Learning by Trusting: Marshall’s Industrial Spaces and the Advantages of Closeness1

Alfred Marshall is considered to be an author who gave special attention to industrial activities and to their interaction with geographical variables. Marshall’s references on this subject, presented mainly in his Principles of Economics and in Industry and Trade, have been extensively used in Regional and Urban Economics, leading to popular concepts among the literature such as Marshall Industrial Districts. The reference to Marshall’s work tended to emphasise the advantages for economic agents by being geographically near. I will present the factors that, according to Marshall, explained the concentration of industrial activities in some places, as well as their persistence on that concentrated way. Then, I will focus on the organisation of the productive structure within the industrial district. Moreover, I will assess the effects of being part of an industrial district to the growth of the firm, and to the development of technical division of labour. The consideration of a firm in an industrial district may have significant effects in the shape of the firm, namely by enhancing a more co-operative behaviour