Opinion of the European Economic and Social Committee on European industrial districts and the new knowledge networks
Date: 2005-04-06
Institutions: European Economic and Social Committee
Subjects: corporate social responsibility, growth point, industrial policy, inter-company cooperation, knowledge economy

14.10.2005

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II

(Preparatory Acts)

EUROPEAN ECONOMIC AND SOCIAL COMMITTEE

416TH PLENARY SESSION, HELD ON 6 AND 7 APRIL 2005

Opinion of the European Economic and Social Committee on European industrial districts and the
new knowledge networks

(2005/C 255/01)

On 1 July 2004 the European Economic and Social Committee, acting under Rule 29(2) of its Rules of
Procedure, decided to draw up an own-initiative opinion on European industrial districts and the new knowledge
networks.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the
Committee's work on the subject, adopted its opinion on 16 March 2005. The rapporteur was Mr Pezzini.

At its 416th plenary session, held on 6 April 2005, the European Economic and Social Committee adopted
the following opinion with 127 votes in favour and 3 abstentions.

1. Introduction

In an attempt to sum up this vast theme, the present

1.4
own-initiative opinion touches upon the following topics:

1.1
Districts have been the subject of a great deal of debate
at all levels and in all the industrialised countries, particularly
over the past 15 years. Developing countries and the Mediterra-
nean partner countries alike have sought to emulate the district
system that has become established in many European coun-
tries,
their business
sectors.

in order to boost the development of

1.2
Furthermore, analyses had shown the positive impact of
districts on employment policy and had given many examples
of good practice (1) in the area of corporate social responsibility
years before the Commission presented the related Green
Paper (2).

1.3 Meanwhile, new economic and social phenomena and
the new knowledge-based networks have altered the districts'
traditional links, steering production systems towards metadis-
tricts (3) and the need to create networks between individual
economic areas.

(1) See Becchettini on industrial districts and social ramifications, 1995.
(2) COM(2001) 366 final of 18.7.2001.
(3) From Greek,

‘beyond’ or ‘surpassing’.
Thus, the metadistrict goes beyond the traditional realm of the
district and is built on the traditional district.

‘metà’ which means ‘after’,

— Section 2: Definitions and unresolved issues

— Section 3: From districts to European knowledge-based

metadistricts

— Section 4: Districts in the USA and at international level

— Section 5: The current situation and existing instruments in

the European Union

— Section 6: Towards a new strategic EU policy approach to

the knowledge-based districts

— Section 7: Concluding recommendations.

The aims of this own-initiative opinion on the new

1.5
European networks of intelligent districts (4) are to:

— carry out a field analysis of existing industrial districts, tech-

nology districts and ‘metadistricts’;

(4) Intelligent/knowledge-based/technology

‘new’
districts, which, contrary to industrial districts, make full use of
information and communications technology.

districts

the

are

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— evaluate the conditions for the successful development of
new districts and analyse their potential in the context of
the Lisbon Strategy, both in the current Europe of 25 and
in the future Europe of 28;

— lay the foundation for an integrated European policy to
promote new European networks of knowledge-based
districts and metadistricts;

1.7 More than four years on from the launch of the Lisbon
strategy, one cannot help but be disappointed by the modest
progress made towards realising its objectives and responding
thoroughly to the process it champions. Even the Lisbon
strategy report by the High Level Group, chaired by Wim Kok,
concludes that ‘the disappointing delivery of the strategy has been
due primarily to a lack of determined political action’ adding
that ‘the agenda has been overloaded, coordination has been poor and
there have been conflicting priorities’ (6).

— highlight the instruments needed to implement this policy,
to evaluate existing districts and to suggest possible modifi-
cations and innovations;

— set out the basis for the emergence of a genuine European
platform (5) of reference for the new European networks of
knowledge-based districts within the Europe of 25;

— contribute to the creation of more and better jobs.

1.6
The European Economic and Social Committee has
emphasised on many occasions, the commitment made by the
European Council when it defined the central aim of
the
Lisbon Strategy as that of making Europe ‘the most competi-
tive and dynamic knowledge-based economy in the world,
capable of sustainable economic growth with more and better
jobs and greater social cohesion’.

1.6.1
on the capacity to:

Now more than ever, growth strategies must be based

— join up the various development policies as effectively as

possible;

1.8
At the European Council meeting in Brussels on 4 and 5
November 2004, the president of the European Commission
stressed that the Kok report ‘provides a realistic, but worrying,
assessment of progress. It shows that we must act now to make
up for lost time’ (7). More specifically, he stressed the need to
‘refocus priorities, measure progress and assume greater respon-
sibility for following them through’ (8). The Committee has also
stated its views on this
recently adopted
subject
opinion (9).

in its

1.9
The resetting of priorities under the Lisbon strategy
should, in the opinion of the EESC, treat industrial districts and
their development as a key element in the creation of new
knowledge and, above all, more and better jobs. This will
involve drawing on the considerable opportunities provided by
the networks, which can generate repeated cross-fertilisation
between the codified knowledge of research and the tacit
knowledge (10) that spreads and takes root in production and
distribution systems.

— increase the involvement of the social partners, with a view
to securing more advanced employment development and
giving districts more momentum;

— strengthen exchanges between technological research and

local industrial development;

1.10
The promotion of initiatives at local level and the
capacity to network them in furtherance of the Lisbon
Strategy is essential: first, to encourage the setting-up and
development of innovative businesses throughout the Union,
particularly in the new Member States; and second, to increase
the opportunities for these businesses to meet and cooperate,
in a spirit of stronger economic and social cohesion.

— achieve a high critical mass of

training and
research institutes, advanced SMEs, skilled human resources,
financial and other services, risk capital and public and
private decision-makers;

industry,

— speed up the development of production and distribution
systems
into permanent European networks based on
knowledge, the ability to share information and expertise,
and the capacity to absorb, improve and pass these on.

(5) COM(2002) 714 final of 11.12.2002 specifies that platforms ‘could
be considered to foster marketplaces for cooperation … and work
out a long-term strategic plan for R&D for specific technologies …
They would ensure synergy among public authorities, users, regula-
industry, consumers, and poles of excellence … There is a
tors,
need for coherence between research, which can create new oppor-
tunities, and the downstream regulatory framework in which these
technologies can be developed and marketed’.

