The birth and development of the Italian automotive industry (1894-2015) and the Turin car cluster

This paper describes the early genesis and later evolution of the Italian automotive industry employing the traditional agglomeration approach combined with Klepper's spinoff theory. It highlights the key role played by the Turin car cluster from the late 19th century. We provide the first comprehensive database of Italian automobile companies from 1894 until 2015, based on original archival research. We use historical analysis and econometric models to identify the factors contributing to the creation and success of the automotive industry in Turin. More specifically, we investigate agglomeration economies and the part played by spinoffs and institutional factors with a special emphasis on the role of local education. Our model confirms the existence of a spinoff effect and, especially, the positive effect of inherited technical skills embedded in pilots. We find support for positive agglomeration effects at the regional level, technological complementarities with aeronautics, a metropolitan cluster effect, and importance of local education. Basic and technical education seem to be particularly important initial institutional preconditions for further technical learning and scientific advancement and would make an interesting research topic.