a management organisation (district committee, local development agency, consortium etc.). But, especially if formed outside the district, these have not been able to offer added value services, or have not been able to carve out a specialist role for themselves in the manufacturing supply chain.

It is no surprise that business associations now have fun criticising the service centres financed by the regional administration as inefficient bureaucratic structures, and not only in Veneto.

Faced with these faults, the Veneto regional administration has left open the possibility that the necessary skills be brought together by the private spin-off mechanism and entrepreneurial commitment of the actors who invest in such skills.

From the regulatory point of view, there are two options available (both admitted by the regulation) to stimulate the creation of ‘productive’ and not only ‘opportunistic’ coalitions:

• on one hand ‘calls for tenders by subject’ can be defined that put the proposals from different districts into competition so they can be compared; for example, a single call for all projects by observatories or service centres on intellectual ownership allows resources to be attributed to the project proposals that are shown to be the best of those (similar ones) presented in different districts;
• on the other hand ‘calls for tenders by project’ can be defined that put different proposals from within the same district into competition; in this case the selection between districts is made at a different time from the selection of the project proposals and the latter are evaluated according to specific criteria for each district.

Each of the two possibilities has merits, shortcomings and application difficulties. In the first case the role of the council is limited to discussion of the ‘subjects’ with the councillor and the group of executives charged with drawing up the calls for tenders. In the second the role of the council is more active and aimed at selecting interesting projects in individual districts; those that make up an interesting regional industrial policy (like a jig-saw puzzle). In this second prospect the agreement is on the aims of industrial policy and the evaluation depends on the consistency of the operational proposals (skills and credibility of the implementers) and the technical structure of the calls for tenders (which must properly reflect the aims of the policy district by district).

In relation to previous experiences, the Veneto regional law gives the political organ (the councillor and the regional government) a high level of responsibility and discretion in the choice of districts and of subjects who will trigger development projects.

This is undoubtedly a new element, a ‘structural reform’ of the policy of supporting local development: in Veneto, development goes from being a technical fact to being a strategic and discretional one. Furthermore, the hypothesis that policy really can direct the economy is revolutionised, while the alternative one that the economy is a space for experimentation, occupied by ‘productive citizens’ and entrepreneurs who organise themselves to interact with the administration to give birth to a new group of artefacts (including the locality) gains ground. In the new perspective the political actor assumes the task of choosing the ‘local agreements’ in which to invest public resources, in the name of and on behalf of the regional community, particularly in the case where the resources are scarce and it is necessary to draw up a list of priorities in the interventions.

The discretionary powers entrusted to the regional administration and the councillor are central to the new regulation.

In conclusion. A series of cultural, political and administrative conditions encouraged the regional administration in Veneto, a key region for the future of the North-East, to promulgate an innovative provision in favour of manufacturing districts or localities at the beginning of 2003.

The aim of the provision is to support the formation and establishment of local networks of businesses and institutions that could be competitive on international markets.

The regional administration’s direction group believed it was important to indicate to businesses and local representatives that the flexible organisation of the district is an advanced form of industrial organisation and a new form of ‘manufacturing democracy’.

In order to avoid the contradictions and limits encountered by other national and regional laws on the subject, the Veneto regional administration decided to organise the provision into three stages:

• selection of the ‘district agreements’ that are put forward to support the future global development of the region;
• analysis of the demand for investment from the manufacturing districts and translation of such demand into specific calls for projects;
• selection and financing of the projects that best interpret the aims of the individual district communities.

By severing the meeting between the subject representing the evolutionary stages of the district and the one implementing projects that such stages are intended to satisfy, the new law avoids a structural limit typical of industrial policy to date.

In this way the regional policy-makers have tried to overcome the logic of showers of financing and a ‘distributive’ use of resources that is incompatible with the state of public finance, but also with the good practices of local development built on the basis of an evolutionary theory of development itself.

They hope to overcome the tendency to create “consociation-opportunistic” agreements between the representatives of civil society at a local level, whose sole consequence is the ‘carve-up’ of the resources intended for the locality and for development factors, and the structural inability to support effective team games.

During the last ten years of application, the reforming principles on which it is based were being seriously put to the test. An evaluation of the distance covered is premature. However, it may be said that, although the concrete implementation of law 8/2003 contradicts a good many of its inspiring principles, the experience under way is certainly an innovation in the national and European panorama of regional policy and for local development.

 

The Provincia Autonoma di Trento (PAT) policy for “Green Building, Energy and Environmental Technology Innovation”

Later on, in 2005, the Autonomous Province of Trento (part of the North-East Italy) decided to test a new approach to local development, in a cluster policy, in the aim of overcoming some limits of the Veneto Region’s attempt. Before that moment the industrial policy of PAT was oriented to attract capitals and productive investments from abroad. This line was possible thanks to a very peculiar fiscal system, which gives local authorities a leverage advantage not available to other administrative bodies in Italy. But it had a high cost, since the coming investors did not interact with the local agents and tended to get away as soon as the fiscal advantage was over.

In 2005 the PAT government decided to experiment an alternative approach, by investing in a local value chain, the construction industry, in the aim of exploring an endogenous development track, a “low cost” industrial policy. This option came into the screen thanks to the debate about the cluster policy in Europe and the eco of the Venetian Law about “Productive Districts”, while the fiscal advantage started to decline, due to the more general Italian crisis.

