by  George Abonyi. UNESCAP, Bangkok, November 2005

The challenge to developing economies in the Greater Mekong Subregion (GMS), both middle-income countries such as Thailand, and lagging poorer economies such as Lao PDR and Cambodia is two-fold: (i) how to access global markets; and (ii) how to do so in a way that provides for sustainable income growth (allowing for increasing pricing power or "value creation" over time). These are particularly serious challenges for producers from lagging economies, and at the firm level for small and medium enterprises (SMEs) who face significant constraints on their capabilities to compete effectively on global markets.

This paper explores the implications of the emergence of global value chains and associated production networks for SMEs in the Greater Mekong Subregion. Section II discusses GVCs and IPNs, including what they are; why they are playing an increasingly important role in the global economy; and their key characteristics. Selected GVCs of particular relevance to the GMS are discussed in Section III, including their potential implications for SMEs. Given the challenges to SMEs of participating in such chains and networks, Section IV discusses ways in which the capabilities of SMEs may be enhanced, including through Business Development Services (BDS) and by cooperation through enterprise ‘clusters'. The final section, V, presents specific recommendations for subregional cooperation in the GMS to strengthen the capacity of SMEs to participate and upgrade in global value chains and networks, with a focus on initiatives where UNESCAP could potentially play an effective role.

Full paper available at http://www.unescap.org/tid/mtg/smesw_s2a.pdf [1]