Jornal de Socialômica

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Cluster Based SME Development: Could be an Effective Tool for Industrialization

Md. Joynal Abdin

There are 48 least developed countries (LDCs) in the world. Employment generation, poverty alleviation etc. are the common challenges facing by all the LDCs around the world. They have limitations in terms of technical, managerial, technological and financial resources to overcome the vicious circle of poverty. Industrialization could be a way forward to alleviate poverty in the LDCs. But to be industrialized all the above mentioned resources needs to be deployed adequately in time. But LDCs have limited access to those resources. The small and medium enterprises (SMEs) are the backbone of industrialization in every economy either it’s in developed countries or in least developed one. SMEs could be defined with different parameters in different countries. For example; in Bangladesh SMEs are defined as; “In manufacturing sector, small industry will be deemed to comprise enterprises with either the value (replacement cost) of fixed assets excluding land and building between Tk. 5 million and Tk.100 million, or with between 25 and 99 workers,” and medium industry will be deemed to comprise enterprises with either the value (replacement cost) of fixed assets excluding land and building between Tk. 100 million and Tk. 300 million, or with between 100 and 250 workers” (National Industrial Policy 2010, Bangladesh). India defined SMEs as, a small enterprise is an enterprise where the investment is more than Rs.25 lakh but does not exceed Rs. 5 crore; and a medium enterprise where investment is more than Rs.5 crore but does not exceed Rs.10 crore (MSMED Act. 2006, India).