The new local development policy followed a five steps scheme[1].

 

Incubation and feasibility study

First of all local authorities or business associations (leading groups of companies) engaged an interaction with national authorities about the possibility of investing in a local cluster of innovative designers and building companies, out od traditional calls.

The first move was “bottom-up”, even though promoted by local authorities and not directly by citizens and companies.

Local “leaders” perceived the possibility of upgrading the position of the local industry in an emerging “market system” (the green building, smart grids and small renewable power plants market) and started to move towards this goal through the means of a more advanced industrial organisation. Thus they decided to invest in a cluster/industrial district policy.

A wide discussion was promoted among the possible participants to the new cluster constituent process. By interacting with other European communities (Freiburg) and exploiting the experience of Bolzano, with its Klima-Haus certification system, the Trentino’s agents discovered a possible entry point in the new business thanks to a highly specialised set of artefacts (wooden houses in X-Lam first of all) and a new voluntary certification system, scaffolding structure for complex construction and real estate development systems.

The local community was composed by different coalitions and the promoters of the new cluster had to struggle in order to create consensus about their new project (vision). Strong discussants (belonging to the conservative coalition), challenged the new perspective in terms of risks, lack of concrete results, dangers, ontological uncertainty.

Any cluster project needs a wide consensus in the local community. It has to provoke high levels of commitment and participation and, last but not least, it has to find out the funding necessary for carrying out the feasibility study and start-up phase.

In the case of Trento local volunteers produced a first draft of a strategy between autumn 2004 and spring 2005, which succeeded in overcoming oppositions and barriers.

A professional design of the new market system and, above all, the demonstration that the local community do already possessed the basic resources (cognitive and financial) to successfully start-up a new cluster game, required a substantial investment (100 thousand Euros), provided by the PAT.

But in 6-8 months in 2005 the innovative coalition was able to defeat resistance to change and to prime a wide collaboration framework for local agents and institutions.

A team of two skilled analysts (belonging to ECLT) joined the group of volunteers and set up a formal agreement among principal stakeholders. Collective agents signed a formal Protocol (MOU) in March 2005, in order to design the macro-level section of the innovation process scheme.

ECLT influenced this decision with a “sandwich emergence” framework. P.Gurisatti was recruited as “facilitator”, in order to widen the group of potential benefiters (possible general contactors) and kept the leadership of the project, signing out an agreement with the macro stakeholders and carrying out the recruitment of the first members of a task aligned with the theory of generative potential. The feasibility study certified the existence of all the subjective and objective conditions mentioned needed for a successful process (number of participants, division of labour and participation to a common value chain, long run commitment, local leaders or authorities roles).

There were companies or research centres recognised as “incubators” of a special set of knowledge (green building design at first) and there were agents recognised locally and internationally.

 

Start-up and seed capital

When the feasibility study provided positive feedbacks to the local community leaders, at the beginning of 2007, a new stage of the process could take place. The rising coalition kept the leadership and ruled the game in the start-up phase (always by the means of the “facilitator”, charged with the responsibility of representing the new identity of the emerging system). The start-up phase had quite simple tasks:

• to define a “constitution roadmap”, finalised to recruit a “sufficient” number of qualified participants, engaged in recurrent patterns of interaction around an evolving family of artefacts; in about 12 months the promoters succeeded in designing a provisional/draft version of a strategic plan for the cluster development and signed out an agreement with a wide group of participants, and started to constitute an adequate and recognised local institution (a scaffolding structure),
• to raise the funding necessary to implement the first collective actions of the cluster (such as organising bilateral and multilateral contacts with participants, concerning with possible investments and common projects, general meetings and seminars about critical problems, recruiting experts in order to carry out a first set of projects concerning with commons, collective goods for competitiveness…); this kind of funding can be assimilated to “seed capital”, with no return on the short run.

The key challenge in this phase was to avoid the opportunistic coalition “trap”. Due to the fact that seed capital was provided by public institutions, the main challenge of the cluster game was not to divert to undesired directions, just in order to catch the grant. The driving storyboard resisted (Green, Smart and Small) and the negotiation between bottom-up proposals and top-down guidelines remained equilibrated.

Consequently, national public funding was delivered on the basis of projects presented by the local leaders (Law 297/99). Constrains of the call, which could bring the project far from the original roadmap, were by-passed by a gentleman agreement. The art of cluster administration drew the “facilitator” to draft a constitution act in line more with the cluster stakeholders needs than the national calls guidelines.

 

Scaffolding structure creation and local goods for competitiveness (collective investment)

Since also the start-up phase was successful, a more detailed and precise set of investments could be planned at the beginning of 2008. The following results confirmed the positive conclusion of the first two stages of the “facilitation” process:

• the “facilitator” was confirmed as a key player in the game (recognised as a good director and social network leader) and became the bridge-node (together with another member of the task force) between the local scaffold (Habitech) and an international scaffolding structure (World GBC and US GBC)
• the cluster generated new names for the emerging artefacts, the attention of leading participants shifted towards new attributions of artefacts and a claim for new institutions (exclusively representing the rising coalition and possibly the new market system) rose up in the community;
• an increasing interest for knowledge items was registered among leading agents and key representatives of the local community started to perform new roles in the collective action (ontological uncertainty started to decrease).