1.11
The new ‘open technological districts’ enable the inte-
gration and networking of all the players operating in a given
area with those of other areas.

(6) Facing the challenge, Wim Kok report on the Lisbon Strategy,
submitted to the Commission on 3 November 2004 and to the
Brussels European Council on 4 and 5 November 2004.

(7) Speech by the president designate of the Commission to the Brussels

European Council on 4-5 November 2004.

(8) Ibidem cfr. 7.
(9) Opinion OJ C 120, 20.5.2005, rapporteurs: Vever, Ehnmark and

Simpson

(10) Nelson, R and Winter, S.G. (1982), An evolutionary theory of economic
change. Tacit knowledge, as opposed to information and codified
knowledge, is not formalised and can only be generated through
social interaction/relationships.

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1.12
In practical terms, European networks of open techno-
logical districts are essential for achieving the following objec-
tives:

changes for the production economy and, in particular, for the
district economies.

— securing better quality jobs that unlock workers' full poten-
tial through greater responsibility, higher involvement and
a new cultural maturity;

— disseminating technologies and know-how and speeding up
into market

innovative applications

the translation of
success;

1.15
The current districts have already developed their
openness towards new markets and supported the more recent
political changes,
increasingly
frequent relocation of manufacturing activities, encouraged by
the environmental conditions in certain countries and backed
up by an increasing level of computerisation.

including for

instance

the

— securing better, more skilled employment and providing an
impetus for new, more diversified professional profiles;

— promoting greater awareness of conservation and protec-
tion of the environment and of the local areas where the
districts operate, and pinpointing the most appropriate
means of promoting social, economic and environmental
sustainability;

— enhancing economic and social cohesion and improving
governance in the area: the aim is to codify common rules
and language and to achieve the type of community that
grows in a permanent cycle of mutual learning;

— consolidating and developing permanent, practical commu-
nication and cooperation networks, that link up companies,
workers, inventors, communities, public and private institu-
tions, the financial world, universities and other educational
establishments, the commercial and marketing systems and
many other regional development players;

— reinforcing young people's natural sense of initiative and

entrepreneurial spirit;

In EU-25, on average, 50 % of district output

1.16
is
destined for the foreign market. The districts thus already have
an internationalised industrial
sights
regarding sales are set increasingly on the international market.

structure, and their

1.17
globalisation:

There must be a shift

from internationalisation to

— in addition to product placement on foreign markets,
involve the various phases of the

globalisation must
production process;

— the system for finding information on traditional and
new markets, regarding possible foreign partners and the
areas beyond current borders must be
potential of
bolstered, in order to back up market penetration policies
and possible partnerships;

sales points,
strategies

— the ‘foreign’ domain must be diversified, in terms both of
setting up
production locations and of
networking and co-business
to
involve the other operative areas and their specific charac-
this must be done, not only from a business
teristics;
perspective, but also and above all with a view to sources
of innovation, research and new projects and ideas, always
bearing in mind the industrial, financial, organisational and
training-related aspects;

in order

— developing the industrial and distribution fabric of the new
enlarged Europe in a harmonious and competitive manner
and accelerating its full integration into a new greater single
market.

— it is essential to make the most of the cultural identities
of the individual areas, in order to profit to the full from
their integration and inclusion within a European network;

1.13
In today's increasingly globalised world economy, the
development of a knowledge-based Europe has major
implications for the national, regional and local order and for
the international balance. These implications relate to the rapid
acquisition and application of new technologies, the interna-
tional-level recruitment of skilled human resources and, lastly,
the opportunity to decentralise the organisation of the produc-
tion and distribution process, while ensuring it remains cohe-
sive and flexible and retains high standards of quality.

1.14
The phenomena of globalisation and the almost
simultaneous appearance and development of network tech-
nologies have brought about short-, medium- and long-term

— to rise to the new challenges of competitiveness,

is
becoming essential to develop continuing training and new
professional skills (11).

it

1.18
The widening of geographical borders, driven by
economic benefits and made possible by technological support,
has loosened the ties of territorial proximity that used to define
the industrial districts and were the basis of their strength. This
has led to the emergence of leader companies, whose frame of
reference in terms of markets for both sales and supplies has
shifted from a territorial rationale to a virtual one, based
mainly on strategies of economic advantage.

(11) See COM(2004)474 final of 14.7.2004 and Committee opinion

CESE 139/2005 of 10.2.2005, rapporteur: Koryfidis.

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1.19
Currently, European industrial districts are under the
spotlight as they are going through a very delicate phase. They
have two types of problem to deal with:

— the opening-up of and competition from new markets

(Asian countries being the most dangerous),

In general terms, the industrial districts may be defined
2.2
as local, homogeneous productive systems,
featuring a
strong concentration of industrial companies, mainly of
small and medium dimensions, with a high level of
production specialisation.

— the need to reorganise and renew relationships between
companies, not least by bringing in new technologies and
new tacit or codified knowledge.

2.3
The final report of the European Commission's Enter-
prise DG expert group on Enterprise Clusters and Networks (12),
defines districts as:

1.20
The new configuration of competitive models on
the global market is imposing major changes. The new inte-
grated platforms and networks must address themes relating to
the design of new products and
research and innovation,
production processes, the management of new, more skilled
human resources and new materials, promotion and marketing,
finance and credit,
logistics and market and client service
management.

