Studies in Regional Economic Development
Edited by Charlie Karlsson, Börje Johansson and Roger R. Stough
Chapter 5: Determinants of MNC location choice in industrial districts: an empirical analysis in Italy
The research on industrial districts (IDs) in recent years has focused more and more on issues concerning the competitiveness and the survival of these local production systems. The main open questions include the following (Biggiero, 2006; Crouch et al., 2001; Rabelotti et al., 2009): 1. Can the IDs whose competitive advantage seems to rest on the colocation of various phases of production survive? 2. How can IDs face the challenges from globalization and digitalization? 3. Can the delocalization and relocation processes determine IDs' recession or decline? Based on Marshall (1920), the agglomeration economies associated with the spatial concentration of production include readily available specialized and skilled labor, privileged access to local suppliers that offer a great variety of highly specialized inputs and easy and rapid access to specific technical knowledge, all of which are cost-based benefits for co-located firms (pecuniary externalities). However, in a global economy, firms can gain a cost-based competitive advantage by delocalizing their production processes in low-cost countries. This phenomenon has involved some IDs developing a hollow-out process and has led scholars to theorize a decline of this production model.
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