In such a situation the “facilitator” could design a set of investments on commons, by interacting with a wider group of cluster specialists and designers of the new market system. He achieved enough leadership to present a list of duties to be fulfilled by the stakeholders and the local government representatives in 2009.

These kinds of investments were recognised as system driving projects. The were oriented to create external economies for participants and to sketch a common “framework” (or guideline for individual behaviour and collective alignment), a meso-level set of attributions to the emerging family of artefacts.

Commons were to be produced, at the beginning, directly by the facilitator and his task force. Later on by specific facilitation/scaffolding organisations: Habitech, GBC Italia and ARCA. The direct involvement of private stakeholders, in the production of public goods, revealed to be the right tool for promoting the consciousness of taking part to a collective organisation. Private company owners were transformed in productive citizens, investing in public rules, commons and other collective and not appropriable goods.

Habitech, as a specific organisation (DIPO – Distributed Innovation Policy Organisation), in charge with the responsibility of providing a set of knowledge & technical services for the cluster members, identity features, was recognised as a scaffolding structure, related to the cluster’s internal dynamics. Since a scaffold is producing high value knowledge and technical services, there was no need to “explain why” the cluster members had to pay for it. The benefits were clear and their effects on individual return are easy to measure.

Nevertheless the free riding behaviour was a permanent source of threats. Here again the facilitator had a key role to play: the mediation role. A scaffold is not only an agent in the cluster arena, but also a node of a network. The facilitator reinforced his role thanks to a sophisticated mediation system (the task force in Habitech) and to the possibility of developing an additional exclusive role as an “international interface” between the local cluster and international scaffolds like the GBC World movement.

He succeeded in shaping an adequate communication system and personally participated to international meetings and projects, reinforcing the reputation and the identity of the rising new industrial organisation. Having back the consolidation of a leading role.

 

Division of labour, between general contractors and specialised suppliers.

Increasing returns on investments were the final target of a cluster game. When the virtuous circuit of a cluster was fully active at the beginning of 2010, the productivity rate started to rise and the cluster “atmosphere” started to attract capitals and high skilled workers.

In order to reach this breakeven point, the cluster game registered a shift towards a new internal division of labour. General contractors and leading enterprises kept the control of emerging specialised supply chains. Re-shaping existing supply chains (in line with the needs of the new market system).

The development of a new “industrial organisation” took more than five years. The building of efficient and innovative teams of suppliers and creation of a knowledge “filiére” (chain) were matters for the leading stakeholders. However, the facilitators (task force in Habitech and GBC Italia) highly contributed to the creation of a governance pattern for the cluster, finalised to promote the generative potential of the local value chains.

sThe facilitator could assess them and empower the emerging coalition by different services (capacity building – empowerment).

Having a permanent observatory on the cluster dynamics and/or an advanced social network analysis model (and software) was of great help in this specific and difficult task of the facilitator (even though the MD platform was not available at the time).

 

Generative relationships and innovation

Even more difficult, if possible, was to promote generative relationships and innovation processes among the cluster partners, after the first steps. In this field the presence of local innovation leaders was the key asset and the facilitator had just to negotiate a cooperative agreement with such kind of experts.

 

Big Bang of the new “market system” and venture capital attraction

When the previous stages of the constituent process were completed, a sort of “big bang” of the cluster occurred. In this final stage of the process the facilitator had minor role. When the green building market system was consolidated and substituted the previous one, other agents could take part to the process and the cluster landscape started to provide guidelines for different kinds of work and entrepreneurial challenges.

The power shifted back to common agents and traditional establishment bodies (business associations, standard setters, training schools, managing professionals, consultants, etc.). The task force role was over.

 

The Green Communities policy for mountain territories

On the basis of the successful experience of Habitech and GBC Italia, ECLT research team decided to check the possibility of extending the North-East territories pattern of policy making to the national level, involving a completely different kind of communities: small and marginal communities in under-developed sites of the Italian mountains, in the Southern regions at first. In this case, the focus of study (inserted as a specific work package in the MD project) was a new set of tools for dynamic evaluation of the local innovation process.

Around 2011, the national government (mainly the Ministries of Environment and Territorial Cohesion) was interested in launching a policy for inland areas. Thanks to their work on Habitech and the resonance from books published (Borghi and Letta, eds. 2009; Gurisatti, 2011a, 2011b) and public debate generated, the group obtained funding from FORMEZ[2] for a pilot project to explore and better define the concept of “Green Communities” (GC). The group studied a couple of potential green communities in Campania (the area covered by the LAG Casacastra and the Island of Capri) and tried, for the first time, to codify a model[3] of sustainable green local development close to their ideal one (based on the 12 axes protocol), having as a benchmark the experiences developed in the Bellunese and Primiero communities and in Trentino.

The reason why the promoters shifted their attention to potential “green communities” located in Southern Italy was twofold:

• Funding possibilities: in order to increase the chances of having an adequate budget for R&D activities (about technology development in each axe of investment), which is more readily obtained for Southern regions, due to EU structural funds destinations.   Moreover, at the time of GC, the Interregional Operational Program – Renewable Energy and Energy Conservation (2007-2013)[4] was in place. While this program concerned only two of the group’s systemic 12 axes, the availability of funding from this program made it a focus of the group’s attempts to launch a “proof-of-concept” project for their overall “green community” concept.
• Experiential diversity: in order to check how extendible was their vision, it was advantageous to see how their ideas applied (and where they needed to be extended) to territories with administrative, environmental and socio-economic assets quite different from the Northern regions that provided the success stories around which their vision was based.

