Small Business Development

Context

A competitive and resilient industrial sector relies on an appropriate mix of large,

medium and small enterprises. SMEs play a leading role in creating employment,
income and value added, accounting for up to 90 per cent of manufacturing enterprises
and between 40 and 80 per cent of manufacturing employment. In LDCs, their role is
even more important, since SMEs often offer the only realistic prospect for creating
additional employment and thus reducing poverty. A healthy SME sector is, therefore,
crucially important for inclusive and socially sustainable development. However,
institutions providing support services are often limited in their coverage and capacity.
Existing institutions are frequently poorly designed and have difficulty in providing their
services effectively and efficiently. SMEs, in general, face problems associated with
their size and relative isolation such as inability to achieve economies of scale and
difficulties in entering into national and global value chains driven by large transnational
corporations. The constraints of individual SMEs include limited technical and
managerial skills, difficulty in obtaining financing and insufficient knowledge about
laws and regulations.

Services provided and expected outputs

1. Development and implementation of SME policies:

Strengthen the capacity of the public and private sectors to formulate and
implement national and regional policies, strategies and programmes to promote
SME development as well as to monitor their effectiveness. This is done by
setting up consultative mechanisms, supporting strong departmental SME
advocacy units in Government and strengthening their capacity to collect and
analyse SME-related information;
Improve the regulatory framework for SME development by reviewing existing
laws, administrative rules and procedures; developing recommendations for
corrective measures; training public administrators and disseminating
information to raise entrepreneurs' awareness of regulatory and administrative
issues affecting their business operations.

Related publication:
"A Comparative Analysis of SME Strategies, Polices and Programmes in Central
European Initiative Countries"

2. Development of local business systems:

Promote the collective efficiency of SME clusters and networks by undertaking

diagnostic studies, developing a joint vision, formulating a network/cluster action
plan, and establishing cooperation with similar networks/clusters for
 benchmarking and exchange of best practices;
Build multisector partnerships and strategic knowledge alliances between
UNIDO, transnational corporations, SMEs, business associations, research and
other civil society organizations within specific manufacturing subsectors aimed
at integrating SMEs into global value chains.

3. Business advisory services:

Establish or strengthen business centres and other business advisory mechanisms

to provide targeted services for SMEs by assisting in the design of their
organizational structure, determining the mix of services to be provided, and
training staff in the provision of basic or more sophisticated business support to
entrepreneurs;
Design and implement programmes that build capacity to promote business
incubators to support new businesses during their start-up and early growth
phase. This is done by promoting awareness of the concept among potential
incubator developers and sponsors, preparing a framework for development and
advising on specific feasibility and operational issues.

4. Rural entrepreneurship development:

Support Governments and other stakeholders in designing programmes in

support of national poverty reduction strategies through promoting rural micro
and small enterprises and in improving the enabling policy and regulatory
environment at the local level;
Strengthen affordable and effective business development services in rural areas
to develop entrepreneurial, managerial and technical skills, with emphasis on
micro enterprises and self-help capacities of civil society institutions, and
facilitate access to finance schemes bridging the gap between micro-finance and
commercial bank finance.

5. Women's entrepreneurship development:

Strengthen the capacity of public and private support institutions to identify and
alleviate the constraints faced by women entrepreneurs by equipping these
institutions with tools to formulate and implement targeted skills enhancement
programmes and by organizing training of trainers courses;
Organize, on a pilot basis, managerial and technical skills development
programmes for women entrepreneurs at the level of selected industrial
subsectors such as food-processing and textiles, with emphasis on micro and
small enterprises.

Global forum functions

Participate in the Donor Committee for Small Enterprise Development which -

 based on a broad membership from both multilateral and bilateral development
agencies - seeks to develop best practices of SME promotion through donor
interventions;
Undertake action-oriented research and issue technical working papers covering
lessons learned from programmes and projects as well as contributions to the
general debate on private sector and SME development;
Cooperate with OECD in the Forum on Enterprise and Entrepreneurship
Development and with UNDP on the regular updating of the United Nations
Inter-agency Resource Guide for Small Enterprise Development.

Index of Service Modules

The UNIDO Cluster/Network Development Programme

INTRODUCTION

SME clusters

There is ample evidence that small- and medium scale enterprises (SMEs) operating in the
same or in related industrial sectors tend to cluster close to one another. This tendency to
bunch in well defined areas has been observed in different environments in both developed
and developing countries, and in different historical periods. There are sound economic
reasons for this phenomenon. SMEs operating in such clusters derive a clear competitive
advantage from:

the proximity to sources of raw inputs,

the availability of suitably customised business development services,
the abundance of clients attracted by the cluster tradition in that industry, and
the presence of a skilled labour force.

SME clustering is common in a wide range of countries and sectors. The literature on the
so-called Italian industrial districts describes SME clusters that have reached high levels of
growth and leadership in profitable niches of world markets (e.g. leather goods, textile,
jewelry, ceramic tiles, and spectacle frames). Similar accounts exist from other developed
countries such as Germany, the USA, and Japan. Evidence on clusters in Latin America,
Asia, and to a lesser extent in Africa, is also available in these UNIDO documents:
"Principles for Promoting clusters and networks of SMEs" (PDF/153KB/39pages) and
"Industrial Clusters and Networks: Case Studies of SME Growth and Innovation"
(PDF/490KB/78pages).

(PDF files (portable document format) can be best viewed and printed in their original form using Adobe
Acrobat Reader 4.0 or above available from Adobe free of charge - Get Acrobat Reader here.)
Since 1993, UNIDO, through its Private Sector Development Branch, has developed an
approach to help government and the private sector to co-operate in the design and
implementation of programmes to promote the organisation and development of clusters
and networks of SMEs. The programme draws lessons from the experience of successful
clusters and it implements them through technical cooperation projects in various
developing countries. Some of the countries where this approach has been introduced are
India, Indonesia, Malaysia, Mexico, Nicaragua, Honduras, Jamaica, Bolivia, Madagascar,
Morocco Tunisia.
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Rationale of the UNIDO Programme

The guiding principle of UNIDOs approach towards SMEs is that these enterprises can
play a key role in triggering economic growth and equitable development in developing
countries. However, this potential role is often not fulfilled because of a particular set of
problems characterising SMEs that are related to size:

Individually, SMEs are often unable to capture market opportunities which require
large production quantities, homogenous standards, and regular supply.
They experience difficulties in achieving economies of scale in the purchase of
inputs (such as equipment, raw materials, finance, consulting services, etc.)
Small size constitutes a significant hindrance to the internalisation of functions such
as training, market intelligence, logistics and technology innovation - all of which
are at the very core of firm dynamism.
Small scale can prevent the achievement of specialised and effective internal
division of labour that fosters cumulative improvements in productive capabilities
and innovation.
Because of the continuous and fierce struggle to preserve their narrow profit
margins, small-scale entrepreneurs in developing countries are often locked in their
routines and unable to introduce innovative improvements to their products and
processes and look beyond the boundaries of their firms to capture new market
opportunities.

