ABSTRACT
This chapter discusses the importance of industrial policies in supporting the local production system within the “spontaneous” effects of the market. It proposes a conceptual framework for the formulation of public policies that stresses the importance of collective learning. In the case of Italy, the influence of policy in determining the performance of local production systems has been mainly indirect. Public policies must reinforce the propagation of practical knowledge by favouring the creation of local research laboratories and technical training centres. In Italy, local institutions have played an important role in the establishment of the general rules incorporated in the local context. This has favoured creative co-operation among firms and has generated the spontaneous aggregation of firms into systems. Technology policies on the local level must be based on the existing pool of knowledge incorporated in local firms and entities. The Italian case used to demonstrate how slightly different local policies have produced similar results in terms of economic dynamics.
