Challenges of Industrial Restructuring in a Globalizing World: Implications for Small- and Medium- scale Enterprises (SMEs) in Asia

Restructuring of global industries, for example, through the emergence of ‘international production networks’ (IPN), is posing new challenges to developing economies in Asia. Expectations and strategies based on the historically unprecedented East Asian success with industrial development need to be adjusted in light of changing conditions. In particular, the requirements for firms to effectively access global markets and upgrade their position in global industries are becoming increasingly complex and demanding. The capacity to master and upgrade production processes is necessary, but no longer sufficient for accessing international markets for sustained income growth. This is posing significant challenges for firms — and economies — in the region, particularly for SMEs, which face special constraints. Taskoriented cooperation among groups of SMEs in the form of industry cluster and networks can provide an effective response to competitive pressures in global markets. This poses challenges to both firms and governments: to implement effective collaborative strategies and programmes, and to strengthen supporting institutions, particularly at the industry and local community level.