This paper examines the apparent paradox behind two contrasting images
of Italy (a negative one which presents Italy as a 'weak state' and a
positive one which emphasizes the more dynamic aspects of the Italian
economy) while at the same time advancing an alternative approach to
the study of comparative political economy. In contrast to the dominan
t, national models approach, the author proposes a micro-political ana
lysis that emphasizes the internal heterogeneity of national economies
and the 'embeddedness' of economic activity in local socio-political
networks. To illustrate this micro-political approach, this paper anal
yses the alternative adjustment strategies present within the same cou
ntry, even within the same industry. By analysing the divergent patter
ns of adjustment in two of Italy's most noted textile districts (Biell
a and Prate), the author stresses the internal heterogeneity manifest
within a single national economy.