Born to innovate, not to produce: three decades of compared change, evolution and innovation in the dynamic Marshallian Industrial Districts of Spain and Italy

This paper examines the role of innovation in Marshallian Industrial Districts (MIDs) in Spain and Italy over three decades. Challenging traditional views that focus on production as the primary driver of success, the paper argues that MIDs function as 'living innovation machines', where continuous technological advancement ensures long-term competitiveness. Using a comparative causal framework and a dataset covering 1991-2018, the study assesses the innovative performance of MIDs relative to other local production systems (LPSs). Results confirm the existence of the innovation-district (iMID) effect, demonstrating that MIDs generate approximately 30% of national technological innovation, with patent intensity surpassing the national average by over 20% in both countries. Despite structural differences - such as Italy's emphasis on mechanical industries and Spain's focus on food and household goods - MIDs in both economies exhibit similar aggregated innovation patterns. The study further explores how transitions between LPS types impact innovation capacity, revealing that MIDs sustain their advantage even as economic landscapes evolve. These findings contribute to a deeper understanding of place-based innovation, challenging stereotypes of MIDs as merely production-driven entities and positioning them as crucial actors in regional and national innovation ecosystems.