At that time, the promoters of GC were convinced that the less industrialized and urbanized areas were the places with the best chance to develop green economy opportunities. Therefore, Southern mountain territories seemed to be the optimal test-bed for the new development ideas. They also sought to create a network linking the most advanced experiences in Northeast and Northwest Alpine spaces, and the most advanced experiences in the Appennine chain in the South. Fabrizio Barca (later appointed Minister of Territorial Cohesion[5]) was insisting on his idea of placed-based policy for local development in Europe and the promoters of GC wanted to check the applicability of this approach in Southern Italy.

What was clear already at the end of the pilot phase of the GC project was that the constituent process of a CISS (Italian acronym for the constituency of a new GC) was not simply an administrative process of aggregation of municipalities. It was a more complex social innovation initiative. Nowadays mayors – at least in Italy! – have a profile very distant from that of the local development agent (the main character of the narrative envisaged by the promoters for the GC project implementation). They have, indeed, a profile closer to that of the “shop steward” of the territory, engaged in claiming more resources transfers by the national government to their local communities. The promoters of the GC project imagined the constituent process of a new CISS as a social innovation process led by a “task force” of professionals (experts in local development policies and scaffolding structures construction) in intense and generative relationships with mayors and other productive citizens, acting in the same zone of the agent-artifact space addressed by the GC promoters.

The GC promoters were aware that, in order to constitute a new model of territorial development – at a convenient scale and with a sufficient patrimony of valuable assets (along the 12 axes indicated above) – a long and complex social and institutional process of change had to occur.

This is the reason why they thought it important to invest in the design of some national scaffolding structures – such as UNCEM 2.0, GM rating system, but also the government policies, like Fabrizio Barca’s placed-based local development policy and, later, the policy for inland areas. The deployment of the GC project demonstrated that they underestimated the difficulties of this “scaling up” process, which concerned the construction of a favourable context not only at the local level, but mainly at the national level.

In order to get started in the process of moving from vision to action, the promoters of GC began to activate a network of contacts and lobbying activities with potential allies in the Government and Parliament: Elio Manti and Antonio Strambaci (Ministry of Environment), Enrico Letta (head of the Democratic Party and coordinator of AREL – a centre for studies for institutional capacity building), Carlo Flamment (Formez), Graziano Delrio (president of ANCI), Fabrizio Barca (Ministry of Territorial Cohesion), Ermete Realacci (honorary President of Legambiente) and Aldo Bonomi (Founder of Consortium AASTER). Through these contacts and activities, they succeeded in obtaining funding from the Ministry of Environment in the specific chapter of “Green Communities Policies” for the Southern Italy inland and mountain areas. The Green Communities project was ready to start at the end of 2011.

The project awarded the contract for a call that had been issued by the Italian Ministry of Environment under the EU Interregional Operational Program, whose funds were specifically dedicated to Italian Convergence Regions with a main focus on energy efficiency. Despite such a narrow call scope, the group’s tender emphasized the importance of a process to construct a CISS and the key role of the GM rating system as a scaffolding structure for effective design and implementation of energy efficiency policies. However, in line with the call, the key activities to be implemented by the project were to:

• valorize forests as resources for energetic and climatic purposes and as a crucial asset for communities’ transition towards patterns of development characterized by low energy consumption (i.e. small scale plants – less than 20 KW);
• measure the energetic/climatic performance of selected public buildings;
• make available to local administrations a number of feasibility studies regarding the energy production from renewable resources and energy efficiency intervention to public buildings (and territories in general), to support local authorities when taking decisions regarding possible development strategies;

Indeed, the commitment of the Italian authorities to the broad vision laid out by the promoters was only partial at best. The Green Communities project started up with a congenital handicap: a potential conflict between at least two different interpretations about the final aims of the project and hence narratives about how the project would play out. While the early promoters of GC gave priority to the design of a local development policy and the involvement of mayors and of other local agents, the Ministry officers and the official program evaluators gave their priority to technical interventions and concrete outputs (feasibility studies on buildings energy-efficiency, forests management, smart grids, small scale energy power plants, ESCO services).[6]

This basic misunderstanding or, better, ambiguity (since the possible “hijacking” of the funding towards the process of constructing a CISS, as mentioned in the tender, was noted favorably by the officers from the Ministry) highly influenced the development of the project during its implementation. And there were other, related issues, having to do with implicit conditions and limits pertaining to the “Italian way” to manage administrative processes.

The promoters of GC were certainly aware that the implementation of the project could produce the emergence of unattended consequences, and accepted the risk of deviations from their original expected and preferred track – although they underestimated the need to monitor them adequately (as the DE-rs tried to point out many times!). The budget available (around 2 million euros) supported their optimism about the possibility of not only providing the Ministry with the promised formal (and technical) deliverables, but also to design and set up the activities concerned with the social and institutional innovation (and capacity building process addressing in particular the mayors) and the investments necessary to allow the constitution of the national scaffolding network.