The emphasis of the UNIDO Cluster/Network Development Programme is to provide

assistance to SMEs so that they can escape these limitations through co-operative
endeavours. For this purpose, UNIDO supports the creation and strengthening of SME
networks and the development of existing SME clusters where:

the term network refers to a group of firms that cooperate on a joint development
project - complementing each other and specializing in order to overcome common
problems, achieve collective efficiency and conquer markets beyond their individual
reach, and
the term cluster indicates a sectoral and geographical concentration of enterprises
which produce and sell a range of related or complementary products and are, thus,
faced with common challenges and opportunities.
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Networking

As far as network creation/strengthening is concerned, the UNIDO approach envisages five

inter-related phases:

1. The promotion and motivation phase consists of a set of promotional initiatives

that contribute to:

o the identification of a critical

mass of SMEs sharing similar
growth constraints,
o their sensitisation to the
benefits of networking, and
o the emergence of groups and
of group leaders.

This is done by organising large and open meetings to introduce the principles of
networking and to indicate their possible applications. As a result of this
promotional initiative, entrepreneurs group around issues (problems and/or
opportunities) that they have in common.

2. The strategic planning phase involves the following elements:

o an analysis of common problems and opportunities,
o the establishment of a common work plan, and
o an organisational structure for the group.

An in-depth analysis of the growth constraints of the enterprises and of their causes
is required at the beginning of this phase. Furthermore, the definition of group work
plans depends upon a consensus being reached with all group members concerning
the evaluation criteria to be applied in the short, medium, and long term. During this
phase, the group selects its legal status and the rules that govern its internal
organisation.

3. The strategic planning phase opens the door

for the implementation of a pilot project
phase through which cooperation starts
bearing concrete results to the participating
enterprises. The aim is to generate visible
results (although of a short-term nature) in
order to engender optimism and trust and to
consolidate the network's willingness for
further cooperation. In general, the projects undertaken over this phase are of a
commercial and/or promotional kind, such as:
 o joint participation in fairs,
o joint purchase of raw material,
o design of a collective catalogue, etc.
4. Pilot projects are expected to give way to strategic projects focused on
specialisation and complementation at the production level. Strategic projects
commonly involve one or more of the following components:
o an increase in the degree of specialization, by process and by product, of the
network members,
o the provision of common facilities also through the creation of new
enterprises.
5. The final stage is the self-management phase, which coincides with the group of
enterprises gaining greater autonomy and the capability to carry out further joint
activities independently.

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Cluster development

The UNIDO approach envisages networking initiatives as components of a broader

spectrum of support measures to SMEs. This is because such initiatives are frequently
much more effective and sustainable if they involve the entire range of actors with whom
the SMEs commonly interact. Among such actors, it is important to single out:

Suppliers of raw materials, plant & machinery

Consumers of goods and services from the SMEs
Testing laboratories (both private and public)
Research and development institutions
Industrial Associations
Technical and management consultancy organisations
Training Institutions
Regulatory bodies enforcing/monitoring rules and regulations
Local Government
Financial Institutions

SME clusters constitute ideal targets for a SME support agency. The concentration of
largely homogenous enterprises within a relatively limited geographical area:

facilitates the intervention because of the similarity of needs and support

requirements,
speeds up the dissemination of best practices because of the pervasiveness of
demonstration effect, and
allows for a distribution of the fixed costs of interventions among a large number of
beneficiaries.

This is true for under-achieving clusters as well as for the best performing ones. However,
underachieving clusters are characterized by environments where information does not flow
easily and where the various actors are not accustomed to talking with one another. In stark
contrast with their counterparts in well-performing clusters, especially in developed
countries, entrepreneurs in under-performing clusters rarely if ever meet one another, do
unot usually have on-going relationshiops with providers of business development services
and are not accustomed to presenting articulated calls for action to the local policy makers.
As a matter of fact, these clusters are often characterized by extremely fragmented
knowledge, latent conflicts, and an absence of discussion fora. As a result, the SMEs in
these clusters have very poor perceptions about the feasibility of joint actions.
The UNIDO cluster approach is an attempt to address knowledge fragmentation, lack of co-
ordination and joint action. It is based upon the realisation that the lack of communication
among the various cluster actors and their scepticism towards joint endeavours are deeply
entrenched within traditional business practices and that the latter cannot be replaced
without the investment of significant resources. The activities required to overcome
knowledge fragmentation and poor co-ordination are:

Awareness- and trust-building initiatives

The dissemination of best practices within an audience of scarcely motivated SME
owners
The creation of suitable discussion fora and ultimately of a governance framework
for the cluster as a whole

These are all activities whose outcome is not only subject to a high degree of uncertainty
but are also largely indivisible and non-excludable (i.e. once provided are available to all).
As a result, profit-motivated agents should not be expected to invest a great deal of their
resources for the realisation of such activities.

The UNIDO cluster approach aims to achieve these outcomes by helping the various cluster
actors to develop a consensus-based vision for the cluster as a whole and by strengthening
their capacity to act upon such a vision.

The first component is aimed at reducing the fragmentation of knowledge, but it

also provides a valuable opportunity to draw attention to a common and often very
innovative agenda, so that each cluster actor (and above all SME owners) has an
opportunity to test the reliability and trust-worthiness of its partners on a "fresh"
ground.
The second component of the approach aims at enabling the various cluster actors to
overcome traditional practices and put in place a sustainable, autonomous
governance framework which will keep dynamising the local economy long after
UNIDO will have withdrawn from the cluster.

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Background to Indian Clusters

With a contribution of 40% to the country's industrial output and 35% to direct exports, the
Small-Scale Industry (SSI) sector has achieved significant milestones for the industrial
development of India. Within the SSI sector, an important role is played by the numerous
clusters that have been in existence for decades and sometimes even for centuries.
According to a UNIDO survey of Indian SSI clusters undertaken in 1996, there are 350 SSI
clusters and approximately 2000 rural and artisan based clusters in India. It is estimated that
these clusters contribute 60% of the manufactured exports from India. Among the larger
clusters, it is worth mentioning those of:

Panipat accounting for 75% of the total blankets

produced in the country;
Tirupur, which is responsible for 80% of the country's
cotton hosiery exports;
Agra with 800 registered and 6,000 unregistered small
scale units making approximately 150,000 pairs of
shoes per day with a daily production value of 1.3
million dollars and exports worth US $ 60 million per
year;
Ludhiana, a city that is well known as the Manchester
of India, which alone contributes 95% of the country's
woolen knitwear, 85% of the country's sewing machines and 60% of the nation's
bicycle and bicycle parts.
Finally, the world famous cluster of Bangalore, operating in the software sector,
deserves an explicit reference.

