Paper
SME Cluster and Network Development in Developing Countries: The Experience of UNIDO
Building up clusters to empower small and medium enterprises: A study
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18 pages
This paper reflects upon the United Nations Industrial Development Organization (UNIDO's) experience in promoting business development services focused on networking as a strategy to develop small-scale enterprises.
The paper provides the rationale for the approach, explaining:
- The need for an external agent to set up successful clusters of small and medium enterprises (SMEs);
- UNIDO's Technical Assistance Program for SMEs.
Further, the paper presents:
- Cases of networking development projects from some of the countries where the approach is currently being implemented. These include: Honduras, Nicaragua, Mexico and Jamaica;
- The following four key phases of an effective methodology in project implementation:
- Promotion of networks;
- Restructuring at the firm level;
- Improvement of the institutional environment;
- Improvement of the dialogue between the private and the public sector.
It concludes by describing the following lessons learned in the creation of networks for SMEs:
- Project strategies need to be demand-oriented, business-oriented, production grounded and targeted at SMEs;
- Project actors must:
- Own the project;
- Be empowered and have the skills to act;
- Have the motivation and incentives to act;
- Be given the right training about best practices.
- Finance should be a mix of public and private investment;
- There should be carefully designed evaluation criteria;
- The enterprise should not become dependent on the service provider;
- A bottom-up approach, fostering on entrepreneurial vision and local actors is best.
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