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EGM on the Implementation Strategy for the Accelerated Industrial Development of Africa Addis Ababa, October 4 to 7, 2

06/10/2011. Outline. What does sustainable industrialization mean and how industry contributes to it?What are the global transformations which influence the dynamics of sustainable industrialization and what is the new role of SMES?Why a strategy of integration in global value chains can help SME clusters to grow and innovate and how can they do it?Why and how the innovation system plays a key role in supporting the innovation strategy of SME Clusters?.

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EGM on the Implementation Strategy for the Accelerated Industrial Development of Africa Addis Ababa, October 4 to 7, 2

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    1. 06/10/2011 EGM on the Implementation Strategy for the Accelerated Industrial Development of Africa Addis Ababa, October 4 to 7, 2010 Strategy for sustainable industrialization: local development of innovative sme clusters in global industries Presentation by Frederic Richard, AFIDE Expert and former UNIDO Director

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    3. 06/10/2011 Sustainable industrialization Sustainable industrialisation is a long-term process of transformation towards a desired vision of an industrialised economy that contributes to wealth creation, social development and environmental sustainability.

    4. 06/10/2011 Industry: engine of transformation of an economy Applying technological progress Driving and diffusing innovation Developing new skills and attitudes Stimulating modern services Internationalizing economies

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    6. 06/10/2011 The Sustainable Industrialization Triangle

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    8. 06/10/2011 The sustainable industrialization process: The High Road to compete

    9. 06/10/2011 Global transformations The on-going and important global transformations strongly affect the dynamics of sustainable industrialization in developing countries and provide new challenges and opportunities for firms and in particular for SMEs to compete and innovate.

    10. 06/10/2011 Global trends and issues

    11. 06/10/2011 Global transformations of industry Globalization of product markets and research characterized by complexity, uncertainties and changes. New and difficult challenges for sustainable industrialization: environment, social issues, poverty. key factors of success : price, innovation, quality, flexibility, understanding and addressing local markets New managerial and organizational processes and systems to design, produce and distribute products New concept of industry: not only production but also design,, marketing, distribution and recycling Globalization of value chains governed by MNCs and localization of the segments in specialized and localized clusters of firms which offer unique competitive advantages. Rapid transformations of the world industrial map with the emergence of new and dynamic industrial centers in developing countries.

    12. 06/10/2011 New role of SMES in a globalizing industry On the one hand, SMEs are well adapted to the new conditions of competition: flexibility, innovation and strong presence in and understanding of local markets. On the other hand, they are isolated from and have limited understanding of the opportunities and challenges of globalization. These weaknesses are particularly important in developing countries The policy challenge for developing and in particular African countries is not to protect them from global competition but to help entrepreneurs and small companies to address the challenges and opportunities by improving their links to global value chains and to improve their access to information, technology, finance and skills.

    13. 06/10/2011 Innovation strategies of SME clusters in Global Value Chains The industrial success of developing countries in particular in Asia and now in other regions as well, including Africa, is based on the links between local industrial clusters and global value chains and in the capability of the local firms to innovate and up-grade their capabilities by networking and learning with the global corporations and the other clusters of the global network. A key factor of this industrial success is the support to this process provided by an innovation system of technical and financial institutions.

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    17. 06/10/2011 Governance of Global Value Chains

    18. 06/10/2011 SME Clusters in developing countries Clustering of firms is an old phenomenon in developed and also in developing countries. Clusters of enterprises exist in all types of industries. In developing countries, industrial clusters develop usually in Resource Based and Low Technology industries but increasingly in Medium and also in High Tech industries as part of global value chains. Contrary to what certain economists predicted, “location matters” under the new conditions of globalization. Localized clusters are becoming key industrial units/systems in the organization of global value chains and networks . They are centers of specialized production and innovation. The concept of sme clusters might be misleading as all clusters include small and large enterprises. What is important is the relationships between the small and large firms within the cluster and with the global value chain and between the small firms and the technical and financial institutions. SMEs have limited market power and resources. The main policy challenge is how to improve their access to information and resources and their links in Global Value Chains.

    19. 06/10/2011 How Global Value Chains affect the innovation process of SME clusters Better understanding the profitability and value added of the different segments Facilitate market access Fast track to acquisition of technological capabilities

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    22. 06/10/2011 Example of an innovation path

    23. 06/10/2011 The innovation system The Innovation system plays a key role in supporting the process of innovation of SME Clusters in global value chains and in particular the Linking, Leveraging and Learning Strategy (LLL).

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    25. Framework conditions Quality and stability of the political system Reliable and efficient legal system Macroeconomic stability Trade, investment and competition policies Tax system and business regulations

    26. 06/10/2011 Support systems for Resources and Capabilities Utilities, Infrastructure and logistics Human resources and education/training Technological development and Research, Entrepreneurship and Business Development Services Financial resources and institutions Information on markets and industries Product , labour and environmental standards

    27. 06/10/2011 Support systems for Global Linkages Attracting foreign investment promoting exports Developing partnerships with global buyers Acquisition of technology Identifying foreign suppliers of capital goods

    28. 06/10/2011 Next Presentation

    29. 06/10/2011 Thank you for your attention

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