Despite such achievements, the majority of the Indian SSI clusters share significant
constraints like technological obsolescence, relatively poor product quality, information
deficiencies, poor market linkages and inadequate management systems. Moreover, with
the Indian economy on the path of liberalization, all SSI clusters (even the best performing
ones) are increasingly feeling the competitive pressures coming from the international
markets.
More detailed evidence on the status of the Indian clusters and
on the policy framework within which they operate can be
found in the paper "General Review Study of SME Clusters in
India" (PDF/104KB/39pages)
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UNIDO Cluster Development in India

Currently, UNIDO is implementing a project in India with the

aim of developing capabilities at both the local and the national
levels so to promote SSI networking and cluster development. This is done by:

Assessing the competitiveness and organization of SSI clusters

Assisting the clusters actors (suppliers of raw materials, plant & machinery, buyers
of SSI goods and services, testing laboratories and research agencies, industrial
associations, training institutions, local government, financial institutions) in
developing a common vision of what their cluster can achieve in national as well as
international markets.
Building up (through training, workshops and study tours), the capacity of cluster
actors to implement such a vision.
Providing advisory services at the policy level.

The project is implemented through a Focal Point based in New Delhi, currently
comprising of four national consultants. These consultants have been trained by UNIDO in
the principles of cluster re-structuring and networking. At the cluster level, the Focal Point
forges working partnerships with one or more institutions (NGOs, producers
consortia/associations, providers of business development services).This is done to
facilitate the implementation of various initiatives and to pass on the competence acquired
as a result of UNIDO training and hands-on experience gained in the pilot cluster. The
programme also draws strength through collaborative support from national developmental
institutions like Small Industries Development Bank of India (SIDBI) and more recently
office of the Development Commissioner Small Scale Industry (DCSS).
The implementation of the programme is monitored by a Steering Committee (chaired by
Development Commissioner, Small Scale Industries the Ministry of Small Scale
Industries), whose task is also to strengthen the synergy between this programme and other
Government initiatives aimed at the development of small-scale enterprises.

The following is a bief chronology of the project history:

In December 1995, the Government of India constituted a high profile expert

group (the Abid Hussain Expert Committee on Small Enterprises ) that, in its
final report issued in January 1997, explicitly endorsed cluster support initiatives as
also recommended by UNIDO.
At the end of 1996, following a national workshop during which the results of a
UNIDO survey of Indian SME clusters were presented, UNIDO was requested by
the Indian Ministry of Industry to promote pilot projects in selected clusters
(Tirupur cotton knitwear, Pune food-processing, Jaipur textile-printing and
Ludhiana knitwear jointly selected by the Ministry of Industry and UNIDO), and
to help the Ministry formulate a national cluster development program.
With initial funding provided by the Italian Ministry of Foreign Affairs, UNIDO
prepared a comprehensive project aimed at developing sustainable capabilities at
both the local and the national levels to promote SSI networking and cluster
development.
Thanks to a contribution from the Swiss Agency for Development and Cooperation,
UNIDO support has recently been extended to the clusters of Ambur (Leather),
Bangalore (Machine Tools), and Ahmedabad (Pharmaceutical). These clusters are
also being supported in close collaboration with SIDBI and DCSSI.
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Main achievements

The outcome of the programme has been manifold:

In the four clusters that have been assisted on a pilot basis (Jaipur; Pune, Tirupur
and Ludhiana) 7 institutions including export consortia, common service centers
and SSI support Institutions/Associations have been established or revitalized.
Approximately 750 firms have benefited from the programme activities.
A comprehensive data bank on 350 SSI clusters in India has been made available to
the policy makers;
More than 600 policy makers, development agents and academicians have been
sensitized on the cluster development approach through 2 national workshops, 4
state level workshops, training modules and various
other seminars.
Five state governments (Andra Pradesh, Madhya
Pradesh, Karnatka, Rajasthan, and Tamil Nadu) have
adopted cluster development within the framework of
their state industrial policies and they have started pilot
cluster interventions with UNIDO support
An international Joint Learning Workshop for policy
makers, development agents and private sector had been organized in Bologna
(Italy). Two study tours have been organized in Italy covering different clusters, one
for the policy makers and another one for the entrepreneurs of the knitwear cluster
of Ludhiana and cotton knitwear cluster of Tirupur.
Methodologies, tools and training modules have been prepared to assist the
government, public institutions and associations to undertake cluster development.
In line with the objective of assuring sustainability to the cluster development
approach, UNIDO is investing increasingly more on this area, to ensure an adequate
capacity building at the cluster as much as at the national level.

An in-depth analysis of the cluster programme in India and for specific references to the
activities implemented in India is available in the paper "Strengthening Indian SME
Clusters: UNIDOS experience". (PDF/48KB/16pages)
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Example of intervention
The following boxes provide examples of intervention under the framework of the UNIDO
Cluster/Network Development Programme in India. In-depth reference to these boxes as
well as an account of the rationale of the initiatives described therein is available in the
document "Cluster Development and Business Development Service Promotion The
UNIDO Experience in India". (PDF/93KB/27pages)

BOX 1 - UNIDO cluster intervention in Jaipur

Colorful hand-block printing enjoys a long tradition in Jaipur, the capital of Rajasthan,
where approximately 550 small firms engage in both hand-block and screen printing
and provide employment to almost 10,000 workers. Since the 1980s exports have
picked up as a consequence of the growing worldwide appreciation for ethnic design
and eco-friendly dyes. Traditional hand-block printers based around the city of Jaipur,
mainly in the villages of Bagru and Sanganer, failed to keep up with growing demand,
especially in the 1990s, progressively giving way to locally based screen printers. The
latter not only enjoy lower production costs, but they have been able to take advantage
of the industrys reputation by picking up the same designs while doing away with
vegetable dyes in favor of synthetic ones (even though the textiles are marketed as
having been printed with natural dyes). The increasing competition from the screen
printers has forced the block printers to squeeze their profit margins and increase the
degree of self-exploitation.

The diagnostic study conducted by UNIDO in 1997 identified an unexploited capacity

for the traditional artisans in the cluster to target profitable national and world markets.
The vision and action plan developed for the cluster envisaged the revaluation of the
traditional form of production and the improvement of the living standards of the
artisans by:

Reducing the cluster disarticulation (i.e. lack of linkages among the different
cluster actors);
Enhancing the design, production and marketing capacity of the firms;
Developing a product image (including a common brand) in line with current
market demand; and
Improving and increasing the types of business support services available in the
cluster.

The most significant obstacles preventing the realization of such a vision included:

The lack of communication among the artisans;

The absence of an active association;
Inadequate quality control capacity of the entrepreneurs;
Lack of design and marketing skills as the hand-block printers had grown
accustomed to working as sub-contractors for exporters; and
Inadequate access to credit.

As a result of the UNIDO intervention the dormant artisan association, Calico Printers
Co-operative Society (CALICO), was revitalized. As an outcome, its membership
increased from 26 artisans to 120, and a common show room was created. In addition,
several networks were promoted and an export consortium - Consortium of Textile
Exporters (COTEX) - was formed.

Initially the local support institutions displayed much less interest in the UNIDO
activities than the entrepreneurs. The first cluster-wide meeting called in January 1998
had therefore limited results. In spite of the proposals coming from CALICO and
COTEX and of the previous sensitization by UNIDO, the local institutions failed to
pick up any of the projects identified, thus contributing to a further worsening of the
relationships between the local producers and support institutions.

