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SME cluster and network development in developing countries: the experience of UNIDO

Date : 2010-12-17 13:13:32

DescriptionPSD Technical Working Papers Series The paper describes the background and experience of the UNIDO technical assistance programme for SME networking. This programme is characterized by an emphasis on the promotion of efficient systems of relations between enterprises and between enterprises and institutions which allow enterprises to overcome their isolation and reach new collective competitive advantages beyond the reach of individual small firms. The programme also emphasizes the development of local institutions to act as facilitators of the networking process. The experience of four UNIDO projects is presented in the paper. The case of Honduras represents a project which evolved from the creation of SME networks into the establishment of a specialized institution acting as a networking promotion agency. Considerations on diffusion and sustainability of impact as well as on funding mechanisms of networking services are made here. The case of Nicaragua illustrates three main points: first, how, as a result of its successes with network brokering, a project has achieved significant influence on policy making at the national level; second, the importance of capacity building of local BDS providers, and third, how the principles of economies of scale and scope govern the delivery of support services. The case of Mexico highlights a project promoting vertical integration arguing for the direct involvement of large-scale manufacturers into suppliers’ upgrading efforts. The case of Jamaica presents an example of entry at the top institutional level (whereby the effort to bring about cluster-based development lays at the operational core of the national SME support agency) and a case of creation of specialized service centres (for garments, fashion, furniture, etc.). After describing the projects and their main results, the paper draws some conclusions on the methodological steps and principles which characterize UNIDO’s networking initiatives, distinguishing four methodological phases: a) the promotion of networks, b) the restructuring at the firm level, c) the improvement of the institutional environment, and d) the improvement of the dialogue between the public and private sector. Finally, the lessons learned through the implementation of the projects are summarized in the last chapter of the paper. They include the need for a demand-led approach, the characteristics of the SME networks promoted by UNIDO, the need to invest in human resource development, some considerations on funding strategies and sustainability issues.

Name of InstitutionSME cluster and network development in developing countries: the experience of UNIDO

Author(s) NameKristen Patin

Added/Updated byKristen Patin

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