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Title: Principles for promoting clustes and networks of SMEs-[World Wide Web]

Notes: In both developed and developing countries there is mounting evidence that clustering and networking helps small and medium sized enterprises (SMEs) to raise their competitiveness. The role of public policy in this process is less clear. The European experience, based on Italy`s industrial districts success, suggests that local and regional government can play an important role particularly where it cooperates with private sector organizations. Since in the European success stories, regional or local government became active only at a relatively advanced stage of industrial development, they do not provide policy lessons for making embryonic clusters grow. More can be learnt from cases where public policy helped to bring about cooperation of enterprises even though the critical mass was small and previous linkages were few. Recent experiences with fostering networks in Denmark and Chile show that specialization and cooperation between SMEs can be promoted through public institutions. Experiences from Indonesia and Brazil suggest that dynamic clusters and networks tend to be buyer driven and that public support for upgrading of SMEs has more impact in buyer driven than in supplier driven chains. The paper shows that effective interventions aimed at fostering collective efficiency are already proceeding apace in developing countries. While sometimes inspired by the success of industrial districts in advanced countries, some of the most interesting insights for policy are emerging from experiments in developing countries themselves. Therefore, as regards policy lessons, South-South channels seem to be at least as important as North-South channels for international leaning and exchange of experiences.

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