The Industria Crisis in Emilia-Romagna: structural change or industrial decline?

Over the past three years, industrial production in Emilia-Romagna (ER) has declined. At the same time, labour productivity has grown faster than in Italy’s other industrialized regions between 2007 and 2023. These contrasting trends raise a key question: is experiencing a structural change of its industrial system or industrial decline? We investigate this issue by analysing the effects of two major shocks - globalization and the digital and green transition – on ER’s production systems. The former led to the creation of global value chains and deeply reshaped ER’s industrial organization. Three main processes emerged: the rise of district lead firms strongly oriented toward international markets, the growing presence of multinationals, and a strong selection among subcontracting firms. This produced a more hierarchical industrial system and a weakening of ER’s manufacturing base. The latter has uneven impacts across industries. The automotive sector is particularly hit due to the shift from internal combustion engines to electric propulsion. Difficulties are evident among firms linked to Stellantis and major German car manufacturers, whose global sales have declined. Nevertheless, the region also hosts successful firms and innovative start-ups exploring new technological opportunities. Overall, signs of resilience persist even in sectors where the manufacturing base has contracted. These transformations pose major challenges for industrial policy.