UNIDO thus opted for a more time-consuming sensitization of the support institutions
both at the local level and through their headquarters, whereby the main thrust of the
cluster approach was repeatedly presented, the initiatives identified by the artisans
were introduced and financial support was requested. This strategy finally started to
pay off as the National Bank for Agriculture and Rural Development agreed to make a
token contribution (little more than 15% of the total costs) for the participation of the
cluster artisans in a fair at Jaipur city. Since this ice-breaking initiative, collaboration
within the cluster improved considerably.

In fact the Small Industries Development Bank of India (SIDBI) initiated various
critical activities along with UNIDO and the cluster actors especially in areas related to
marketing training, design development, technical training with National Institute of
Design (a lead design institute), creation of Dhabu (mud-dye) pasting machine,
creation of an innovative credit mechanism and targeted national and international
exposure of artisans and exporters. SIDBI has also adopted this cluster under its Rural
Industrialisation Programme for further intervention.

Moreover, in an attempt to secure the emergence of a partner institution within the

cluster,UNIDO started to collaborate more and more closely with a local NGO, the
Indian Institute for Rural Development (IIRD) which was invited to participate and
contribute to all cluster initiatives.

Numerous other nation-wide SSI support institutions joined, most prominent among
them the Small Industries Development Bank of India, the State Bank of India, the
Development Commissioners (Handicraft), the Development Commissioners
(Handlooms)and the Chamber of Commerce. By the end of 1999 their financial
contribution to cluster related activities reached an average of 20%. Furthermore, it is
now common for the local branch officers of these institutions to get in touch directly
with CALICO, COTEX and the IIRD to learn about upcoming initiatives and to
inquire about the possibility of co-financing them.

Strengthening the business system also required the improvement of the relationships
between SSI and commercial banks, which had effectively ceased since a serious flood
had hit the village in 1991 depriving the SSIs of their collateral. The initial meetings
between members of CALICO and the bank managers was stormy. Thanks to the
efforts of the Focal Point (who personally chaired the meeting), all participants agreed
on a common platform and assigned individual responsibilities accordingly. One of
the major outcomes was that the president of CALICO (one of the largest and most
respected businessmen of Sanganer) could facilitate loan disbursement by providing
collateral on behalf of the consortium's other members and by screening applications
in light of his knowledge of the local firms. 15 loans applications were signed between
the local banks and CALICO members within few months after the agreement had
been reached. Subsequently, the supply of loans increased so dramatically that it is
 now common for bank managers to contact CALICO directly to ask if any other loan
application has been handed in. . With a view to reduce the gap between the bankers
and the potential borrowers, SIDBI with UNIDO support conceived and sanctioned a
Mutual Credit guarantee Fund Scheme where the former will contribute on a matching
basis to the guarantee corpus created by the beneficiaries, 2 banks have already
expressed their interest in making use of this scheme and is expected to have a wider
outreach in the coming months.
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BOX 2 - Strengthening co-operation among the block-printers of Bagru

Creating an environment of mutual trust among competing SSIs rarely proved as hard
as in the case of the block printers of Bagru, a village near Jaipur. The diagnostic study
disclosed that an attempt to co-operate had failed some twenty years before and that no
further move had been made ever since. The reluctance of the firms to participate even
in an introductory meeting indicated that 20 years of bitter competition had made any
trust-building initiative remarkably difficult.

The Focal Point therefore shifted the focus of awareness building towards the artisans
sons (themselves block printers) hoping that they may not yet share the same mutual
mistrust and that their superior education would equip them with a longer-term
approach to business. A series of one-to-one interviews were conducted to identify the
needs and priorities of these young artisans. It thus emerged that they shared a keen
interest in strengthening marketing skills, and that they would contribute to a suitably
designed training course. In conjunction with a locally operating NGO and with the
support of the Small Industries Development Bank of India, a market orientation
training program was organized in Bagru for 23 young artisans with an average age of
21. Besides class teaching on marketing promotion, quality testing, product
development, advertising and distribution, the program included a visit to Delhi (to
showrooms and representatives of artisan support agencies) and to Jaipur (to the larger
block-printers as well as trading houses).

The reaction of the young artisans was enthusiastic. These young people emerged
more confident about their marketing skills. They also reported a greater deal of
interest towards various existing artisan support schemes (about which they admitted
they had not known anything before the program) as well as their surprise regarding
the profit margins that show rooms earned on products bought at Bagru. Their
enthusiasm rapidly spread to their parents who started to show up at the following
meetings (often the very same people that had declined to participate earlier on and
had actually displayed a great deal of aggressiveness). As a result, 16 hand-block
printers voluntarily took part in a UNIDO supported pilot project with SIDBI's support
whereby an external designer was hired to pool together the block design of the
various printers and to develop new designs which would appeal to foreign buyers.
Subsequently, a common brand was created which distinguishes original Bagru
products. On the basis of this brand, the same printers have been able to participate
 jointly in major textile fairs in India, thus significantly broadening their markets.
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BOX 3: The introduction of IT in the cluster of Ludhiana

The diagnostic study showed that the adoption of Information Technology (IT) in the
hosiery cluster of Ludhiana was limited prior to intervention, while Internet access was
prohibitively expensive due to the lack of a point of presence (POP) in the area. Since
the cluster action plan gave high priority to exploiting the opportunities offered by IT,
UNIDO organized a workshop in Ludhiana where a well-known IT consultant from
Delhi introduced the principles of electronic mail, web browsing and e-commerce to
the cluster entrepreneurs. From there onwards, however, all responsibilities have been
transferred to the Ludhiana partner institution, Knitwear Development Group
(KNIDGRO), an association representing 12 cluster SSIs created in March 1998 with
the support of UNIDO (very much as described in Box 2). In April 1998, the director
of KNIDGRO was hosted in Delhi where UNIDO co-financed his participation to an
ad hoc training course on IT.

After a series of awareness-building initiatives and training courses organized by

KNIDGRO in which over 30 Ludhiana firms took part, and after a joint request from
KNIDGRO members had reduced the cost of internet access, KNIDGRO embarked on
an ambitious attempt to further bridge the gap between the cluster entrepreneurs and
the local providers of IT-related services.
KNIDGRO contacted all the local training institutions in the field of IT with the
request for greater customization of their existing courses in line with the needs and
capacities of SSIs. Thanks to the expertise acquired at the Delhi course and to the in-
depth knowledge about its association's members, the director of KNIDGRO was able
to devise a suitable syllabus and to put it forward to all the previously contacted
institutions. Having identified the institution providing the best offer in terms of
facilities, quality as well as price, and with the full endorsement of its members,
KNIDGRO signed a contract on behalf of 17 of its members. A very similar strategy
was implemented the following month, when a dozen KNIDGRO members came up
with a request for an on-line outlet site for e-commerce. Once again, KNIDGRO
brokered a deal with the most experienced Internet provider from Ludhiana.

