Promoting business linkages between large and small firms: The experience of the United Nations conference on trade and development

This chapter outlines the importance for small and medium-sized enterprises (SMEs) of participating in global value chains (GVCs) in developing countries as a vehicle to improve productivity and create employment. In practice, however, GVC participation is constrained by major challenges in terms of accessing finance, obtaining quality standard certifications and upgrading technology. The United Nations Conference on Trade and Development (UNCTAD) has developed business linkage programmes that are designed to upgrade and increase the capacity of SMEs by generating linkages between transnational corporations (TNCs) and SMEs. This chapter presents the characteristics of these programmes and those implemented in Argentina and Brazil, while also reflecting on the Mexican experience. The case studies show that such programmes can assist SMEs in upgrading production and increasing capacity, and can help TNCs establish a local supplier network, which leads to a win-win situation for all participants. However, programmes are only successful when policies designed to attract foreign direct investment (FDI) encourage TNCs to transfer technology and knowledge to domestic SMEs. Also, a critical mass of both TNCs and SMEs is required, along with a longterm commitment from all participants, as benefits are neither instant nor automatic.

Sustainable Development Goals:

Industry, Innovation and Infrastructure