At

international

the region most

1.21
strongly
level,
marked by the industrial district and cluster phenomenon is
North America, where they have multiplied in number from
the Pacific coast to the Atlantic; for instance: Silicon Valley, the
San Diego industrial clusters and Route 128. Though they
differ in terms of their level of industrial development, there
are also districts in Latin America: in Mexico (the Guadalajara
(Sinos Valley) and Uruguay (the Meat
Cluster),
Cluster). As far as Asia is concerned, significant examples can
be found in India (the Agra Cluster, the Tiruppur Cluster and
the Ludhiana Cluster), in Pakistan (the Sialkot Cluster), in South
Korea (the Consumer Microelectronics Assembly Cluster) and
Indonesia (the Central Java Cluster). The district phenomenon
has also reached Africa: there are even a number of them in
some countries of Sub-Saharan Africa.

in Brazil

‘Groups of independent companies and associated institu-
tions that are:

— collaborating and competing,

— geographically concentrated in one or several regions,
even though the cluster may have global extensions,

— specialised in a particular field,

linked by common

technologies and skills,

— either science-based or traditional,

— clusters can be either institutionalised (they have a
proper cluster manager) or non-institutionalised,

— the cluster has a positive influence on: innovation and
formation and information;

competitiveness;
skill
growth and long-term business dynamics.’

the Cambridge High-Tech Cluster,

1.22
In Europe, apart from the dozens of examples in Italy,
the most significant are to be found in France, where, as a
result,
the French Industrial Districts Club was founded in
1998, and Germany, where there are over 50 ‘Raumordnungs-
regionen’ and the especially important initiative in Baden-Wurt-
temberg. The British examples are also very important (in par-
ticular,
the Motor Sport
Cluster in Birmingham or those in Scotland or other regions).
A number of positive examples have grown up in Scandinavia,
where great importance is given to learning as the cornerstone
of development, facilitated by proximity. In the new Member
States, significant examples are to be found in various regions
of countries such as the Czech Republic, Hungary, Poland,
Slovenia, Malta and the Baltic States.

2. Definitions and unresolved issues

Over

recent decades,

2.3.1
the districts that began life
encouraging the creation and development of production activ-
ities in the industrial and services sector, in areas with specific
economic characteristics, have developed in a largely auton-
omous way, focusing their activities on specific sectors,
in
which they acquired and developed very significant competitive
advantages. The need to meet ever higher quality and safety
standards then led the district companies to focus on increas-
ingly specialist market niches, as attested by the high quality of
their products.

2.4
The districts are not only groups of companies that
may be specialised and located in a given area: they are groups
of companies that play according to team rules. Each
grouping cooperates on projects and competes together, while
the local area, far from being just a backdrop against which the
companies operate and produce, is a genuine facility promoting
integration socially, economically and in terms of the produc-
tion cycle. In essence, the local area is a storehouse of produc-
tion traditions and practical knowledge.

2.1
It is not easy to provide a single definition for a district
phenomenon that is so varied, dynamic and diverse at world
level.

(12) See the final report of the expert group on Enterprise Clusters and
Networks, page 9 – European Commission, Enterprise directorate-
general, 2002 map project.

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2.5
The acceleration of information transmission and the
opportunity to explore the entire supply panorama within a
short timeframe has both made companies' work easier and
forced them to adapt. The balance within districts has
changed. The emergence and consolidation of new technolo-
gical models has involved the entire production chain, with an
impact on professional profiles, work organisation, the devel-
opment of workers and areas of growth.

often national) borders, a relationship of trust between
players is still essential.

3. From districts to European knowledge-based metadis-

tricts

centres, vocational

Increasingly, the districts are linked to and integrated
2.6
training
with specialised service
schools, universities,
and research
centres in the local area. The quality of the product provided,
a vital factor in the survival of the district companies, is based
mainly on their capacity to marry existing production tradi-
tions with the demand for
innovation and specialisation
expressed or perceived by the market.

technology parks

invest

that companies

2.7 More and more, the internationalisation of produc-
tion demands
in a transnational
network. In cases where the network within which they intend
to build their competitive advantage goes beyond the local
sphere, SMEs and major multinational companies alike have to
be able to count on adequate technological facilities, to enable
them to pool and process knowledge, and on a responsible and
motivated workforce.

2.8 While tending to penalise companies that are used to
operating in restricted markets, increased market integration
provides others with major opportunities for new market
outlets, particularly the more dynamic SMEs. Major technolo-
gical changes do not always work to the advantage of the
larger companies. Often, the net economy neutralises factors
such as geographical distance or the availability of an indepen-
dent distribution network, thus removing some of the tradi-
tional weak points of SMEs. They must however be able to take
full advantage of the opportunities that technological develop-
ment can offer, with support
from assistance and service
centres.

traditional

Increasingly,

3.1
industrial districts are being
joined by and in some cases transformed into metadistricts. In
contrast with classic districts, these may be defined as inte-
grated industrial platforms, within which technology
sector players expand to take in new centres of knowl-
edge processing and applied research and look beyond
their immediate neighbourhood to develop production
and distribution systems that focus on shared values and
strategies.

3.2 Metadistricts enable the various phases to take place in
geographically distant
locations, chosen on the basis of
economic factors and local opportunities, while maintaining
productivity levels and, especially for manufacturing, guaran-
teeing quality by means of a ‘learning by interaction’ process,
that enables a shift from a mainly reactive to a proactive
approach.

3.3
As the shift towards the metadistrict takes place, the
district must increasingly act as a knowledge laboratory. The
policies necessary to support the repositioning of the district
within a global logic must be conducted by the public institu-
tions (particularly the local and regional authorities) but also,
first and foremost, by the companies, and must concern human
resources and the level of innovation, in a process which fully
involves public and private executives.

The metadistricts step up the network between small,
3.4
medium and large companies, which interact
together and
tighten their cooperation and working links with the most
advanced centres of scientific and technological research. The
driving forces here are:

— leading players, i.e. those able to steer the development of

the sector;

2.9
The internet has partially overcome geographical limita-
tions. Essentials such as the rapid exchange of information
or monitoring opportunities, that used to depend on a reduc-
tion in journey times, are now secured by IT connections.

— investments made to obtain high technological standards;

— cooperation between companies, and between companies

and the research system;

Although there are a lot more opportunities and
2.10
possible activities than previously,
the internet still cannot
compete with interpersonal contact. Face-to-face contacts,
irreplaceable.
based on knowledge and experience, are still
Although the internet has partially negated geographical
distances and changed district structures, prompting companies
to operate increasingly with players beyond their local (and

— motivating and training the workforce at all levels.

As a rule, there are four elements that help to identify a

3.5
metadistrict:

— multisectorality:

that
involves an entire service, area of research or development
activity,

there is a chain-based approach,

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— locality: the concept of geographical proximity is replaced
with one of network links and of making the most of the
various cultural identities of the partners,

— identifying guidelines for intervention: policies and activ-
internationalisation and
investment,

research,

ities
competitiveness on foreign markets;

for

— importance: the sectors represented in the metadistricts are
important to the economy and feature a significant number
of knowledge production centres,

— establishing the degree of training and involvement of all

levels of workers employed in the districts.

