Emilia-Romagna

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= as an example of sustainable manufacturing: The Emilia-Romagna region of Italy, boasts one of the highest living standards in all of the European Union and one of the lowest unemployment rates. It also has the strongest cooperative economy in Europe, with employee co-operatives representing 30% of the GDP and involving 57% of the population. [1]


Description

Alan Avans:


"New Impressions of Emilia Romagna--a Global Leader in Innovative Approaches to Development and Economic Democracy

In the 1940s, the Emilia Romagna region in northern Italy—Bologna is its center—was one of the poorest regions in Europe. Today, according to Bob Williams, of the Van City Capital Corporation in Vancouver:

“There are 90,000 manufacturing enterprises in the region, surely one of the highest densities per capita in the world! Small, medium, enterprises (SME’s) predominate. One person in twelve is self-employed or owns a small business. In recent years the region has produced the highest GDP per capita in the country, and it now ranks with the ten best in Europe…2/3 of the citizens of Bologna belong to a co-op…45% of the GDP is produced by co-ops…(and) 85% of the social services in Bologna are delivered by co-ops…”

Today it’s a fascinating web of cooperatives, small manufacturing companies, innovative social service programs, and a complex and dynamic partnership between business, labor, and government. It’s a region that was governed by the Italian Communist Party for over thirty years, and still has strong labor, social and business organizations and leaders that identify with the left, as well as a strong Catholic tradition among those sectors, and a smaller presence of similar companies, organizations, and networks that identify with the right.

I with 16 other American and Canadian cooperative practitioners just spent 5 intense days in Emilia Romagna studying this phenomena with the support of the Cooperative Charitable Trust Forum of Cambridge, Massachusetts. I was looking at this region to understand it relevance and importance for those who are looking for a model for development that is practical, has scale, and consistent with social justice values. This was my second visit and study tour. After the first, I had more questions than I started with, and was skeptical. This time, I got it. This region needs to go to the top of the list for those in the developed and developing world creating the competitive alternative development model.

 Some of Emilia Romagna’s manufacturing companies that are world class high performance companies are cooperatives. Other private companies and cooperatives work together in flexible networks that combine a number of smaller firms into joint projects. And government has played a powerfully positive role in creating sector-based service centers that assist smaller companies in being competitive in the global economy;

  • Coop Italia is the top retailer surpassing giants like the French equivalent of Wal-Mart—Carrefour—in sales. It has 6 million owner/members, 55,000 employees, 1,200 stores, and €11 Billion in sales;
  • Cooperatives are legally required to put profits into an “indivisible fund” that will sustain the company for generations and can’t be taken by the worker owners;
  • The cooperatives have their own huge insurance company—Unipol, large investment funds such as Coop Fund to provide loan and equity to start-up companies, and very sophisticated support organizations such as Lega Coop that provide a full-range of technical, educational, and financial services to insure the success of cooperatives;
  • “Social Cooperatives” provide various services to the mentally and physically disabled—“privatizing” what historically were state services but to cooperatives that are frequently preferred by professionals because they permit creativity and the delivery of high quality services and work experience for the disabled; and
  • Italian cooperatives are expanding internationally, and the cooperative movement is assisting the growth of cooperatives in both the developing as well as the developed world. Recently the Coop Fund and a large cooperative of restaurants committed $500,000 in debt and equity, as well as technical assistance to a group of workers in New York City affiliated with the labor-based Restaurant Occupation Center who are starting a restaurant cooperative in Manhattan.

Those committed to economic democracy and sustainable development need to learn more about this experience. See Coop Italia power point, Bob William’s full article, and a great description by David Thompson on the region at www.clcr.org" (http://www.ecodema.org/archives/000119.html)


Discussion

Kevin Carson:

"The closest existing model for sustainable manufacturing is Emilia-Romagna. In that region of 4.2 million people, the most prosperous in Italy, manufacturing centers on "flexible manufacturing networks" of small-scale firms, rather than enormous factories or vertically integrated corporations. Small-scale, general-purpose machinery is integrated into craft production, and frequently switches between different product lines. It follows a lean production model geared to demand, with production taking place only to fill orders, so there's no significant inventory cost. Supply chains are mostly local, as is the market. The local economy is not prone to the same boom-bust cycle which results from overproduction to keep unit costs down, without regard to demand. Although a significant share of Emilia-Romagna's output goes to the export market, its industry would suffer far less dislocation from a collapse of the global economy than its counterparts in the United States; given the small scale of production and the short local supply chains, a shift to production primarily for local needs would be relatively uncomplicated. The region's average wage is about double that of Italy for a whole, and some 45% of its GDP comes from cooperatively owned enterprises.

Emilia-Romagna's production model is a fulfillment of the potential of electrically powered machinery." (http://c4ss.org/wp-content/uploads/2009/01/industrialpolicycarson0109.pdf)

John Restakis talks about the cooperative economy of Emilia Romagna, and about the networks of small manufacturing companies. http://youtu.be/bPpLaLcqz7E

It's Legal Basis

Kevin Karner:

" Article 45 of the Italian Constitution (1947) states: “The Republic recognizes the social function of cooperation characterized by mutual aid and not private profit. The law promotes and favors the growth of these structures using the most appropriate means and guarantees that their character and purpose will be inspected accordingly.”

