Integrating SMEs in Global Value Chains: Towards Partnership for Development

The document represents a step in the effort to establish a sound conceptual basis for UNIDO’s partnership programme with the business community. As such, it surveys the changing role of the private sector in economic and industrial development, reviews how the formation of transnational corporation (TNC)-SME linkages and the insertion of SMEs into global value chains can contribute to SME development, and assesses the measures that national and multinational bodies such as UNIDO can take to promote such development in partnership with the business community. It therefore provides insight into the purposes and benefits of entering into such development-oriented partnerships with the business community.

This paper is divided into four parts:

• Part One begins by reviewing two important dimensions of developing country participation in the global economy—trade and FDI.
• Part Two analyses the way in which sub-optimal insertion in the global economy may result in immiserizing growth and identifies the various ways in which SMEs may be incorporated into global product markets.
• Part Three addresses the policy implications which arise in assisting SMEs to participate gainfully in global product markets.
• Part Four assesses the scope for public-private partnerships in formulating and implementing the proposed policy measures, and the extent to which UNIDO can play a catalytic and supportive role in this process.