At the local level, the project involved four potential CISS (Cilento and Titerno Alto-Tammaro in Campania, Madonie in Sicily, Pollino in Calabria). In order to successfully implement the transition process from the existing mountain communities (traditional MC) to new Green Communities, the promoters set up a national task force – highly skilled and adequately heterogeneous, according to their internal criteria – articulated in three functional bodies:

• the Board of Directors charged with the responsibility of designing the stages and WP of the project and managing the operative actions (through a national project manager)
• a national Steering Committee, composed of 12 experts giving advice on the 12 axes of investment identified by the GM Protocol, supported by the GBC representatives for the development of the GM Protocol itself aligned with international standards like LEED.
• four local task forces of experts, one for each of the key items of the project: forests management, buildings’ energy efficiency and territorial local development.

At the national level, the promoters invested energies in the construction of a network of stakeholders of the project, in order to locate the GC project at the center of the national debate about local development policies, going beyond traditional patterns. The priority was given to the most representative associations of mayors (UNCEM e ANCI) but a continuous flow of interactions was planned also with other national and regional bodies, like GBC Italia, MATTM, DPS and PAT.

The promoters envisaged two phases:

1. For each CISS, they wanted to implement experimentally (at least in three out of the four local CISS candidates) a process similar to HABITECH’s (or the ACSM-BIM model), featuring the selection of a suitable local task force, the presence of a group of stakeholders and of a shared driving project, inspired by an identity based local development policy and supported by the steering committee, with an adequate budget. In this phase Pierluigi Svaluto (leader of UNCEM in Belluno), Marino Simoni (leader of UNCEM in Trento), and Mario Cicero (leader of UNCEM in Sicily) were supposed to act as national sponsors and advisors of the initiative and designers of the new scaffolding structure UNCEM 2.0, together with Enrico Borghi (UNCEM national president). In addition, joint ventures between the successful cases in Trento and Belluno and the pilot Southern territories were planned.
2. During the second phase, they wanted to develop a national rating system (the GM Protocol – first draft), supporting the emergence of a new national policy for “green communities” in mountain and inland areas, sponsored by national stakeholders enlisted into the project’s network, other national authorities and even international bodies (GBC World, Sustainable Sites Initiative – SITES , etc.).

Finally, after the experimental phase, they imagined the possibility of opening a wide discussion about the local administrative structure of Italian institutions and their possible reforms. This was the basis for the narrative the promoters wished to see enacted. This narrative is framed around a powerful narrative structure, with an intimate relationship with modernity and the Innovation Society ideology, which we in MD call the “Happy Project” narrative structure. This narrative structure frames stories about “successful” projects, highlighting the role technique plays in “resolving” the social problems these projects set out to address (see MD Final Report for a discussion and A4 representation of the Happy Project).

The detection of the performed narratives and the mapping using the MD platform show clearly that the GC project failed to establish a task force able to organize the scaffolding structures required by the GC project’s longer-term goals. This could be due to the fact that in the selected communities the “right” characters just weren’t available (as they were in Trentino or Belluno) or, maybe, they were there, but they hadn’t been “activated” and properly coordinated through interactions with GC project participants. As one of the promoters claimed after the end of the project:

“We failed to engage citizens in the four territories for two reasons:

1. first of all, because we underestimated the absence of independent trade organisations in the southern regions; while in the Northeast part of Italy (the regions the national experts were familiar with) the role of these associations is more important in front of the one performed by administrative institutions, in the four Southern pilot areas they were practically absent; therefore any contact with local entrepreneurs (i.e. productive citizens and coalitions) did not produce any collective engagement, as it usually happens in Northern areas (where citizens act on behalf of their organisation); the transfer of Northern attributions to Southern citizenship revealed to be a mistake;
2. secondly, it’s true that we privileged the technical experts approach to social innovation problems as a matter of reducing the gap between local communities and more advanced social and technical solutions or patterns; this top-down approach was reinforced by the Triumvirate ending with the success of the coalition aligned with central authorities primacy.”

It is generally agreed that the Italian institutional structure is inefficient. Italy is struggling against a constant reduction in the productivity rate (since 1992), a high cost of infrastructural change, a heavy weight of the public sector, and a not sustainable national debt.

At present, Italian policymakers seem to act according to one or the other of the following two narratives:

1. the first one is oriented to top-down approaches to structural reforms, composed by a selective spending review, “horizontal” cuts of the public expenditure, elimination of the Province level, and compulsory aggregation of small municipalities. Within this narrative, part of the problems is solved by the national élites directives (mainly through statistical planning, based on unclear models), and part by local autonomous re-organization processes;

1. the second one is oriented to a bottom-up approaches intertwining negotiations among local institutions (Regions with POR, FAS, FESR and ASI; Municipalities with land use plans -PAT, etc. ) and national institutions, acting on behalf of the EU authorities (e.g. Cohesion and Structural Funds), according to the traditional methods of periodical calls and co-investment in locally driven development projects.

Fabrizio Barca, Carlo Trigilia and the promoters of GC refer to the second narrative, even though with important differences. The GC promoters are particularly concerned with the limits of the “distributive coalitions” that very often take shape when a call is published by national or regional authorities. They endorse the development of local “productive coalitions” (self-maintaining aggregations of citizens, with a clear sustainable pattern of investment in mind) as the basic condition for a positive negotiation between national authorities and local institutions. Beyond that, they pursue the transformation of national élites in “dynamic evaluation” teams, able to play an active role in the local development decisions, instead of assuming an external, neutral referee role.

