Paper-making activity boasts an ancient origin in Villa Basilica: in 1344, the Book of Taxes reports several transfers of paper to Pescia. Between the 16th and 17th centuries, and even more so in the 18th century, the number of "paper-mills" sited in the Villa area along the Pescia Minore stream, slowly but progressively increased, also thanks to the thriving publishing industry of Lucca. Between 1830 and 1840, Stefano Franchi from Villa Basilica invented a method for obtaining paper from straw. The factories in the area started producing wrapping paper, abandoning the previous activity of making paper for writing and printing, and making Villa Basilica an important production centre of straw paper. Still in the mid 20th century, the Commune of Villa and the neighbouring Commune of Pescia had the highest concentration of paper-mills in Italy. Today, the number has dropped, but the production is still of excellent quality.

Going back up the road that from Collodi leads to Villa Basilica, a sort of scenographic open-air manufacturing museum unfolds with a sequence of paper-mills with their typical structure, easily recognisable by the arched openings on the tops of the factories, where paper was dried.