— leadership: there are leader companies able to steer the
metadistrict, in an environment that features a strong SME
presence.

3.6
The process of understanding the phenomenon with a
view to planning support for metadistricts is undoubtedly
still more complex and multifaceted, not least since, as already
mentioned in relation to the definition of the metadistricts, the
aim is to select, on an experimental basis, production areas of
excellence, with strong existing or potential
links with the
world of research, production and innovation. Understanding
these phenomena is complex however as there has been little
empirical study on the subject and little statistical documenta-
tion.

The planning process must

3.7
the elements
needed to improve the analysis of the metadistricts' proper-
ties:

include all

— identifying and quantifying the traditional players: compa-
nies operating in specialised production sectors, producing
raw and semi-processed materials, machine tools or produc-
components; pinpointing leading
tion services;
specialisations for each sector; models for technological
transfer between companies;

sector

scientific

— identifying and quantifying new players in the system:
universities;
technological
research
services to companies; communication and marketing; iden-
tifying lead players; relations and interactions with the
transfer and
production chain; models for technological
cooperation;

centres;

— benchmarking analysis at national and international
level,
in order to: pinpoint similar production systems;
evaluate macrodynamics in the respective contexts; assess
development strategies implemented by the public authori-
ties in the specific contexts, and assess systems for public-
private relations and university-research-company relations;

— assessing the competitiveness of metadistrict sectors
and the potential of the system; conducting SWOT
analyses of metadistricts, with particular attention to weak
points and risks;

The shift

3.8
brings major governance problems:

towards a system governed by knowledge

— the development of

into a form of open
the district
network, or a local network incorporated within global
production, distribution and knowledge-use networks,
requires district companies to shift from the old system of
production-based division of labour, which had worked
well for them, to a new system centred on knowledge
that is extended to all operators and public and private
executives at all levels. While the old system centres on
the capacity to manage the practical operations of manufac-
turing, the critical resource of the new system is the capa-
city to manage global information flows, to communi-
cate using scientific or technological
language, and to
manage complex organisational models, all against a
backdrop of the in-built need of the district to reinvest in
vocational training and structured knowledge;

— the central interactive processes are cooperative and trust-
based links between the districts' entrepreneurs, and
between entrepreneurs and employees, the pluralistic
organisation of the production process, and the cooperative
relationship between companies, and between companies
and local/regional authorities. The key element is the value
of
the concept of social capital within the district
system (13), and the way in which policies respond to the
gradual dissipation of that social capital and the degenera-
tion of the vibrant and dynamic system of local interaction;

— the district contains a kaleidoscope of ambitions and frus-
that
trations, competition, emulation and collaboration,
defines the entire community. It is designed in such a way
as to penalise disadvantageous practices and reward those
that favour district development, by conferring a seal of
approval.

3.9
New service structures that act as a cognitive inter-
face between the local context and global networks seem,
lastly, to be gaining in importance. New agencies are emerging,
geared to the needs of local companies and to the original
mechanisms of competition and cooperation, and designed to
facilitate the development of the production context.

(13) A survey on district workers highlights a strong sense of participa-
tion and motivation among workers, even at the lowest levels
(Lombardy region, preamble to the Law on Metadistricts, 2004).

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4. Districts in the USA and at international level

needs, and in some cases secured government grants for
studies, consultancy and secretarial services.

According to some estimates,

4.1
there were already as
many as 380 districts/clusters in the USA in the mid-1990s,
operating in a broad range of manufacturing and services
sectors and representing 67 % of the working population and
61 % of US output (14). Many such sectors were born out of
crises in regional production, as was the case for the Califor-
nian San Diego Clusters that emerged from the restructuring of
the defence sector. They have benefited from the prominent
role played by state and local governments in launching a
process that has since been taken up by the private sector. In
Arizona, for instance, a government commission launched an
initiative in local universities to identify local districts, grouping
the main private sector players and thus promoting the crea-
tion of district organisations to assess and address the difficul-
ties and opportunities for individual districts. Similar initiatives
have been launched in other American states, such as New
York State, Minnesota, Oklahoma and Oregon.

In Canada, the federal government has placed the crea-
4.2
tion and development of knowledge-based,
internationally
recognised industrial districts at the centre of its ‘innovation
strategy’. This involved the main federal granting agencies iden-
tifying the research investment made in 27 of the country's
regions and cities. As part of the Canadian innovation strategy,
one of the main objectives of federal innovation policy is to
develop at least 10 internationally recognised ‘technology clus-
ters’ by 2010. In Canada, it is quite common for there to be a
major research institute, often a university, at the centre of an
industrial district (15).

4.3
In Asia and Latin America, examples are extremely
varied. There are districts in India and also in China. In Paki-
stan, pressure from the new competitive drive sparked by
market
liberalisation and globalisation has accentuated the
tendency to work with industrial associations and with the
services they provide in order to meet internationally recog-
nised quality assurance standards. In Brazil and Mexico, the
districts have had to face international competition over prices
as a result of strong Chinese inroads into the North American
market. This competition has led to greater vertical integration
on the one hand and to district differentiation on the other.

4.4
In New Zealand, local governments have taken various
initiatives to promote industrial districts. In Australia, mean-
while, there have been a number of bottom-up initiatives, such
as those taken by the local authorities in Adelaide, Cairns and
Hunter Valley, which identified groups of companies, devel-
oped a dynamic between them in relation to their respective

(14) See OECD ‘Promoting Entrepreneurship and Innovative SMEs in a
Global Economy’ 2004 - Second OECD Ministerial Conference on
SMEs, Istanbul 3-5 June 2004.
(15) See Canada Foundation for
funding: key to clusters’, 2003.

innovation – J. Adam,

‘Research

5. The current situation and existing instruments in the

European Union

‘Made in …’

In many parts of Europe,

5.1
industrial policy, that until
present had been generally directed towards sectoral policies
and initiatives, has started to look to the local area as well, in
order to sustain the conditions that contributed to the success
labels around the world. Frequently,
of
however,
local production systems encounter difficulties in
finding adequate answers from an organisational and manage-
rial point of view. This has opened the door to new types of
support, no longer directed at individual companies, but rather
focusing on the local system as a whole.