As some of the association's members expressed an interest in ERP (Enterprise

Resource Planning) technology and their dissatisfaction with the inability of the local
software providers to come up with a sufficiently integrated and robust package,
KNIDGRO contacted one of the larger private software providers operating in India.
Considering that the cost of developing such a tailor-made product would have made it
unbearably expensive for an SSI, KNIDGRO called a meeting with all interested
entrepreneurs where it emerged that a further 20 SSIs would be ready to purchase the
software if it was successfully tested by someone operating in the cluster. Furthermore,
it emerged that up to 500 Ludhiana entrepreneurs were in a position to purchase such a
product. Supported by this evidence, the software provider agreed to undertake pilot
 product development in association with two local producers (who at the end received
the software at a very subsidized price) and signed a contract accordingly.

As a result of this initiative (which lasted approximately one and a half years) the use
of IT in the Ludhiana cluster increased dramatically. In particular, there has been a
spectacular increase in the use of e-mail (as an instrument for entrepreneurs to get in
touch with one another, to share ideas and projects, and to identify and implement new
and more ambitious action plans) and of the Internet (as a source of information and a
marketing opportunity through e-commerce). IT penetration in the textile industry
appears to be higher than anywhere else in Ludhiana, in spite of the technological
backwardness normally characterizing the industry.
(Back to top)

BOX 4 - Articulating demand in the cluster of Pune

The diagnostic study revealed that the vast majority of the food-processing
entrepreneurs in the cluster of Pune identified the stringency of the 1954 Food
Adulteration Act as the greatest obstacle to their growth. Their initial request was for
UNIDO to act at the most senior level to relax this legislation. In collaboration with a
leading figure from the cluster (himself the owner of a well-known local private testing
facility), UNIDO undertook a long-term awareness-building initiative lasting over four
months in the attempt to help the cluster entrepreneurs re-focus this request. Bilateral
as well as group meetings were organized to identify in greater detail the reasons
behind their inability to meet regulations.

As a result of these initiatives, the great majority of cluster entrepreneurs admitted

their ignorance about the law and their inability to keep up with its continuous
amendments. As this issue was further discussed with the producers, their requests
increasingly shifted towards the need for an information point within the cluster where
all the relevant legislation could be rapidly looked up. Furthermore, it emerged that the
cluster producers lacked any opportunity of dialogue with the food regulation agency
at the federal level because of the intense fragmentation of their representative
associations. As a result, the demand was increasingly raised for the establishment of
an umbrella organization with sufficient critical mass and representativeness to liaise
directly with New Delhi. The bilateral meetings also disclosed that the lack of
sufficiently reliable and independent testing facilities reduced the capacity of the local
producers to monitor their compliance. This realization led to a broader demand for the
creation of a technical center in Pune. It also helped introduce the producers to the
more general issue of quality control. Finally the importance of acquiring new skills
also became apparent to the majority of the cluster producers.

At a joint meeting of the various cluster actors held towards the end of this awareness-
building phase, it therefore proved relatively easy to identify a set of pilot projects
(including the creation of an umbrella organization, of a dedicated info point about
food legislation, and of a feasibility study for a technical center). These projects have
been enthusiastically taken up by a significant number of cluster entrepreneurs who are
slowly becoming accustomed to collaborating intensively with one ananother.
LATINOAMERICA

Since the early 1990, UNIDO has been involved in Latin America. The following pages
present four cases, namely that of Honduras, Nicaragua, Mexico, and Jamaica.

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. The case of Nicaragua illustrates three main points: first, how, as a
result of its success with network brokering, a project has achieved significant influence on
policy making at the national level; second, the importance of capacity building of local
business development service 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. And, finally, the case of Jamaica presents an
example of entry at the highest institutional level (where the effort to bring about cluster-
based development lies at the operational core of the national SME support agency) and of
the creation of specialized service centres for garments, fashion, furniture, etc.

An in-depth analysis of the cluster programme in the four countries and for specific
references to the activities implemented in Latin America is available in the paper "SME
Clusters and Network Development in Developing Countries: The Experience of UNIDO".
(PDF/90KB/28pages)

NICARAGUA

The project in Nicaragua began in 1995 with PAMIC (Programa Nacional de Apoyo a la
Micro Empresa) which has, since 1998, become INPYME (Instituto Nacional para la
Pequea y Mediana Empresa) as the counterpart. During the first phase of the project, the
strategy has been similar to the one implemented in Honduras and it is described in Box 1.
Some 20 horizontal networks were thus created by a team of seven national consultants
assisted by short-term international consultants.

Box 1. EcoHamaca: Handicraft hammock sector

EcoHamaca is a network of 11 enterprises operating in the handicraft hammock

production sector. While the network members all compete with one another in the
local market, they are trying to collaborate in an attempt to break into foreign
markets. Prior to UNIDOs assistance, none of the local producers had direct
exporting experience. Through the project the producers were assisted in
standardizing their production in order to collectively reach quantities suitable for
export and, at the same time, improve the quality and design of the products and the
pricing systems. The group selected an ecologically friendly strategy and, therefore,
focused on changing the wood used for the poles (from cedar wood which is close to
 extinction, to other more abundant exotic species). It also shifted from the use of
chemical dyes to natural ones. This strategy proved to be very successful since it
permitted the group to penetrate important markets like the EU and USA. To date, the
producers have exported on eight different occasions to destinations such as Sweden,
Finland, USA, and Peru and over 3,000 hammocks are exported on average every
month. In order to consolidate results and further common work, the group has
acquired legal status and has hired a manager whose tasks presently include the
identification of more formal training schemes for the workers, the research of other
technical and financial assistance inputs from a variety of local SME support
institutions, and the strengthening of their marketing strategy. EcoHamaca now has a
presence on Internet.

In Nicaragua, however, a public-sector counterpart was identified right from the beginning.
Further and complementary to the above, three other points are worth emphasizing with
regard to this project (which is currently in its second three-year phase with a budget of
US$ 1.3 million financed by the Government of Austria):

First, as mentioned above, the project is actively promoting inter-institutional

networking at two levels. Through the establishment of an inter-institutional
committee, the project shares activities with other local providers of business
development services (including other multilateral and bilateral donors). This
committee is presently cooperating on a variety of issues including improving loan
access for SMEs, coordinating the design and application of evaluation criteria for
SME assistance intervention, transferring network development methodology to
other service providers and executing specific joint projects in localities or sectors
of common interest. On a more comprehensive scale, the project has been invited to
assume an important role in the National Committee for Competitiveness and
Sustainable Development (formed by high-level policy makers and main
representatives from the private sector as well as the main economics university of
Nicaragua) and is contributing to the dialogue to design an overall SME
development policy.
Second, an important component of this project consists of local capacity
building. The national consultants working in the project are local professionals
with no international experience and no direct knowledge of cluster or network
practices or policies. The project is, therefore, investing in training them in order to
upgrade and specialize their skills, which should result in improved services to the
enterprises. Training is provided by international consultants and UNIDO staff via
thematic seminars and on-the-job training.
Third, the Nicaragua project, like the project in Honduras, is now diversifying its
activities to also include, in addition to the promotion of horizontal networks, the
training of new network brokers, the promotion of industrial integration along
production chains (through subcontracting links between SMEs and large
enterprises with emphasis on supplier upgrading) and the promotion of industrial
districts (in Nicaragua the term industrial district is used to mean clusters as
defined in the introduction of this paper). This evolution has come about quite
naturally while realizing that economies of scale and scope can extend beyond the
 boundaries of horizontal networks. As exemplified in the following box on
Masaya, the task is to find "the right equilibrium" in scale and scope of the joint
action, and to direct common development projects to achieve maximum economic
efficiency and return. In Masaya this has translated into a progressive evolution of
the scale of the common project from networks to sector to cluster to national level,
as schematically described in the box below.

