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Title: The Italian SME experience and possible lessons for emerging countries- [World Wide Web]

Notes: The Italian industrial model is known worldwide as a successful example of endogenous development based on SMEs strongly rooted in their communities. This paper tries to highlight the main elements of the Italian experience and to learn some lessons for emerging countries. SMEs networks merit consideration because in emerging countries or regions, interventions on the part of large firms to establish production plants in these low-cost areas have often failed. The south of Italy is full of such examples. The reasons for these problems are many, including: inadequate infrastructure to support large plants, increased traffic, drain on limited energy resources, insufficient and/or ill-prepared workers, distrust and even animosity between local workers and non-local managers. Small firms must grow from local roots in order to survive and even flourish without reliance on heavy subsidies. Bottom-up growth based on small firms is also considered as a source of increased employment, including self-employment, and a way to incorporate actors that are traditionally excluded from economic development like women and young people. Numerous small firms, particularly if concentrated in the same industrial sector, or in complementary ones, also tend to increase the tendency for specialization among firms. Such specialization is seen as one of the key factors in success of small-firm networks and clusters. Italian SME clusters cannot be reproduced, i.e. may not be transplanted somewhere else. The success of the cluster phenomenon is rooted in the local context, local traditions and local forms of social and economic organization. Any attempt at nurturing the development of cluster-like agglomerations of small firms must build upon the particular characteristics of the area in question.. Previous approaches to industrial policy based on top-down interventions by a central authority have failed because they did not consider local history, traditions, formal rules and informal norms. It is possible to establish a productive environment by stimulating local forces to create a local institutional context providing common externalities. A bottom-up approach that builds on the specifics of the local level to create the conditions that increase efficiency and productivity of groups of firms and to stabilize the local community in order to establish a foundation for endogenous growth is advocated.

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