Industrial districts, inward foreign investment and regional development

Stefano Menghinello, Lisa De Propis, Nigel Driffield

Research output: Contribution to journalArticlepeer-review


This article compares the importance of agglomerations of local firms, and inward FDI as drivers of regional development. The empirical analysis exploits a unique panel dataset of the Italian manufacturing sector at the regional and industry levels. We explore whether FDI and firm agglomeration can be drivers of total factor productivity (separately and jointly), with this effect being robust to different estimators, and different assumptions about inter-regional effects. In particular, we isolate one form of firm agglomeration that is especially relevant in the Italian context, industrial districts, in order to ascertain their impact on productivity. In so doing, we distinguish standard agglomeration and localization economies from industrial districts to understand what additional impact the latter has on standard agglomeration effects. Interaction effects between FDI spillovers and different types of agglomeration economies shed some light on the heterogeneity of regional development patterns as well as on the opportunity to fine tune policy measures to specific regional contexts.
Original languageEnglish
Article numberlbq012
Pages (from-to)539-558
Number of pages20
JournalJournal of Economic Geography
Issue number4
Early online date22 May 2010
Publication statusPublished - 4 Jul 2010

Bibliographical note

This is a pre-copy-editing, author-produced PDF of an article accepted for publication in Journal of economic geography following peer review. The definitive publisher-authenticated version Menghinello, S., De Propis, L., & Driffield, N. (2010). Industrial districts, inward foreign investment and regional development. Journal of economic geography, 10(4), 539-558 is available online at:


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