Box 2. Masaya handicrafts

Masaya is a town south-east of Managua with a strong handicraft tradition with

hammocks as one of the main local products. Initially, the project assisted networks of
hammock producers to upgrade their products for export (see box "EcoHamaca").
While implementing the networks projects, it became evident that the main factor
influencing hammock prices was the cost of the cotton yarn used as raw material. After
studying the relationship of the cost of cotton yarn to quantities purchased, it became
clear that the best prices could be obtained for quantities greater than those required
by the single networks, i.e. coordinating the purchase of yarn at the level of the whole
hammock sector of Masaya. The broker, therefore, focused on creating a local
purchase centre offering raw material to a large number of Masaya hammock
producers.

Another important factor which was identified for improving the performance of the
hammock sector was design. In response to this, the project has been working towards
improving the design according to market trends and creating new products (for
instance hanging chairs, deck chairs, cribs, etc.). The new products, in order to be
successful, are being designed in cooperation with the wood and furniture sector. At
the same time, since the most interesting market for this line of products is the export
market, the need to build-up an export promotion strategy has arisen. The resulting
common brand, "Made in Masaya", was developed to promote local identity
accompanied by activities to increase the quality of local products. This brand is being
extended to all handicraft products from Masaya and, therefore, to the entire cluster.

Finally, other initiatives have a national dimension. For instance, actions to facilitate
export transactions which are part of the export strategy for Masaya, must extend
their effect to all Nicaraguan enterprises.

The conclusion emerging from the experience in Masaya is that the concepts which
guide the implementation of network/cluster-based projects, are demand orientation
and a creative solution design. Brokers should look at the entire business system, tap
all available resources, and design the intervention in order to take maximum
advantage of economies of scale and scope.

MEXICO
In the second half of 1997, the Program of Industrial Integration was launched by:

the Mexican Confederation of Industrial Chambers,

the Fundacin para la Transferencia Tecnolgica a las Pequeas y Medianas
Empresas,
the United Nations Development Program (UNDP), and
UNIDO

Through a flexible and decentralized set of initiatives, the Program of Industrial Integration
aims at stimulating and supporting local projects to promote networks of SMEs as well as
subcontracting networks between small- and large-scale enterprises. In the initial phase of
the program, two projects were initiated in the states of Chihuahua and Jalisco, which
focused on subcontracting networks between small- and large-scale enterprises and aimed
at increasing the competitiveness of local SMEs by stimulating a deeper and broader
integration with the locally established multinational corporations.

In the case of Chihuahua, the counterpart has been the association of "maquiladoras" firms.
In the case of Jalisco, the participating association is the Camara de la Industria Electrnica.
In both Chihuahua and Jalisco, the private sector counterpart covers one third of the
operating costs; another third has been contributed by the state government; while the
remaining third has been funded by the Program of Industrial Integration.

Both projects are in the process of establishing two technical centres (Centres for Supplier
Development) with the following aims:

helping enterprises to identify subcontracting opportunities;

cooperating with the technical personnel of the lead firms on the definition of
support programs targeted at upgrading the capabilities of the identified
subcontractors;
identifying and channeling technical support, training and loans (when required)
from locally available institutions to the subcontractors to assist them in meeting the
needs of the main contractors.

NORTHAFRICA

Il est de plus en plus manifeste que, tant dans les pays industrialiss que dans les pays en
dveloppement (par exemple, lexprience des districts industriels en Italie, de la rgion de
Baden-Wurtemberg en Allemagne, de Silicon Valley aux tats-Unis, de Bangalore en Inde,
etc.), les petites et moyennes entreprises (PME) peuvent tre plus concurrentielles si elles
se regroupent et sorganisent en rseaux/consortiums. Il est ainsi plus facile pour une
entreprise de se dvelopper rapidement, de trouver des crneaux pour ses produits,
daccder aux marchs dexportation et doffrir de nouveaux emplois en adhrant un
rseau de PME, plutt que de rester isole.

Lide-force est ici de crer des relations de coopration entre les entreprises, leurs
fournisseurs de matires premires, dquipements et de services, leurs sous-traitants et
leurs clients. La coopration, associe la spcialisation des entreprises, produit une
efficacit collective et amliore la capacit de concevoir des procds et des produits.

Loin dtouffer la concurrence entre elles, la mise en rseaux des entreprises la stimule
mais permet aussi aux concurrents de sunir pour surmonter les difficults quils doivent
tous affronter du fait des goulots dtranglement dans linfrastructure, dans loffre de
facteurs de production et dans laccs aux marchs. Cest ce couple de concurrence-
coopration qui encourage les entreprises progresser. Lorsque les PME sorganisent en
rseaux, elles acquirent un certain nombre davantages:

Souplesse et facult dadaptation collective plus grande devant les difficults du

march.
Meilleure diffusion des comptences, des capacits organisationnelles, de
linformation et de linnovation technologique.
Possibilit de compter sur les ralisations collectives pour concurrencer la
production en srie.

Lassistance extrieure peut faciliter lorganisation et le dveloppement de

rseaux/consortiums industriels. Un intermdiaire comme lONUDI peut dceler les
possibilits dassociation, favoriser la rencontre dentreprises et aider mettre en uvre des
projets collectifs pour rsoudre des problmes communs. De plus, comme cette formule
permet de travailler avec des groupes dentreprises et dinstitutions plutt quavec des
entreprises isoles, la rentabilit des ressources publiques affectes lassistance sen
trouve augmente.

Dans le cadre du projet US/GLO/95/144 Programme ONUDI/Italie pour le

dveloppement de PME, lONUDI a dvelopp en coopration avec le Ministre de
lindustrie, Bureau de Mise Niveau et Service Connexe lindustrie, deux consortiums
pour la promotion dexportation, notamment dans les secteurs de composants automobiles
et de service dengineering. Ces alliances dentreprises constituent en soi une premire
lchelle nationale, ds lors que des industriels tunisiens unissent leurs efforts et se
regroupent au sein dune structure juridiquement bien dfinie, pour faire face aux nouvelles
exigences du march extrieure.

