With the spread of globalization and internationally fragmented production, many scholars have declared the demise of the old Marshallian industrial districts. This chapter in The Oxford Handbook of Local Competitiveness argues that spatial agglomeration of activities across all stages of production and local interfirm cooperation can still enhance firms’ competitive advantage and support innovation. Written by Giulio Buciuni and Dan Breznitz, the chapter analyzes the evolution of the newly formed uninterruptable power supply manufacturing cluster in Dongguan, China, and the long-established Alto Livenza furniture district in northeast Italy.
The chapter develops two sets of arguments. First, it argues that we need to go back to a Schumpeterian understanding of innovation as occurring across the complete chain of actions from ideas to the constant delivery of better products and services. Second, there are four semipublic goods that industrial clusters must be able to continuously supply if they are to prosper: (1) shared assets, (2) effective innovation network structures, (3) flexible business models, and (4) specialized financial institutions.