Local government authorities, together with univer-
5.2
sities, research institutes, business associations and credit
institutions, are committed to supporting measures aimed at
disseminating innovation, promoting quality, boosting the
marketing of
lastly, generating system
projects, by means of initiatives geared towards business rela-
tions.

local products, and,

Industrial districts are now legally recognised in
5.3
various European countries (in Italy, for instance, by Law
317/1991), and are unanimously considered to be a genuine
success for national economies. This is especially true of Italy.
Despite this, it is not easy to pinpoint them precisely, and offi-
cial figures do not add up when it comes to their number or
their sectors of specialisation.

5.4
Initiatives to promote districts have been conducted at
regional level in Italy (in Piedmont, Lombardy, Veneto, Emilia
Romagna and Tuscany), in Spain (Catalonia and Valencia) and
in Germany (e.g. the BioRegio, Exist and InnoRegio initiatives).
In France, DATAR (16), an interministerial department under the
responsibility of the prime minister, has formulated specific
policies
local production
systems (SPL), which are part of the French Industrial Districts
Club. There are many examples of districts in Scotland, Wales
and Northern Ireland.

the development of

to support

The Nordic countries too have developed their own
5.5
approaches to district policy. In Denmark, the district method
has had a major impact on the country's economic policy, and
in Finland, the promotion of districts has influenced not only
economic policy but also scientific research, technology and
education.

(16) DATAR: Délégation à l'aménagement du territoire et à l'action

régionale.

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development programmes have

In the new Member States, since 2000-2001, various
5.6
district
been launched,
including the ‘cooperation’ programme in the Czech Republic
and the NFT GVOP programme, which covers the development
of industrial parks (17) emerging from an NGO (18) called the
Association of Industrial Parks, in Hungary. Hungary now has
165 industrial parks, which account for 18 % of
industrial
employment and 28 % of industrial exports. Between 1997 and
2003, it invested EUR 46,182,000 (19) in industrial parks. The
PGK (20) programme was launched in the western trans-Danube
region and the SME Clustering/Networking programme in
Poland. In 2000, Slovenia launched a three-year programme
for district development involving over 500 companies and 50
institutions. Over 130 pilot projects and trials are under way in
the Baltic States. In Malta, the local authorities have imple-
mented a strategy to support key districts in sectors such as
health, oceanography,
information technology, aviation and
services. There are also significant examples in the applicant
countries, such as that of the Timisoara district in Romania. In
2001 in Bulgaria, as part of the Phare programme on Capacity
building for accelerated growth of the SME sector in Bulgaria, five
potential districts were identified. With a view to developing
them further, the ministry of economic affairs decided to create
a national agency with the specific task of managing their
development.

5.7
In the Netherlands, the district method has been incor-
porated directly within government policy and programmes,
while in Austria specific policies have been launched to
strengthen the links between research institutes and the private
sector, reducing regulatory and administrative obstacles to
innovation, promoting
and establishing
competence centres.

specific districts

District-promoting policies call for a systemic and inte-
5.8
grated approach taking account of the links between compa-
nies, between industrial sectors, and lastly between companies,
institutions and local authorities. Following this approach, the
private sector should be the driving force behind initia-
tives, while the public sector should act as facilitator and
catalyst.

The ‘district system’

is at the root of various forms of
5.9
horizontal
integration between companies, ranging from
links between primary and ancillary companies, and within the
to out-sourcing. This integration paves the way for
sector,
maintaining a high degree of flexibility, and also for securing
the economies of scale typical of large companies, by means of
integrated production. By breaking down the various proces-
sing phases, the district is able to provide autonomously for all
the phases of the production chain within the sector in which

(17) The parks require a minimum surface area of 25,000 m2. A
company manages infrastructure and the business venture. The
public and private sectors jointly contribute towards the project;
unfortunately, the banks and financial institutions do not.

(18) NGO: non-governmental organisation.
(19) Source: Janos Toth, EESC member;
(20) PGK: Pannon Gazdasagi Kezdemenyezes.

it operates. Production costs can thus be managed flexibly and
market requirements can be adjusted to more easily.

5.10
The success that districts' products have found on
international markets is also the fruit of their great capacity to
innovate and of ongoing research to improve products.
This is encouraged by the competition between each district's
companies and by interaction with local universities and/or
academic institutions. As a result of these synergies, even
sectors commonly considered to be less developed from a tech-
nological point of view, such as the textiles and clothing indus-
tries, have become competitive at international level.

5.11
Up to now, the factors taken into consideration to
determine indicators for the possible presence of a district
have included business density, sectoral specialisation, and
percentage of employees in the manufacturing sector. It has
always, therefore, been a matter of quantitative values, in line
with the aim of deciding on an objective basis. Factors such as
economic profile, product
innovation, companies' overall
strategy and, most importantly, the ‘network’ element must also
be taken into account however. That last factor is vital both for
determining the origin of
structure and for
pinpointing the future strengths of the metadistrict, with a
view to a close link between business and research.

the district

At EU level, various initiatives could contribute to the
5.12
development of European technological districts. However, a
genuinely integrated policy has yet to evolve to promote the
development of innovative district networks, in line with the
relaunch of
the Lisbon strategy required by the European
Council on 4 and 5 November 2004 and with the commitment
to weave the economic fabric of SMEs in the old and new
Member States into the enlarged single market as rapidly as
possible.

5.13
The EU-15 had a series of Community instruments
that could be used to promote the development and creation of
knowledge-based district networks. These instruments
fall
largely under regional policy, research and development policy,
business and innovation policy, information society policy and
training policy.

Regional policy — Substantial financial appropria-
5.13.1
tions have enabled the research-innovation policy of the Struc-
tural Funds to give a real boost
to regional development,
through the innovative actions of Article 10 of the ERDF, the
RIS programme (Regional
Innovation Strategies) and Com-
munity initiatives such as Interreg III–C. The European Invest-
ment Fund and the European Investment Bank meanwhile offer
the ‘Growth Initiative’ as a means for SMEs to set up innovative
networks.