The GC promoters’ narrative envisages new social roles and identities for the key agents of the local administrative policies. First of all, they expected the coming into being of “productive” relationships aimed to produce, locally, the necessary budget for public administration. Such a vision developed among the promoters on the basis of their personal experience in several “productive districts and clusters” of the Northeast region of Italy, that showed to be able to successfully enact a pattern of self-sustainable development over the past 40 years, emerging as a new component in the Italian economy (the so called “Third Italy”, already mentioned above), and providing a surplus to the country in terms of net-export flows, fiscal drags and so on.

The GC promoters had the opportunity to interact with agents close to or inside the Italian Government (e.g. Barca and Trigilia), and in these occasions they tried to introduce and foster the adoption of a new framework enabling bottom-up and distributed policies, but found themselves out of the administrative policy making circuit, regardless of the several processes in which they took an active part (including the Veneto Regional Law on industrial districts in 2003, the Green Community policy in 2011/2012, and, later, the policy for Inland Areas “Politica per le Aree Interne”).

In the end, the DE of the GC project provided the following conclusions:

1. On the one hand, the leaders of the “bottom-up coalition” were endorsing the creation of local “productive coalitions”, led by local task forces of development agents, who had to perform the role of designers and of managers of CISS or GC, able to produce a cash flow of resources through energy efficiency plans and investment on identity based local assets, but didn’t notice the following narrative incoherences and incompletedness[7]:
   1. the characteristics of local agents – engaged in the role of members of a task force –did not correspond to those “ideal character” encountered in the HABITECH/ACSM/BIM archetypal stories.
   2. the characteristics of the local mayors (UNCEM 2.0 local stakeholders) did not correspond to the profile of the political leaders described either in the HABITECH story (i.e. Dellai /Salvatori), or in the BIM (i.e. Piccoli) and ACSM (i.e. Simoni) stories.

• the scaffolding structure, represented by the national association of experts (GM Association), didn’t take off in time, and didn’t provide appropriate social and technical services to support such kind of characters ( as GBC World – LEED rating system did in the archetypal HABITECH story (Gurisatti, 2011b)

1. no DIPO took off in the pilot territories, playing the role of citizens’ association (like trade associations in the HABITECH case).

The leaders of this coalition (the promoters) continued to await bottom-up initiatives in the South for too long, even though the DE provided feedbacks alerting them that the conditions were not as they expected them to be (therefore radical adjustments to the process design had to be performed!).

1. On the other hand, the leaders of the emerging “top-down coalition” (i.e. Lo Bianco, Zoccatelli with the support of GBC Italia members), didn’t notice their own narrative incoherencies and incompleteness:
   1. The features of the new rising national leaders (for example, Enrico Borghi and Fabrizio Barca) did not correspond to the ideal character of a national “distributive network professional”. Borghi became a member of the Italian Parliament, but with a secondary role, and continued to be the internal leader of ANCI for Mountain policies, but with no budget, thus failing to transform UNCEM into an assessment private agency for European projects. He never became the reforming or even revolutionary leader imagined by the promoters. Fabrizio Barca failed to control the policy for Inland Areas by involving national bodies like UVAL, ISTAT, Fondazione per il Sud and the like.
   2. The GCB Neighbourhood Protocol failed to become a recognized alternative to the GM Protocol, and GBC Italia could not gain recognition as an interesting partner for national governmental policies.

The leaders of this coalition (the new-comers, i.e. GBC Italia) continued to endorse the top-down approach, considered suitable for the underdeveloped areas of Southern Italy, even though they faced a strong competition with other distributive coalitions (and better organized ones at that – for example, that of Corrado Clini, Ministry of Environment from November 16, 2011 to April 28, 2013) – when trying to enter the national policy-making arena.

As it is becoming clear at this point, beyond the specific evolution of the experiment, the ECLT team achieved the result of developing not only a new approach to policy evaluation, but also a “narrative” based theory of social action, having in the social agents “narrative” analysis one of its basic pillars.

 

The Valle del Chiampo case study: from a dump to a mine

And here we come to the last experiment, under implementation since 2014, openly inspired by the identity based local development theory, which could become a term of reference during the Basque Country analysis considered in the ALC project.

After having experimented the MD methodology in the GC case, another opportunity of testing David Lane’s theory took place in the constituent process of a new DIPO in the industrial district of Valle del Chiampo, a territory specialised in leather production. The new DIPO (Distributed Innovation Policy Organisation) is called Distretto Conciario Vicentino (DCV) (www.distrettoconciariovicentino.it) and is led by Paolo Gurisatti (president of the DIPO and of a national institution for innovation in the leather cluster called SSIP (Stazione Sperimentale Industria della Pelle (www.ssip.it).

Here the innovation problem is the following: how to organise the transition of the Valle del Chiampo local system from the present identity of a dump to the more promising identity of a mine. This perspective is in line with the local community representatives’ ambition and challenges the traditional pattern of organisation of the industry. The leather industry is traditionally producing a lot of dangerous waste and has a deep environment footprint. The technical problem is how to evolve in the direction of a no waste process and how to develop new bio-chemical systems for higher levels of quality in leather and recycling.

