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Lazerson & Lorenzoni 1999 p 235:

Industrial district refer for Alfred Marshall description of spatially clustered agglomeration of small
firms of cotton industries in Lancashire and cutlery industries in Sheffield.
Economist and geographers argued that local-firms agglomerations generate external economic
efficiencies by supporting both large and stable markets in labor skills and equipment and cheaper
subsidiary trades (cabang perdagangan) and related services, and promote greater use and
development of specialized machinery and organizational methods. (Romer 1987; Storper and
Scott, 1989; Krugman, 1991)
In short, industrial district is a spatial arrangement of industrial production sites that is beneficial for
market and trade purposes.
Some political economist have heralded the industrial district as the foundation stone for a meso-
level industrial policy in which community institutions both reconcile the interests of business and
labor, and promote continuous product and process improvements in manufacturing (Piore and
Sabel, 1984; Best, 1990; Locke, 1995)
Lazerson & Lorenzoni 1999 p 236:
On Italian model of industrial district, it has been discussed since the 1980s (Piore and Sabels 1984)
and very much resembled the model of industrial district in Indonesia by the era of decentralization.
It is related to the flexibility of production.
The organizational structure of Italian industrial districts in large measure rests on outsourcing
production to mostly independent subcontractors
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Lazerson & Lorenzoni 1999 p 236:
Sabel and later on continued by Franchi and Rieser describe that decentralized production still is a
dominant feature of industrial districts, but it is usually organize by a lead firm Rather than having
a pyramidal structure sehere each type of firm is subordinate to a higher level, the district is a

1.
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In microeconomics and management, vertical integration is where the supply chain of
a company is owned by that company. Usually each member of the supply chain
produces a different product or (market-specific) service, and the products combine to
satisfy a common need. It is contrasted with horizontal integration. Vertical integration
has also described management styles that bring large portions of the supply chain not
only under a common ownership, but also into one corporation (as in the 1920s when
the Ford River Rouge Complex began making much of its own steel rather than buying it
from suppliers). http://en.wikipedia.org/wiki/Vertical_integration Check it out to the
book Folsom, Burton The Myth of the Robber Barons 5th edition. 2007. pg 65 "only we can
develop ability and hold it in our service. Every year should be marked by the promotion of
one or more of our young men." Interesting that there supposedly a historical connection
between a phenomenon of oligarchy in the US history (the robber barons) with the form of
supply chain systems (vertical or horizontal)

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composite weave of firms having different choices and varying degrees of independence. (Franchi
and Rieser, 1991, pp.464-465)
Geographer Storper and Scott (1989) identified industrial district with spatially dense
agglomerations of industry-related firms.
The difference between a lot of other agglomeration in other places with the Italian condition of
industrial district is related to the fact that they are marked by strong regional social, political and
cultural attachments where the place filled with relative culturally homogeneous population.
Lazerson, Mark H., and Gianni Lorenzoni. 1999. "The firms that feed industrial districts: a return to
the Italian source." Industrial and corporate change no. 8 (2):235-266. doi:
10.1093/icc/8.2.235.

In Indonesian history, labor control conducted with strong state involvement. In new order era, the
employment regime succeeded to contribute for growth in national ouput for global trade, and also
in employment and wages (World Bank data must be seek, this one from 1990)
The regime was centralized as the nature of authoritarian power, with high degree of state
intervention in the labour market to regulate the capital/labour relationship with the intent of
containing the boundaries of oppositional politics, meeting the needs of local business, interests and
maintaining Indonesias comparative e advantage in the global trading system (Lambert 1997, 11)
One of important element of state intervention, beside the labour regulations that repress organized
labour, was military engagement in industrial relations. The military has long history of territorial
command structure, institutionalized in the late 1950s to anchor the armed forces deeply in the
economic and political infrastructure of the regions; the militarys relative autonomy form central
government funding, generated by its vast network of off-budget sources that has been in place
since the independence war of the late 1940s;