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5.13.2
European RTD policy — The Sixth research and
development framework programme 2002–2006 is an impor-
tant source of potential support for knowledge-based districts,
especially in the realms of:

certification, financed at regional level, are of particular note in
the context of
the joint sustainable development measures
managed by the Environment DG.

— new instruments, integrated projects and networks of excel-
lence, set up with a view to meeting the objectives set out
in the horizontal thematic priority for SMEs;

— the ‘research and innovation’ strand;

— Marie Curie fellowships for companies under the second

specific programme;

— the ERA-NET coordination scheme;

— the science and governance action for technology foresight.

5.13.3
The ‘More Research for Europe: Towards 3 % of
GDP’ action plan provides for a series of new actions at
national/European level. Furthermore,
it will be possible to
develop support
for Europe's knowledge-based
districts via the services deriving from the Galileo radio naviga-
tion and satellite positioning programme.

initiatives

However, as has been highlighted in recent reports, including
in particular the one on small business involvement in the
programme, access for small companies can be fraught with
difficulty, particularly in the new Member States (21).

5.13.4
with regard to enterprise and innovation policy:

Enterprise policy — The following should be noted

5.13.6
Information Society policy — Under the eEurope
2005 programme and, more specifically, within the eGovern-
ment,
Broadband
networks, eInclusion, and Go digital initiatives, there is great
potential for projects to support district networks.

eProcurement,

eCommerce,

eBusiness,

5.13.7
Education and training policy — Various measures
provided for under the Socrates and Leonardo programmes can
be used to promote training for the knowledge-based networks,
and initiatives can also be planned under the e-Learning and
eEurope 2005 programmes.

6. Towards a new strategic EU policy approach to the

knowledge-based districts

At the Spring 2004 European Council, it was stressed
6.1
that: ‘measures taken at the European level are only part of the
formula for putting the Lisbon strategy on the right track;
numerous reforms and investments, which are the responsi-
bility of the Member States, have yet to be achieved’ (22). This
stance was reaffirmed at the European Council on 4 and 5
November 2004, to which Wim Kok submitted his report (23).

— the Innovation and SMEs programme;

The most significant challenges relate to three funda-

6.2
mental strategic areas for growth:

— the RITTS programme (Regional

Innovation and Tech-

nology Transfer Strategies);

— the TRIP projects (Trans-regional innovation projects);

— the PAXIS pilot action, for the creation and development of
networks of
innovative companies, and the other pilot
actions under way, supporting the development of sectoral
networks of industrial districts;

— the Euro Info Centre Network.

Interesting Enterprise DG initiatives include those for
5.13.5
the development of district networks and the work done by the
IDABC programme to support companies and company
networks. The initiatives for cooperation between industrial
districts on EMS-EMAS (Eco-Management and Audit Scheme)

The

intelligent

development

6.2.1
trans-national
of
networks: this is to be achieved using for instance the Com-
munity Growth Initiative and giving priority to investment in
research, innovation and lifelong training. Another important
element is the identification and skilling of new professional
profiles, stepping up the use of network cooperation instru-
ments under the sixth framework programme.

Bolstering companies' competitiveness on the global
6.2.2
market and environmental sustainability:
this will
involve the development of broadband communications and
high-speed networks, necessary for research and innovation
(GEANT), use of the Galileo programme pilot applications, and
the development of
the eEurope 2005
initiatives under
programme.

in part

(21) See Cordis press release, ‘EU project aims to increase SME participa-
tion in the 6th FP’ (14.01.2005); see also European Commission,
five year assessment of IST research & development (17.01.2005).

(22) Report from the Commission to the Spring European Council ‘Deli-
vering Lisbon – Reforms for the enlarged Union’ - COM(2004) 29
final of 20.2.2004.

(23) See footnote 2.

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Building up ‘neighbourhood policy’ (24) in the enlarged
6.2.3
Europe: the aim should be to generate better rooted and more
consistent synergies with the new Europe's neighbours with a
view to establishing an area of prosperity and security, imple-
menting cooperation mechanisms on sensitive issues such as
the management of common borders, the control of migratory
flows and the fight against organised crime.

In all

6.3
the EU countries, and especially in the new
Member States, there is a growing awareness of the importance
of district networks and industrial clusters as a means of
strengthening competitiveness and productivity,
reinforcing
employment policy, boosting the quality of work and encoura-
ging the development of small and medium-sized enterprises.

6.4
The EESC thinks that there should be a Union-level inte-
grated policy to set up a European platform to support the
establishment of new European networks of knowledge-based
metadistricts.

6.5
The EESC is convinced that these metadistricts are a
genuine key to success in a global market, as they can secure
SMEs better access to high-level skills, modern shared services
and new knowledge-based facilities, while also improving
company management and making for a better informed and
more mature workforce.

6.6
The EESC would argue that the creation of a European
platform for districts could provide a much needed, coherent,
transparent and easily accessible framework for SMEs and for
old and new Member States, the applicant countries and the
EU's European neighbours.

6.7
This European platform for districts should have the
capacity to coordinate the many policies managed by the
various DGs, currently available instruments and Community
actions.

6.8
The financing allotted to this platform must be sufficient
to enable it to support Union action. The measures coordinated
through the platform and conducted under the Lisbon strategy
could without doubt contribute to the development of SMEs
that are especially rich in deep-rooted tacit knowledge. Com-
munity initiatives could codify that knowledge and convert it
into a common fund, as well as transferring it to European
networks.

(24) The Barcelona process for the Mediterranean (since 1995); the
Association and Stabilisation Process for the Western Balkans; the
cooperation and partnership agreements with the countries of the
Commonwealth of Independent States (former USSR).