The DCV DIPO is charged with the responsibility of mobilizing local entrepreneurs, technical experts and the entire community in a great social innovation process. So far the conflict between common people and technical experts (apparently unable to provide the industry with not polluting processes) was so strong that little advancements have been made even to experiment new technology tracks. The real challenge is to create a “narrative framework” driving the local agents to undertake a more effective and generative interaction.

The theoretical approach of INSITE and the operative set of tools produced by MD sound are at the core of this experiment. The narrative structure adopted by the designers is inspired by the Trentino’s green building district narrative. What is different in this case is the set of managing tools and the governance pattern. Since the project is still under implementation, we do not describe its framework here in this report. We can do it during the ALC project. Here we just underline its coherence with the general framework described above.

 

6. Towards an innovative model of development policy and democracy?

The history recounted in these pages leads to some considerations that go beyond the simple objective of reinterpreting events concerning Italian (or Northeast of Italy) development and the way in which some theoretical views have been translated into concrete policies.

The ‘Italian’ theory of the districts, and especially the Veneto and Northeast experience of ‘manufacturing areas’, suggests some promising paths for reviewing the key concepts of the dominant culture in organisation of the economy and of industry (P.Gurisatti, 2004). The crux of the problem now, as in the time of the classical economists, is how to increase productivity. Without an organisation of work and industry able to increase the quantity and quality of the final product, the economic system remains in a re-integrative state that does not allow margins of social well-being and growth. It has long been thought that the best way to increase the productivity of an area was the establishment of big national structures such as a single market; a state system capable of redistributing income and wealth, of organising investments, of creating jobs and amassing the necessary capital. More recently it has been shown that the means chosen for creating big business and national state (the Fordist model and the French model respectively) and a kind of ‘passive’ citizenship, limited to interpreting and learning the law and enjoying generic ‘rights’, are not able to increase productivity uniformly everywhere.

Local citizens’ organisations based on new levels of ‘active or productive citizenship’ are on the contrary able to achieve the objective, largely ignoring the apparatus and organisational support of the state. The study of these organisations, which we now call ‘productive districts or territories’, has shown that local development (increase in the productivity of factors and in welfare) occurs ‘autonomously’ because productivity now depends on ‘cognitive work’ and the elaboration of distributed knowledge rather than on the simple learning of ‘regulations’ and standard paths defined by the centre. The structure of the national bureaucracies and technocracies (but also the regional and provincial ones) is shown to be inadequate for the fundamental aim of productive efficiency.

Not only this, but an analysis of economies of scale also shows that a large dimension does not ensure an absolute advantage. The ‘power’ of the monopolistic organisations (both in industry and services) continues to guarantee a re-distributional effect in favour of those citizens that are part of them, but it is always less able to make any contribution to overcoming the zero-sum society (L.C.Thurow, 1981). The institutions of local development, on the other hand, are effective, but ‘clash’ with the ‘power’ exercised by the big existing national and international institutions. It is a paradox. But it is possible to come to the conclusion that regional policies themselves (of individual countries or of Europe) are not an opportunity offered to ‘manufacturing areas’, but rather an ‘obstacle’ to the possibility of their comprehensively fulfilling their own function.

Unless, and this is happening for the first time in Veneto, productive citizens and representatives of the traditional institutions of the state (or region, which is the same) do not begin communicating and trying out an innovative path (C.Sabel, 2000) that would overturn the relationship between the ‘paternalist’ state institutions and the new institutions emerging at a local level. We presumptuously risk claiming that it is precisely in Veneto and Northeast Italy that the processes that may influence the international debate are now being tried.

But why do we claim that the conditions for such important innovations in terms of citizenship and development policy now exist in Veneto and Northeast Italy? What is so revolutionary about an economic system that has assuredly moved to the top of the world rankings, but without so far expressing any explicit intention in its evolutionary trajectory? How is it possible that entrepreneurs concerned about being ‘too small’ and badly organised (oriented toward ‘Fordism’) can give rise to a model based on alternative hypotheses? How can one speak of the institutional innovation in a system that does not recognise its own specific nature and explicitly rejects becoming a ‘model’, and is not even capable (unlike Emilia Romagna) of producing a governing group to guide the country or the European Community?

The reason for our optimism lies precisely in the ‘understatement’ of this region social and institutional project. It is consistent with the idea that a local development project does not necessarily have to become a ‘model’ (a centre) for others, but must primarily show that it is autonomous and can meet the needs and ambitions of its constituent citizens (even if it is unable to conquer the ‘centre’ of the national or international scene).

Veneto in particular now meets the challenge of productivity with a local development programme that ignores the rules and opportunities offered by state and community institutions. It performs in a way that is seen as ‘not very efficient’ by other regions more ‘expert’ in the management of relationships with centralised institutions. But it is a programme that works!

Veneto is now a widespread metropolis that is possibly unaware, but is capable of managing potent relations with the global economy, of attracting resources from all over the world and maintaining more than acceptable levels of income and employment. The objective results of its development ‘model’ are unequivocal and envied even by those European regions (Emilia Romagna, Rhone Alpes, Catalunya and the Basque Countries) that have also been able to present a planning procedure of their development and a system of relations with the ‘theoretically’ much more rational and evolved ‘centre’.

