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09/07/2019 04:33pm

Importance of Global Value Chain network for MSMEs

image Importance of Global Value Chain network for MSMEs

New Delhi, July 9 (KNN) Almost all quality improvement comes via simplification of design, manufacturing, layout, process and procedures.

With the rise of the Global Value Chain paradigm, it is believed that the integration of developing countries into the Global Production and marketing network are an opportunity for the advancement of their economic competitiveness and for the better access to global markets.

Value chains become “global” when their component activities are geographically dispersed across borders to multiple country locations. The driving forces of the globalisation of value chains are several, including increased competition, technological progress, especially information and communications technologies.

Global Value chains provide opportunities for developing countries to diversify their exports and intensify their integration into the global economy

“Our priority is to enable firms of all sizes, in particular SMEs, to be innovation-ready. Integration into global value chains offers new opportunities for innovation-ready firms”, said Anabel Gonzalez, Senior Director, World Bank group Global Practice on Trade and Competitiveness.

MSMEs are key drivers of innovation, economic growth and new employment generation. Global Value Chains network links firms and consumers around the world and often provide a stepping stone for firms and workers in developing countries into the global economy.

In a globalised economy, there is a need for MSMEs to learn and plug into the new market opportunities various counties provide. Since there is direct link between internationalisation and MSMS performance, they stand a good chance to grasp the reinforced growth and enhance competitiveness.

Across the globe, MSMEs are significant drivers of growth, job creators, reason behind increased competition and innovation. For example, Regionalism in Asia, led by global value chains (GVCs) and free trade agreements (FTAs), has increasingly put the spotlight on small and medium-sized enterprises (SMEs). Now, more than ever, SMEs have the opportunity to engage in international trade. Moreover, it also provides them with the opportunity to achieve economies of scale, expand market share, and increase productivity.

An interesting contrast arises on the contribution of MSMEs from developed and developing economies of the Global Value Chain while considering the amount of value add activities performed from MSMEs of the two types of economies.

MSMEs in the developed economies generally tend to focus increasingly on high value add activities like Research and Development, Branding, Innovation, whereas the MSMEs in developing economies focus on low value add activities like Manufacturing.

With services dispersed across different economies and regulations becoming a key factor for analysing the way MSMEs fit into the Global Value Chain, it is very important to understand in what ways are Global Value Chains managed around MSMEs. (KNN/LM)

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