The European platform for districts should provide a

6.9
programme framework for:

— new European metadistrict network initiatives for specific
industrial sectors, when necessary; for instance the creation
of technological platforms in the biochemistry, aerospace,
textiles or
information and communication technology
sectors;

— new initiatives designed to develop a common strategic
vision, in order to explore future European options in fields
in which product and process innovations are being tested,
anticipating potential developments;

— strategic capacity building actions for district networks in the
old and new Member States, the applicant countries and
neighbouring countries;

— ascertaining the relation between metadistricts and employ-

ment policy;

— measures to promote the cultural growth of workers in

district organisations;

— the exchange of best network practice, on the basis of
harmonised criteria for evaluations and procedure; the aim
here is to form a solid basis for the enlarged Europe's
research and innovation area, with impact assessments and
clear and comparable feedback, so as to gather an appro-
priate amount of codified and transferable knowledge;

— joint

training measures

for district managers, business
leaders and financial and credit system managers, to be
implemented in conjunction with political decision-makers
and public sector officials, and with local and regional
authority executive officers who are also involved in the
training process;

— the creation of Jean Monnet Chairs (25) on the new knowl-
edge-based district networks, and of European prizes for the
most successful and transferable examples of European
districts;

— the establishment of a system of study fellowships for
district technology agents, so as to finance the presence
within the networks of researchers and experts in tech-
nology marketing and auditing;

— the development of a strong communication and informa-
tion function based on an interactive portal on the knowl-
edge-based districts;

(25) Between the beginning of 1990 and October 2003, the DG for
Education and Culture approved approximately 2,500 teaching
projects on European themes: these include 82 European Poles,
601 Chairs and 1560 permanent courses and modules. The calls
offering funding are published annually on the following website:
http://europa.eu.int/comm/education/programmes/ajm/index_-
en.html

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— incentives to access expertise and projects, with assistance
from the Joint Research Centre institutes, in particular the
Institute for Prospective Technological Studies in Seville;

7.2
The EESC calls for an approach that steps up new
district networks, especially in the new Member States, in order
to stimulate informed, market-led demand.

— the inclusion of a specific budget line in the seventh RTD
framework programme for the development of knowledge-
based district networks;

— the inclusion of a programme of support activities for
district development, within the new cohesion policy frame-
work for 2007-2013.

7.3
Degressive aid should be paid out over a period of three
or four years to cover feasibility and start-up analyses, network
brokerage and sustainable development costs and lab costs for
certification purposes.

7.4
Technological environments and social relations change
rapidly and call for the speedy creation of new professional
profiles. Continuing training instruments (31) are therefore
needed for:

7. Concluding recommendations

Deindustrialisation is under way in all

the more
7.1
advanced countries.
In the EU, value added of the tertiary
sector has risen to 70 % of total GDP (22 % for industry, 5 %
for construction and 3 % for agriculture) (26). The process
should not, however, be encouraged, since a large part of the
value added is channelled to, or originates in, businesses (27):
trade and transport 21.6 %;
financial and business services
27.2 %; public administration 21.6 % (28).

— network brokers;

— technological marketing experts;

— innovation and technological transfer enablers; and

— metadistrict managers.

7.1.1
Policies capable of supporting and spreading a culture
that heightens district experience can, indubitably, do much to
enable districts throughout the enlarged EU to compete with
countries where low labour costs go hand in hand with a lack
of dialogue between the social partners and a disregard for
health and safety standards at the workplace.

7.5
Drawing on its experience, the EESC hopes that courses
in the metadistrict field, based on technological innovation, can
be organised for public and private stakeholders, the world of
industry and work, universities and banks. To these could be
added training scholarships that would involve exchanges
between the public and private sector, and between businesses
and academic institutions.

7.1.2
In the EESC's view, the new policy should aim to
make greater use of the competitive edge which stems from
adopting positive
in busi-
nesses (29). This would lead all workplace players to invest
production with a sense of awareness and responsibility, meet
delivery deadlines, establish a ‘fair price’ (30), and ensure a
competent, punctual, thorough after-sales service.

socially responsible practices

7.6
The Innovation DG, which does much to support the
experiences of Europe in a global context, should increase its
support for arrangements relating to the launch, monitoring
and assessment of inter-district and trans-national technological
foresight management and benchmarking with a view to stea-
dily extending the cultural and information database of current
changes and the instruments used to measure them.

(26) Source: Eurostat, structure of gross value added, 2002.
(27) According to the Bureau of Economic Analysis, every $1 of final
demand spent on a manufactured good generates $0.55 of GDP in
the manufacturing sector and $0.45 of GDP in non-manufacturing
sectors. Manufacturing in America: A Comprehensive Strategy to
Address the Challenges to U.S. Manufacturers; Department of Commerce,
January 2004 (http://www.commerce.gov/DOC_MFG_Report_Comple-
te.pdf) November 2004-MANUFUTURE . EUROPEAN COMMIS-
SION

(28) Source: Eurostat, ibidem.
(29) See the Green Paper on corporate social responsibility, COM(2001)

366 final of 18.7.2001.

(30) The ‘fair price’ principle was officially approved by the Heads of
State or Government at the Cardiff European Council in 1998. ‘The
environmental cost must be reflected in the product's price and
cannot be charged to future generations!’. One of the quickest ways
of including environmental concerns is that of fixing prices that
reflect the environmental costs of goods and services and using
market instruments to pursue positive environmental goals.

In order to support credit arrangements, which have
7.7
always been a critical issue in all Member States and the enlar-
gement countries in particular, a contact centre could be set up
at the EIF (32) which, through its guarantee instruments, would
be responsible for providing guarantees for the credit lines
issued by banks, financial institutions, consortia and coopera-
tives providing services for metadistrict companies.

(31) See Footnote 11.
(32) The EIF (European Investment Fund) was set up in 1994 with two
main objectives: to support networks and facilitate credit for SMEs.
The EIF shareholders are the EIB, the European Commission and
many European banks. During the last few years,
the EIF has
increasingly lent its support to small and micro-enterprises.

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7.8
In the EESC's opinion, the new knowledge-based district
is also the ideal environment to trial the most advanced forms
of corporate social responsibility through eGovernment, eBusi-
ness and the new eBusiness2business relations that are crucial
to the transnational development of district networks, with the
support of the common IDABC (33) interoperable networks and
close attention to the eEurope 2005 programme (34).

7.12
In the opinion of the EESC, it would be advisable to set
up a helpdesk to provide advice and assistance on intellectual
property and other services intended for district set-ups which
are rapidly becoming an integral part of European networks
and the global market.