At every cyclical recession the Veneto system ‘dips’ more than the average and predictions of decline are then repeated that are unfailingly belied by the facts. Even Enzo Rullani and other observers of the Veneto situation (who have also contributed to the analysis of the North-East model with new instruments), are beginning to claim that the conditions of its success are diminishing, have been exhausted over the last decade and that it is therefore necessary to launch a new cycle, an innovative constituent project. This is all true, but it does not contradict the hypothesis that the variety of relations and knowledge in the region (whose ‘territory’ now extends to take in part of Romania, Slovakia, Vietnam and China more than other Italian regions) may become a sufficient base for recombining the factors in an innovative way and go back to creating an increase in productivity. There is no doubt that such a ‘recombination’ must also take place with factors outside the system or with new factors that the system has not yet developed, such as new cultural, political and technological functions.

But it is precisely here that there is a ‘possibility’ (not a probability) that a nucleus of initiative different from the past will be able to construct the synthesis of the future Veneto model, able to give a name to the emerging metropolis, to change its international reputation, to build new institutions that may be recognised all over the world as the ‘specific, constituent architecture’ of a new global player of the third millennium.

This however calls for extreme faith in the ability of the Veneto people and a change of perspective from the point of view of ‘citizenship’. Up until now the Veneto people, like other citizens of Italy and Europe, have paradoxically stayed ‘overly dependent’ on the rules and constraints imposed by the national and European order, by the same national state and ‘paternalist’ capitalism that had its origins at the end of the nineteenth century precisely here, in Veneto.

Could the ‘closed and conservative’ people of Veneto, always trailing the projects of others, for once dare real innovation from the point of view of institutional creativity? The ‘closed and conservative’ people of Veneto, always trailing the projects of others, could for once dare real innovation from the point of view of institutional creativity. On the other hand, who else should build a hypothesis of intelligent and lasting local development?

The executive management of Law 8/2003 (of which it will shortly be necessary to make a careful and detached evaluation) leaves broad margins of dissatisfaction and for the moment does not satisfy the expectations of the productive citizens.

But we ask ourselves what could or should occur in Veneto if the constituent processes of new manufacturing areas under way and especially the process of forming a new global metropolis really should find themselves being interpreters and narrative structures that are equal to the hypotheses advanced in this article.

The ‘Veneto Case’ would not have finished astounding and transmitting to the world a message of hope regarding the possibilities of overcoming the limits of a social and political system that we have inherited from early modernity and that no longer satisfies us.

The comparison with other territories in Italy (like the closer Autonomous Province of Trento, but also the other four mountain territories in the South – involved in the Green Communities policy) and other regions in Europe (like the Basque Countries), carried out with the methodology presented in the ALC project on IBLD, will give important feedbacks to the hypothesis outlined so far.

 

Notes

[1] Further details in P.Gurisatti, Verso la green economy: innovazione e sostenibilità in Trentino, in Patrizia Messina (edited by), Innovazione e sostenibilità, Quaderni dell’Associazione Master, n.5, Cleup, 2009 and in Paolo Gurisatti, A tool kit for a successful “facilitation process” (constituent process of a new “cluster”) and/or for the start-up of a self-sustainable technical “service provider”, prepared for JTI – Jamaica Trade & Investment, 2009.

[2] For details see note 31.

[3] The final report of this pilot project already included a draft of the GM Protocol, thanks to the involvement of a task force of experts including Marco Mari (later member of the board of GBC Italia, expert in quality certification processes and rating protocols, such as LEED and alike), who set up the first structure of a rating system for sustainable mountain communities (CISS).

During the same period the group participated to an Unicredit/Federlegno project finalized to develop a national policy for the sustainable management and exploitation of forest resources in – the project’s results ended in a book (Gurisatti, 2011a) containing the first general description of CISS development, the role of UNCEM as a scaffolding structure and of GM Rating System as a training/formative tool for newcomers in the CISS federation.

^[4] Managed by regions with the participation of national competence centres or central administrations. The Operational Programme Renewable Energy and Energy Conservation 2007-2013 has been financed by EU and national funds acts with the aim to increase the production of energy from renewable sources and to improve energy efficiency, promoting local development opportunities in the Convergence regions (Campania, Puglia, Calabria and Sicily). For the period 2007-2013 the budget for the program has been 1.6 billion euro, of which 50% co-financed by the European Regional Development Fund. For more details: www.poienergia.it

[5] On 16 November 2011, Fabrizio Barca – who has held the positions of head of the Research Division of the Bank of Italy, the head of the Department for Development Policy at the Ministry of the Treasury, and Director General of the Ministry of Economy and Finance – was appointed minister without portfolio with responsibility for territorial cohesion of the Monti government.

[6] This is due also to the constraints given by the type of tender (i.e. POI 2007-20013)

[7] As stated by D. A Lane “Narratives, even when they are not explicitly formulated, play a key role in generating participants’ actions. By making them explicit, participants can assess the coherence (in the sense of connecting present context and contemplated action with desired future directionality) and completeness (in the sense of the capacity to incorporate without loss of narrative logic additional information about relevant events and entities) of the narratives that guide their project-related interactions”