Tunisia

Consortia take off in Tunisia

Italie: le succs des districts industriels

L'union fait la force

Tunisian Firms Going Global

Morocco

ITALIAN EXPERIENCE

The Third Italy

The international interest in SME clusters has been fueled particularly by the experience of
what has come to be called the Third Italy. The concept of the Third Italy started to be
used in the late 1970s. At that time, it became apparent that while little economic progress
was in sight in the poor South (Second Italy), the traditionally rich Northwest (First Italy)
was facing a deep crisis. In contrast, the Northeast and centre of Italy showed fast growth
which attracted the attention of social scientists. In a number of sectors where small firms
predominated, groups of firms clustered together in specific regions seemed to be able to
grow rapidly, develop niches in export markets and offer new employment opportunities.
In-depth evidence is available for selected SME clusters operating in the following
industrial sectors:

Textile (Carpi , Prato)

Leather (Arzignano)
Ceramic tiles (Sassuolo)
Furniture (Manzano).

The rapid growth of the Third Italy, and in particular the rapid growth of SME-based
industries, was associated with the concentration of firms in particular sectors and
localities. Such clusters were able to establish a strong position in world markets in a
number of so-called traditional products - shoes, leather handbags, knitwear, furniture, tiles,
musical instruments, food processing - and also in the industries which supply machinery to
these sectors. In a traditional industry, such as shoes, clusters of SMEs were able to
expand production and exports in the 1970s and 1980s at a time when large enterprises in
Britain and Germany were in decline. Perhaps most important, such clusters seemed to
have the capacity to innovate their production.

The apparent vitality of SME clusters in Italy led to a considerable interest in the bases of
their success. The concept of industrial districts was used to capture the success of
agglomerations of small firms in these areas of this country. This Italian experience gave
impetus to research on industrial districts in a number of advanced country regions. From
this international debate the following have emerged as the main attributes of industrial
districts:
 geographical proximity of SMEs,
sectoral specialisation,
predominance of small and medium sized firms,
close inter-firm collaboration,
inter-firm competition based on innovation,
a socio-cultural identity which facilitates trust,
active self-help organizations, and
supportive regional and municipal government.

(Back to top)

Features of SME cluster development in Italy

The analysis of the Italian experience indicates that there are many types of SME clusters.
However, there are some common denominators in the most dynamic SME systems, and it
is these factors that should be emphasized in policy considerations. These are outlined in
the following remarks:

The development of a cluster of SMEs is a long-term process. It is determined by

positive market perspectives and favourable local conditions (technical know-how,
social cohesion, flexible labour force, etc.).
SME clusters are characterised by static competitiveness, which is rooted in
productive efficiency. This ensures the realization of different products at relatively
low costs, thanks to the wide presence of subcontractors and component suppliers.
The division of the production process among many SMEs allows firms to be highly
specialized in complementary phases of production. It also helps keep entrance
barriers at a minimum and therefore facilitates the entry of new actors. However,
there may be several firms dedicated to the same production phase. Among these
firms competition is strong. The presence of many final firms helps avoid too much
concentration and too much hierarchy as it is the access to final markets that places
certain firms in a privileged position with respect to others.
SME clusters are however also characterised by dynamic competitiveness, which
is linked to technical know-how accumulation. The cluster determines a strong
concentration of firms, human resources, training institutions, physical and research
infrastructure, all specialized in the activities of the cluster, or in related ones. This
concentration implies a lot of relationships and interaction, favouring spontaneous
mechanisms of specialization, incremental innovation and enterprise creation, that
make the companies and the SME clusters increasingly competitive in terms of
quality.
The promotion and diffusion of innovation occurs through enterprise
relationships and interaction especially if a leader firm or a group of leader firms
exists. The example of the individual success of a leading firm can be a powerful
stimulant for innovation.
The institutional configuration is also flexible. In the more mature SME systems,
it is clear that intermediate governance structures play a vital role. They act as key
reference points for the firms within the system and for the systems external
relationships. Their central role is achieved through the high degree of co-
 participation of firms in common initiatives. It is through these structures that firms
have a sense of participation in the larger SME system and this may eventually lead
to the pooling of resources to meet the specific needs of the sectors firms.

A reference to the various policies favouring Italian SMEs as well as a list of the major
Italian industrial district is available in the paper "The Italian SME Experience and Possible
Lessons for Emerging Countries". (PDF/98KB/39pages)

(Back to top)

The Real Service Centres

A feature of the Italian industrial districts that has attracted a great deal of attention is the
tendency of public support to focus on the supply of business development services that are
highly customised to the specific industrial tradition of each area (also known as real
services in the literature). Over 130 real service centres were identified in 56 industrial
district. Such centres offer a wide array of services including:

credit guarantee,
export insurance and/or promotion,
organisation of fairs,
access to information on the evolution of markets/technology,
client rating,
consultancy,
training,
waste management,
pollution control,
quality certification and award of trademarks,
product promotion,
support to innovation,
bulk purchase of inputs, and
product testing.

These centre are invariably publicly-owned (by producers associations, local government,
SME support agencies or partnerships among them). On the basis of a comparison of
various case studies, it can be concluded that successful service centres display four
features, which are highly inter-dependent and characterised by a progression, which links
the first to the last.

An effective platform

The success of an initiative whose aim is to catalyse the collaboration among actors
from various constituencies (entrepreneurs, policy makers, civil servants,
technicians, etc.) depends upon the identification of a platform that balances long-
term developmental objectives with the realistic prospect to impact upon the
profitability of the cluster producers. The platform is neither an all-comprehensive
 plan for action nor a clear description of the rights and duties of the participants to
the initiative, but it rather provides the opportunity to initiate a dialogue within the
district and to set its tone. From the start, such platform enshrines all the crucial
elements of the SME support initiative:

o it identifies an area for intervention (thus putting forward a vision for the
future of the district as well as a strategy to realise it),
o it discloses the opportunity for the district producers to strengthen the
viability of their own businesses,
o it lists the priorities for public support, and
o it sets an agenda for a public-private dialogue.
Customer-orientation

The definition of a platform does not indicate a top-down (i.e. supply-led) approach
to the delivery of business development services. Quite on the contrary, the value of
such a starting point resides in the opportunity to set an agenda within the district
and thus to frame the requests of the various local actors. The lesson, which
emerges most clearly from various case studies, is that ample scope needs is left to
the district entrepreneurs to allow an adequate customisation of the business
development services. At such level, there appears no substitute to the in-depth
knowledge of the market as well as of the production process, which is held by the
district entrepreneurs. Rarely is however the supply of real services the consequence
of a univocal demand from the local producers. In spite of their spatial proximity,
the district producers habitually operate on a highly individualistic basis. At the
same time, however, the knowledge dispersed within the district can only be
grasped as a result of the willing participation of the local producers. As a result, the
SME support initiative should be neither predominantly supply-based nor
uniquely demand-led but they should rather present a careful mix of the two.
Customisation involves three interdependent tasks for the (will-be) managers of the
real service centre, namely:

ouncovering the latent needs of the cluster SMEs,

ore-interpreting such needs in light of the original platform and
orallying a consensus within the district about the opportunity to tackle them
through a collective initiative.
Embedded autonomy

This term refers to the capacity of a public institution to successfully balance

o the need to retain a developmental character (thus being able to hold a vision
encompassing wide-ranging structural changes) and
o the need to maintain a dialogue with its private counterparts (who are the
beneficiaries of the initiative but also the main actors behind its
implementation).