Also in the constitution was a provision called Basevi’s Law, which allowed declared cooperatives to transfer their surpluses to a reserve free of corporate tax on the condition that if the coop be dissolved or sold the reserve is dispersed to other cooperative associations, providing development funds for other cooperative initiatives. Additional tax advantages are tied to initiatives like “employment for marginalized” communities. " (http://onthecommons.org/good-life-italian-style)

John Restakis on Emilia-Romagna

Case Study – Emilia Romagna

Emilia Romagna is a region of four million people in the north of Italy. It is one of the best examples of how a government can employ co-operative and commons-based principles as part of a Partner State approach for both economic and social development.

The co-operative economic system in Emilia Romagna has achieved an internal coherence and integration that is unique. Over 8,000 co-operatives account for almost 1/3 of the region’s GDP which is the highest per capita in Italy. [[[27]]] This is Italy’s largest exporting region, accounting for thirteen percent of the country’s total. [[[28]]] But this wasn’t always the case. In the 1950’s this was one of Italy’s poorest regions. Today, Emilia Romagna is among Europe’s top ten performing economic regions. How was this accomplished?

Over a period of 30 years commencing with the formation of regional governments in 1971, Emilia Romagna’s regional government blended the strengths of the co-op system with the power of government to create a co-operative economic model that extends beyond co-operatives to the economy as a whole.

The most distinctive feature of Emilia Romagna’s industrial paradigm is the emergence of what has since become a key strategy for the successful development of a small firm economy – the clustering of small firms in industrial districts. Industrial clusters were perfected in this region and an extensive literature has been devoted to what has since come to be known as the Emilian Model. And although the model has undergone significant changes since its discovery in the early ‘70s, the pattern of industrial development that it represents is a unique instance of successful co-operation in a capitalist framework.

ERVET and the Real Service Centres

One of the first tasks of the regional government was to create a mechanism through which the regional economy as a whole could be understood, its strengths and weaknesses diagnosed, and a program of development established. It created ERVET, the economic planning and development agency that had a lasting impact on the development of the region’s strategic sectors.

ERVET was a public/private agency that was funded and directed by a partnership between the regional government and its key allies among business, labour, and academic institutions. It undertook a careful analysis of the regions’ key economic sectors, diagnosed the particular strengths and weaknesses of the firms comprising these sectors, and established a series of what were called “real service centres” to provide strategic assistance to the firms and the industrial districts of which they were a part.

While the particular services provided by each service centre were tailored to the needs of the sector in which they operated – ceramics, agricultural machinery, footwear, clothing, etc. – the overall strategy was the same: to increase the productive capacity and competence of individual firms and to ensure that the linkages between firms in the industrial districts remained strong and were further mobilized to strengthen the system as a whole.

Some of these service centres (ASTER, Democentre) were engaged exclusively in research, training, and technology transfer. The service centres were structured on a co-operative model – they were funded through a mix of ERVET funds and member fees and directed by elected representatives of the firms that used their services. This ensured that the centres’ services would correspond to the real needs of the firms.

The co-operative nature of these networks were a key reason why SMEs were able to access the research, training, and knowledge that were central to creating the innovations that were indispensible to the success and survival of these enterprises. The programs and services of ERVET and the centres reinforced the co-operative bonds between firms and within the industrial districts. For example, research funds for product development or the development of new technology were granted only to groups of firms that had agreed to work together.

On the question of capital investment, firms would organize credit co-operatives. These groups, or consorzi, would then take responsibility for the loans taken out by their members, operating much as a loan circle for small firms. Adapted to the credit needs of Emilian firms, consortio loans are provided at very low rates by co-operative banks, many of which were first established as a source of credit for farmers. So successful are these consortia, and the default rates so low, that the large national banks have been trying to break into this market for years, but with little success. The smaller regional banks provide for almost all of the region’s capital needs.

These and similar policies are already highlighted in the ideas and proposals promoted in Ecuador’s National Plan and numerous policy documents. There is a strong affinity between Ecuador’s social and economic aims and what Emilia Romagna has been able to achieve, and both cases rely on elements that are central to the idea of a Partner State.

Undoubtedly, countries and regions differ. The economic, social, and political antecedents that gave rise to the Emilian Model are in some ways unique. However, the lessons of co-operation as an instrument of regional development and of small firm empowerment are even more relevant in the case of countries like Ecuador where economic inequities and the domination of established power structures are even more adverse to the interests and prospects of small and medium firms.

In these contexts, co-operation among MSMEs at a regional level is even more of an imperative if they are to develop and contribute significantly to a new, more pluralistic, productive matrix. And, just as the new digital technology of the 1970s and 80s gave impetus to the specializations and innovations of Emilia Romagna’s small firms, the open source technology and commons-based knowledge systems of today provide a means for small firms to similarly adapt emergent technology to the particular conditions of MSMEs in Ecuador and elsewhere.

Today’s Internet makes possible the adaptation of farm machinery to local needs through open source designs that can be shared at minimal cost. Open source technology provides a means for small farmers to access information online that greatly enhances their capacity to improve production by adjusting their practices to the particularities of crops, soils, and climates. New avenues for global marketing of local products are available, as is the integration of products into fair trade distribution networks that are meant to support the kinds of locally controlled production models described above.

Most important of all are the examples of successful development strategies that can benefit both private and collective forms of ownership through the use of co-operative systems. Just as these systems have proven successful in regions like Emilia Romagna and the industrial districts of Germany, France and the US, so too have these models been adapted to serve the needs of regional economies in countries like Sri Lanka, Mexico, and Costa Rica. Here, the challenges of small scale, isolation, absence of secondary processing, inaccessible markets, and the control of product distribution by intermediaries are identical to the problems faced by small producers and entrepreneurs in Ecuador.

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