Can SMEs participate in global production networks?

This paper examines factors influencing the participation of small and medium enterprises (SMEs) in the Association of Southeast Asian Nations (ASEAN) economies in global production networks. SMEs – which are seen as the backbone of employment and poverty reduction in ASEAN economies – have returned to the spotlight with expanding global production networks in East Asia. Greater SME participation in global production networks through closer linkages with multinational corporations (MNCs) and direct exports can be a potent means of accelerating technology transfer, spillovers and economic development (Hobday, 2001; Lim and Kimura, 2010). Facing a fragile world growth outlook, the ASEAN and East Asia Summits in 2011 have emphasized SMEs as a vehicle for increasing intra-regional trade, rebalancing towards domestic and regional demand and inclusive growth in Asia.