East Asian Production Networks – The Role and Contribution of SMEs

The Asia-Pacific region generates over half of global economic activity (54.2%) and about 43.7% of global trade, and is the most dynamic region in the global economy. At the core of this is an increasingly dynamic, vibrant and entrepreneurial small-medium sized enterprise sector. Advances in information and communications technology, market liberalisation and moves towards closer regional economic integration (e.g. ASEAN, and prospective ASEAN+1, ASEAN+3, ASEAN+5 and ASEAN+6 arrangements) provide new opportunities, as well as new challenges, for regional small business entrepreneurs. In conjunction with these developments has come the increased recognition by regional governments, particularly in the wake of the 1997-98 financial and economic crisis, of the need for expanded entrepreneurial activity in the context of small businesses for the generation of regional income, employment, exports, investment, economic growth, poverty alleviation and regional development. This would also facilitate comprehensive restructuring of corporate sectors, with the aim of improving transparency, improving corporate governance, developing globally competitive enterprises, and further developing the region’s burgeoning and economically significant production networks. This paper reviews the contribution of small-medium sized business entrepreneurs in the Asia-Pacific region, the challenges and opportunities they face in the context of globalisation and regional developments, key capacity building areas, government support measures and potential competitiveness strategies for their survival and development.