Within the context of the industrial districts, embedded autonomy is the basis for
the real service centres to trigger a radical redefinition of the internal structure of the
 local SMEs. Indeed, the managers of the real service centres rarely prove able to
"force" their decisions upon the district entrepreneurs. Quite on the contrary the
autonomy of the real service centre (in terms of the capacity of its managers to
identify the challenges faced by the district and to put forward proposals to address
them) is systematically balanced by its embeddedness within the local economy (a
feature that tames the most far reaching projects but that certainly contributes to the
disclosure of the otherwise tacit knowledge dispersed within the district).

Enhancing governance potential

The embedded autonomy of the real service centre contributes to the effective
supply of business development services and thus to the competitiveness of the
district producers. In the medium term, it also contributes to strengthen the capacity
of the district to act as a coherent entity with respect to the challenges faced by its
entrepreneurs, and thus to favour an enhancement of the governance potential of the
local economy. The management board of a real service centre provides in many
ways an ideal opportunity to facilitate the emergence of a consensus among the
various district players, because:

o most of such players are represented on such a body and these meetings are
often the only opportunity to look beyond immediate needs,
o the autonomy gained by the managers of the centre allows the latter to put
forward proposals as impartial referees who can credibly claim to act in the
interest of the district,
o it provides the opportunity to reward the actors who are most likely to be
negatively affected in anticipation of their welfare losses (for example
granting privileged access to the services provided by the centre).

Further evidence on this topic, as well as a range of in-depth description of selected Italian
real service centers, is available in the paper " Real Service Centres in Italian Industrial
Districts Lessons Learned from a Comparative Analysis" (PDF/68KB/24pages).

A set of case studies on services centres in selected Italian industrial districts

Centre Type of service Cluster Sector PDF

document

CITER Info centre Carpi Knitwear and Download the

textile document
(52KB/17pages)

ENEA R&D support to Prato and Knitwear and Download the

SMEs Carpi textile document
(54KB/20pages)

Promosedia Marketing support Manzano Furniture Download the

document
 (40KB/15pages)

FIT - CADA Effluent Treatment Nove and Leather and Download the
Plants Arzignano ceramics document
(49KB/16pages)

Quality Branding Quality Foodstuff Download the

Consortia Certification document
(47KB/16pages)

(Back to top)

TRAINING PROGRAMME FOR

CLUSTER DEVELOPMENT AGENTS
Ahmedabad
18 July - 26 September, 2002

As an outcome of the UNIDO Cluster Development Programme in India, a methodology

has been developed which is targeted at so-called cluster development agents (CDAs). This
methodology has further been refined and turned into a full fledged training programme of
the duration of 8 weeks, which is aimed at practitioners in the field of SME development
that are interested in undertaking cluster development in India.

The first edition of the programme, organised by UNIDO and by the Entrepreneurship
Development Institute of India (EDII), took place in Ahmedabad in the Indian state of
Gujarat, during 11 October - 22nd December 2000 and it was attended by 25 trainees
nominated by the State Bank of India, Development Commissioner (Handicrafts), District
Industries Centre/ State Department of Industries , State/ Regional Industry Development
Organisations and NGOs.

The third edition of the programme (18 July - 26 September, 2002) will also be divided into
three phases of class teaching and guided fieldwork according to the following syllabus

Phase I: 18 29th July, 2002

Module 1: Overview of the cluster development process

Module 2: Attitudinal Reorientation and developing of Soft Skills
Module 3: Understanding a Cluster and its internal dynamics
Module 4: Business Profiling and Value Chain Analysis
Module 5: Analysing potential and drawing up plans for capacity building

Phase II 30 July - 17 September 2002

 7 weeks of field-level orientation at the respective clusters where participants are
expected to function as CDAs in future

Phase III 18 - 26 September, 2002

Module 1: Presentation of reports on cluster structure and warranted initiatives

Module 2: The process of formulating and implementing cluster development
initiatives
Module 3: Development of soft skill competencies
Module 4: Monitoring and Evaluation

Further information can be requested by e-mail to clusters@unido.org.

DOCUMENTS

"Development of Clusters and Networks of SMEs"

Size: 2,493 KB
Date: 2001
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"Cluster Development and Business Development Service Promotion The UNIDO

Experience in India", paper presented in Hanoi on April 3-6, 2000 at the international
conference on "Business Services for Small Enterprises in Asia: Developing Markets and
Measuring Performance" organised by the Committee of Donor Agencies for Small
Enterprises Development
Size: 93 KB
Date: 2000
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"Developing Indian clusters" Interdisciplinary Research Institute for Asian Studies Forum
Size: 48 KB
Date: 1999
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"SME Clusters and Network Development in Developing Countries: The Experience of

UNIDO" Working Paper 2 - UNIDO Private Sector Development Branch,.
Size: 90 KB
Date: 1999
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"MISE EN GROUPES ET EN RESEAUX DES PME DANS LES PAYS EN
DEVELOPPEMENT : EXPERIENCE DE L'ONUDI EN LA MATIERE"
Size: 119 KB
Date: 1999
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Real Service Centres in Italian Industrial Districts Lessons Learned from a Comparative
Analysis
Size: 68 KB
Date: 1999
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CENTRES DE PRESTATION DE SERVICES REELS DANS LES DISTRICTS

INDUSTRIELS ITALIENS LECONS TIREES D'UNE ANALYSE COMPARATIVE
Size: 110 KB
Date: 1999
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SME Consortia in Italy: An Instrument for Economic Development

Size: 118 KB
Date: 1998
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Les Consortiums de petites entreprises en Italie:un instrument de dveloppement

conomique
Size: 115 KB
Date: 1998
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"The Italian SME Experience and Possible Lessons for Emerging Countries - Executive
Summary"
Size: 98 KB
Date: 1997
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CREATION D'UN CENTRE DE SERVICE REEL: L'EXPERIENCE ITALIENNE

Size: 76 KB
Date: 1998
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"Industrial Clusters and Networks: Case Studies of SME Growth and Innovation" Case
Study UNIDO, Small and Medium Enterprises Branch,
Size: 490 KB
Date: 1995
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"Principles for Promoting clusters and networks of SMEs" Discussion Paper 1 UNIDO,
Small and Medium Enterprises Branch,
Size: 153 KB
Date: 1995
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Background paper on the Indian SME sector as well on the support policies
Size: 104 KB
Date: 1995
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"Italie: le succs des districts industriels"

Size: 411KB
Date 1998
Source: Le Moci n. 1337
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L'union fait la force

Size:93KB
Date 2000
Source: Le Presse Economie
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