Budapest, 24 th March 2004

1. Paola Maccani Head Local Development Initiatives INNOVATION IN TRADITIONAL INDUSTRIES AND LOCAL DEVELOPMENT Budapest, 24th March 2004

2. Emilia-Romagna. Some Indicators 2002 • Population 4.059.416 • Total labour force 53,4% • Total unemployment rate 3,3% • Female labour force 42,9% • Female unemployment rate 5,3% • GDP per head (€) 30.038 • Employees in themanufacturing industry 645,648 • Manufacturing local units 94.817 • Manufacturing av. size 6,8 • Firms with less than 50 empl. 59,8% (1996)

3. Emilia Romagna positioning European regions ranked for GDP per-head decreasing (class. Nuts 1) 2000 Source: Eurostat Archivio Regio

4. Strengths • Productive systems well consolidated, dynamic and renowned at international level (mechanical engineering, packaging …) (ER) • Territorial specialization of the work force( ER) • Significant presence of well equipped business parks in a growing phase (EA) • Presence of Universities, Research and Innovation Centres (ER) • Variety of environmental resources and presence of several natural areas (MA) • Centres of tourist attraction with a growing potential (ER, cities, EA, coast; MA (sport …) • Widespread presence of primary as well as of minor historic and cultural assets (ER, MA, EA) ER = Emilia RoadMA = Mountain AreaEA = Eastern Area

5. Challenging Aspects • Enhancement of brain circulation • Saturation of industrial areas (ER) • Links between companies and Research System (EA, MA) • Sustainability of mature products exposed to globalisation and competition (ER) • Local productive system not much related to large companies (EA, MA) • Limited diffusion of “networks of companies” (EA, MA) • Inadequate integration of the tourism industry among the coast, the art cities and the mountain eastern areas (EA, MA) • Critical environmental situation mainly in areas where the chemical industry is located (ER, EA) • Zones characterized by a strong hydro-geologic instability (MA) • Difficulties to have access to services (public, business, etc.) (MA) • Depopulation, ageing population (MA) • Entrepreneurial fabric with elements of fragility (EA, MA) ER = Emilia RoadMA = Mountain AreaEA = Eastern Area

6. Historical roots • a) PARTICULAR POLITICAL AND INSTITUTIONAL SETTING: • Regional governments had been established in Italy just a few years ago, devolving them powers in the fields of vocational training, agriculture and artisan production, with the exception of SMEs sector. • The role of employers’ and trade associations, Chamber of Commerce and Trade Unions has been growing in influence, affecting the local policy making. • The competition between national and regional model of government has encouraged innovative policies. • b) PARTICULAR ECONOMIC CONDITIONS: • The crisis of large industry and, on the other hand, the growth of small businesses

7. Emilia-Romagna: industrial districts Farm machinery Machine tools Textile-clothing industry Biomedical products PIACENZA Shoes PARMA FERRARA Agro-food REGGIO EMILIA RAVENNA MODENA Upholstered furniture Food processing BOLOGNA Mechanical engineering FORLI’ Ceramic products and machines for ceramic industry Packaging machines RIMINI Wood –processing machines

8. The policy of 80s Policy of “Real services” Based on the fundamental role played by local manufacturing systems (Textile in Carpi and farm machinery in Modena and Reggio Emilia) Basic assumptions • Planning and interventions are conceived to have an impact on a large number of companies belonging to the same sector. • Continuous monitoring of the status of local production systems. • Involvement of all the relevant actors (Local Administration, Business associations, Chamber of Commerce, Trade Unions, etc.)

9. Innovation - Technology Transfer ASTER QUASCO CITER Fashion Construction CENTRO CERCAL CERAMICO CERMET DEMOCENTER CESMA Quality - Technology - Engineering The ERVET System ERVET

10. Quality-Technology-Engineering • Laboratory analysis and testing • Process and product certification • Assistance to SMEs in introducing quality control systems • Training • Information and assistance on technology innovation and regulations • Demonstration installations CERMET Quality Certification and Lab. Testing Bologna CESMA Farm Machinery Reggio Emilia DEMOCENTER Industrial Automation Modena

11. Significant changes in the scenario • Growing role of the regional Government on industrial policy matters and on local development thanks to the devolution process • Development of an articulate private or associational sector providing high quality services to companies • Applied research and technology transfer as new needs expressed by companies • Evolution of regional industrial system requiring new reading keys

12. A new reading of the economic system The whole region could be considered as a broad multi-sectoral district • Industrial system strongly diversified • Prevalence of mechanical sector in terms both of employees (45%) and of local units • In areas where mechanical sector is prevailing, the dense presence of firms belonging to different sectors and the widespread system of subcontracting relations make it very difficult to identify productive areas with a single predominant product.

13. A renewed interest in the debate on Industrial Districts • More balanced growth between the economic and the social components of development • SMEs as vehicle for enhancing endogenous development • Distinctive competencies give fresh weight to competition based on the peculiarities of the local context rather than on cost advantages • Incremental innovation fosters a continuous bidirectional connection with positive feedback among investment, industrial and final goods • Higher degree of evenness in the value distribution - considering the same turnover and value added produced • Labour intensive much more than capital intensive • Not hierarchical productive system Source: Lucio Poma, 2003

14. Local Development Theory • Re-discovering by Social Sciences of territory as the conceptual frame to interpret the human phenomena • By analysing the dynamics of Industrial Districts, academics and practitioners have provided an in-depth understanding of the strategic importance of the territorial/local dimension for the comprehension of economic and social actions • History, cultural identity, local communities, social differences, institutions, accumulation of entrepreneurial know-how, become fundamental factors to explain and “read” the local territorial dynamics in a global context

15. Distinctive aspects defining the development processes • In a territorial context the development processes do not merely respond to economic-financial logics but arise from the synergic action of the socio-cultural structures • The local development of the territorial context is based on the enhancement of its own differences: the whole social actor system is engaged in a process of construction of the territory through bottom up methodologies

16. Preliminaries for anew Player System • Regional Law on innovation and TT in order to encourage partnerships between firms, Universities and public research bodies • ERVET has dismissed the role of shareholder in favour of others (i.e. Universities, Companies, etc.) • ASTER has changed its legal status and shareholders composition • The evolution of Business Service Centres moves towards a full immersion in the market • Only for their innovative activities, the Business Service Centres can have access to public funds through public tenders (in competition with other private and public Business Service Centres) on projects developed in a close connection with the companies

17. Research and TT Laboratories Innovation Centres ERVET ASTER Co-ordination, financing, managing the Network for Applied Research and TT The new Player System TA and support to PA and Local Authorities for Promotion and Improvement of the regional territory

18. The Key Strategy DEVELOPMENT OF ENDOGENEOUS POTENTIAL