Local Economic Governance in Hard Times: The shadow economy and the textile and clothing industries around Lódz and Naples

Abstract

Areas of industrial decline, with poor quality local government and poor infrastructure, frequently find a kind of economic success through the shadow economy. But illegality imposes constraints on the kind of success that can be achieved. The study of such areas in central Poland and southern Italy reveals considerable similarities, despite the fact that the former was part of the former state socialist bloc, the latter not. In both regions, small and medium-sized textile and clothing firms were flourishing within the limits of the shadow economy following the collapse of large corporations in the area. There were, however, important differences. Italian public policy has provided some possible routes out of the shadow economy, and its distinctive governance, which has been taken advantage of to a limited extent by firms, while Polish policy continues to deny that the problem exists. Also, because of the presence of leading clothing brands elsewhere in Italy, southern Italian firms have access to routes for upgrading their activities that are largely unavailable to their Polish counterparts.