Industrial Clusters in Veneto
Manufacturing Central to Northern Italy
Although the Veneto region, in northeastern Italy, is more famous for its wine, art, and the romantic lure of its regional capital, Venice, the region happens to be one of the industrial powerhouses of Italy, as well. Indeed, with a GDP of EUR160 billion in 2018, the region owes its robust economy to the reconciliation of tourism and industry sectors since the 1970s.
Raising the level of export-oriented industrial activities without marring the Veneto region’s idyllic image has secured two parallel channels of revenue for the region—each of which forms over 20% of the Venetian economy. This framework of multidimensional development is sometimes referred to as the “Veneto development model” or “the case of Veneto.”
With around 20 million arrivals per year, there is little doubt that the Veneto development model has succeeded in promoting the region’s tourism sector, but few may know that the model has been equally successful in ramping up industrial activities. Vento’s industry sector is formed of local clusters—locally known as distretti—which attract workshops and factories specializing in the same product—preferably a product with significant connections to the hosting geographical region. Mainly composed of SMEs, these clusters of businesses focus on all manner of commodities associated with Veneto, including apparel, leather, food, high-end furniture, and designer jewelry and fashion accessories, as well as heavier industries such as chemicals, electronics, and steel.
The province of Verona in the west of Veneto, for example, has become a haven for agro-food industries—and predictably wine. Wine labels such as Amarone, Bardolino, and Soave come from this part of Veneto, and their export fetched some EUR881 million in 2015 for the region.
The Venetian provinces of Treviso and Vicenza, meanwhile, have made a name as world-class textile manufacturers. This is apt as there is an old tradition of fabric manufacturing in both provinces: SERICA 1870, to name but one, is a manufacturer of silk fabrics in Treviso that has been in business since 1870.
The tradition of weaving is even older in Vicenza. Looms dating back to the 13th century and even as early as the fourth century BC have been discovered in the province. As such, it is hardly surprising that the Vicenza is, to this day, home to a sizeable cluster of textile and apparel manufacturers.
Since antiquity, societies have been aware of the benefits in the clustering of businesses. In ancient Rome, the Eastern Mediterranean world, and the Middle East, workshops engaging in a similar craft tended to huddle together in an area conducive to that particular craft. The old city state of Venice itself remained Europe’s most prominent center of glass-making for centuries.
Toward the end of the 20th century, however, the concept was further popularized by economists and business theorists such as Harvard Business School’s Michael Porter and the winner of the Nobel Memorial Prize in Economic Sciences, Paul Krugman.
The Competitive Advantage of Nations (1990) by Porter and Geography and Trade (1991) by Krugman set out to show how the grouping of interrelated SMEs in one locale stimulates innovation and drives productivity. The leap is achieved, according to economists, through establishing a robust supply chain in the region that can benefit everyone, while shaping a specialized culture of craftsmanship that permeates the region.
Veneto, just like the rest of Italy, still struggles with economic woes such as an employment rate that is “below the European level,” according to the European Commission, but the economic clusters across Veneto are the region’s best hope for repeating another “Italian economic miracle” in the 2020s.