The EESC believes that

7.9
the
Commission creates a compendium of common terminology to
be used by all districts involved in Community programmes,
and a European interactive database covering all districts,
according to sector and area of activity.

is also essential

that

it

A Community centre for coordination and cooperation
7.10
between the district set-up and the various institutions involved
could also be established within DG Enterprise. This centre
could, among other things, produce and update guides to good
practice, to be distributed at regional level.

7.11
The culture underpinning corporate social responsi-
bility sees business as a resource for the general public, and is
antipathetic to red tape and its attendant costs, which make
action less attractive. A ‘Slid’ initiative would provide a useful
instrument to extend the experience gained from the SLIM
programme (35) to districts.

(33) EESC opinion CESE 1610/2003 of 10.12.2003,

for bringing public administrations

(OJ C 80 of
30.3.2003, rapporteur: Mr Pezzini). Networking across borders, by
making use of information technologies (IT), has become the key
instrument
together and
supporting their cooperative efforts towards a modern, enlarged
and secure Europe. Furthermore, studies conducted by the Commis-
sion consistently show that investments in this area boost the
economy (with high rates of return). A Community initiative on
the subject,
‘Interchange of Data between Administrations’ (IDA),
was launched by the Commission in 1993-1995 with IDA I (1995-
1999). Between 1999 and 2004, €127 million of Community
resources have been allocated for IDA II. Of these, around 60 %
have been used for sectoral projects of common interest (PCIs), and
the remainder for horizontal measures aimed at ensuring interoper-
ability and full accessibility of trans-European networks.

(34) eEurope 2005: an information society for all. Action plan, Seville Euro-
pean Council, 21 and 22 June 2002. Summary: The Action Plan aims
to provide a favourable environment for private investment and for
the creation of new jobs,
to modernise
public services, and to give everyone the opportunity to participate
in the global information society. eEurope 2005 therefore aims to
stimulate secure services, applications and content based on a
widely available broadband infrastructure.

to boost productivity,

(35) The SLIM programme was launched at the beginning of the 1990s
on the initiative of DG XXIII in order to ease the red tape that
surrounded small businesses at the time, substantially more than
now. The SLIM programme gave rise to BEST.

It is also necessary to facilitate the participation of
7.13
district bodies in pre-normative and co-normative projects
carried out under CEN, Cenelec, ETSI and NORMAPME (36)
which promote technological development.

In the context of the 5th multiannual programme for
7.14
entrepreneurship and competitiveness (2007–2013) (37),
the
EESC believes that it is important to draw attention to the
situation and needs of industrial districts.

In the opinion of the EESC, which is based on experi-
7.15
ence gathered in the past years, particularly in the wake of the
European Councils of Lisbon, Barcelona and Seville, it would
be useful to set up a European platform for ongoing dialogue,
subdivided by sector and area of activity. This platform would
bring together district
the social
partners, financial representatives, research centres and NGOs.

leaders, public authorities,

7.15.1
The EESC considers that thought should be given to
granting Community recognition to European knowledge-based
metadistricts, so as to:

— facilitate exchanges both inside and outside the single

market;

— enable companies

in different countries

to pool

their

resources;

— give the districts project a truly European stamp, with

direct access to European schemes and programmes;

— conduct evaluations, monitoring and benchmarking of

European district networks.

7.15.2
In this context, the EESC thinks that it would be
useful to hold a public hearing to build on the present opinion,
inviting district bodies and other interested organisations from
different regions. The aim would be to encourage crossborder
cooperation and to highlight its benefits:

— politically: crossborder economic cooperation promotes EU

integration and performance on world markets;

(36) CEN: European Committee for Standardisation; Cenelec: European
Committee for Electrotechnical Standardisation; ETSI: European
Telecommunications Standards Institute; NORMAPME: European
Office of Crafts, Traders and Small to Medium Sized Enterprises for
Standardisation.

(37) See COM(2004) 781 final of 7.12.2004 and CESE 245/2005.

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— in terms of simplification:

it can pinpoint new forms of

access to cognitive, financial and production resources;

— economically,

for competitiveness: European knowledge-
based districts (EKD) could form a European consortium
that could adopt an EU quality mark;

— in terms of the wide scope for public/private partnerships:
the new district groupings should include both private busi-
nesses and local authorities, as the latter can play an impor-
tant role as catalysts for new proposals;

— for bringing together businesses, universities and research
bodies, thereby systematically drawing on new technologies
and innovations.

7.15.3
The EKD consortium should foster the spirit of enter-
prise, social responsibility, the creation of new activities and
the development of
further training, and should encourage
crossborder partnerships. It should be:

— freely and easily accessible, both to individuals and to

public/private bodies;

— simple, flexible and adaptable to the differing needs of its

members;

7.15.5
Approach — The EKD should be subject to similar
criteria as those governing the establishment of consortia in the
sixth RTD framework programme. It should run for a five-year
(renewable) period (39) and should be entered in a special
register within an EKD platform to be set up at the Commis-
sion.

7.15.6
Legal status — Dealings with the Community institu-
tions should be handled by a single recognised EKD coordi-
nator, as happens with the integrated projects and networks of
excellence in the RTD framework programme.

7.16
In conclusion, the EESC considers that the experience
developed in districts and now being focused towards knowl-
edge-based metadistricts, provides an excellent opportunity for:

— increasing employment;

— improving social relations in the labour market;

— broadening the occupational skills of workers, at all levels;

— ensuring safe and healthy workplaces;

— developing and extending ethical and environmental certifi-

cation (ISO14000 and EMAS);

— better addressing credit problems and the impact of Basle II;

— improving the quality and competitiveness of products

made in Europe;

— able to adapt to market trends;

— supporting and widening export possibilities;

— established at EU level,

involving a large number of

Member States or associated countries (38).

7.15.4
thus not make public calls for funds.

Nature — The EKD should be a private body, and

— reasserting the power of work, workers and enterprise over

red tape.

7.17
Therefore, for all these reasons, the development of
metadistricts should be supported and encouraged at all levels,
be they local, national or European.

Brussels, 6 April 2005.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

(38) Cf. the RTD framework programme.

(39) The limited accreditation period is needed to ensure that

the

districts continue to develop, and do not become set in stone.