The evolution of the district model: ‘reverse relocation’ and the case of the leather-tanning district of Arzignano, ERIEP, European Review of Industrial Economics and Policy

n this work we discuss the evolutionary paths of industrial districts. We describe a specific case which illustrates an ‘anomalous’ path but is nevertheless of interest, given its possible replicability in other district contexts. 2In particular, we shall examine the evolutionary path of the tanning district of Arzignano, by analysing the results of an empirical survey conducted in 2005 1. We shall dwell upon the reasons that have induced the majority of local actors to favour the developmental model which we call ‘reverse relocation’. This phenomenon involves the large presence of immigrant workers and contrasts with the 1990s trend, whereby Italian districts relocated some manufacturing activities to countries with low labour costs. In Arzignano, currently, about one-third of the labour force in the district – 4,644 out of 12,000 employees – consists of recently immigrated workers. The survey showed that the deep local embeddedness of firms had dissuaded them from pursuing the path of international relocation. Instead, they have preferred to open the local labour market to non-EU workers (thereby solving problems connected with institutional hyper-rigidity). This case is emblematic, because it confirms the existence of different (more or less efficient and/or effective) strategies of globalisation. The choice of reverse relocation, as will be shown in what follows, can be considered a second best solution, because it does not yield a net reduction of costs as does relocation to low-wage countries (the first best solution). 3Section 2 outlines the evolutionary trends of the district model, including the review of recent internationalisation processes and the illustration of the “reverse relocation” phenomenon. Section 3 describes the case of the leather-tanning Arzignano district, depicting its rise, consolidation, and evolution towards a hierarchical model, headed by leader firms, strongly embedded in the territory, and dominated by a “reverse relocation” internationalisation model. Section 4 offers some conclusive remarks.