The Comeback Kid: How smart policy turned Trentino around

Policy makers the world over have been searching for ways to turn around the fortunes of ex-industrial areas. The Autonomous Province of Trento, Trentino for short, a region of around 500,000 in North Italy has a remarkable story to share.

Trentino transformed

In 1980, employment in Trentino relied heavily on farming and manufacturing, which accounted for 40% of total working hours. Fierce competition from emerging economies and the closure or downsizing of major manufacturers posed a major threat to the region’s prosperity and prospects. Strikes and demonstrations became a frequent occurrence, with the risk of mass layoffs looming large.

By 2019, manufacturing employment had almost halved. But it had been replaced by growth in service sectors, particularly the expansion of tourism and knowledge-intensive services. In the process, Trentino has enjoyed spectacular growth in employment. In stark contrast to neighbouring Alpine regions, it has managed to maintain a growing population. Productivity steadily grew between 1980 and 2000, resulting in average income growth of 47% over the 20-year period, about 1.9% a year on average.

Trentino has seen better economic performance compared to the rest of Italy and Europe

Note: Calculations based on NUTS3 level information. Other EU includes regions for which information is available from 1980 onwards. Source: OECD calculations based on ARDECO.

Progressive policies

So, how did Trentino accomplish this remarkable transformation?

Local leadership played a powerful role. In the depths of the global recessions of the mid-1970s and early 1980s and empowered by new autonomy statutes in 1972, Trentino deployed a powerful combination of labour, welfare and industrial policies. In 1983, the region established a provincial employment agency, which served as a platform for convening labour unions, business associations and the local government. This institutional set-up allowed the agency to defuse conflicts and work together to deploy active labour market policies to turn around their fortunes.

One notable example of Trentino’s successful active labour market policy is Progettone, which emerged after the dismissal of workers at a plant of Grundig, a TV manufacturer. This programme matched people that had few options for re-employment in the other businesses, mostly older low-skilled workers, with community service needs, facilitating their transition toward retirement.

The Progettone programme has helped 8,000 workers after their factory closed

Over the past 25 years, Progettone has supported over 8,000 unemployed individuals, engaging them in projects related to infrastructure maintenance and community development. Trentino also pioneered groundbreaking welfare policies, introducing maternity protection, compulsory supplementary pension schemes, and pensions for stay-at-home parents well ahead of other Italian regions.

Female employment and overall unemployment rates have improved markedly since the mid-1980s, diverging from national trends. Alongside this, the region embraced industrial policies aimed to convert disused industrial plants into technology hubs and start-up incubators.

A good example is the re-use of the historic buildings of Manifattura Tabacchi in Rovereto, which currently houses start-ups and branches from larger firms supported through the regional development agency. At the same time, Trentino invested in one of its key strengths – culture. A prime example is the construction of MUSE, a cutting-edge natural science museum (see picture below) that now stands on the site once occupied by Michelin’s plants.

Cultural employment in Trentino is higher than Italian and EU average, accounting for 4.3% of all employment in 2021, and local government and residents spend more on cultural activities than average among Italian regions.

The impact of these policies on Trentino has been significant. Notably, Trentino has consistently ranked among Italy’s most liveable places, with well-being indicators that place it in the forefront in fields such as jobs (ranking second out of 21 Italian regions) and education (fourth), reinforcing its success year after year.

Facing the future with confidence

Challenges remain for Trentino. Sluggish productivity growth over the past 20 years, an aging society and climate change demand attention. To help tackle these challenges, the provincial government has now established a productivity board alongside the OECD to guide their policy and progress.

Yet Trentino’s successful industrial transition over the past four decades gives them confidence in facing these challenges. Its example should also inspire optimism in other regions, showing that with proactive policies and the right partnerships, all regions can plan for a more prosperous future.

OECD resources

OECD (2023), Trentino’s turnaround 1980-2020, Case study presented during the 82nd Local Economic and Employment Development (LEED) Directing Meeting, Trento, Italy, 10 May 2023:

To learn more on LEED’s work:

Discover the OECD Trento Centre for Local Development:

Policy Analyst at | Website | + posts

Mattia Corbetta is a Policy Analyst at the OECD Trento Centre for Local Development. Since joining the OECD, he has been investigating multiple employment and economic development issues through a spatial lens, such as start-up ecosystems, the rise of remote working as well as the societal and economic repercussions of major crises and related policy responses. Between 2012 and 2019, he worked as a Policy Adviser at the Italian Ministry of Economic Development, where he contributed to designing and implementing the Italian Start-up Act, the National Plan on Industry 4.0 and other policies in the field of innovation, entrepreneurship and digital. He holds a MA in International Relations, a MA in Contemporary History and a postgraduate MA in Business and Trade in MENA.

Economist at ECD Trento Centre | + posts

Wessel is an economist with over 10 years experience in economic analysis of the productivity of firms, regional economies and international trade and policy analysis. At the OECD, he focusses on understanding actors that drive regional economic performance and policies that can support regions, its firms and workers. His academic work has been published in Economic Journal, Journal of Economic Geography, Journal of Economic Growth, Journal of Comparative Economics and Energy Journal.