ABSTRACT
Industrial structures across the world are undergoing significant changes. The participation of developing countries in global manufacturing and exports shows a decisive rise, although the share of trade in manufacturing is increasing much faster than the growing share in output. Moreover, there is a growing trend in specializing in specific tasks within the production process and developing countries can enter into the global markets without necessarily producing the whole of the product. The fact being that the production of a relatively capital intensive good can be broken down into parts that might involve a labor intensive operation and require low skills. This provides an opportunity for developing countries to enter into the global value chain and take part, even in producing a relatively capital intensive product. Scale and specialization bottlenecks that primarily emerge because of limited domestic market could also be released to a great extent, as expected, through globalization. However the opening up of economic barriers and exposure to global markets does not necessarily instruct a larger scale of operation. The ‘small’ once again assumes importance primarily because of the change in technology, as well as changes in perceived demand. The frequency of changes in demand has increased to a great extent: tastes nowadays are more in favor of customized goods in place of standardized products, resulting in considerable curtailment of product life cycles. On the other hand fixed costs have been drastically reduced by increasing the use of malleable technologies, particularly machines capable of doing multiple tasks. As a result the functional durability of machines has increased, thereby reducing average costs to a large extent. In a Fordist structure average costs can be reduced only by mass production. However by increasing the use of flexible technologies average costs can be brought down at a relatively much lower scale of operation. The moments of competition have also changed. In other words producing only at a lower cost was not very successful, what has become important is responding to the customized needs of consumers at the lowest possible price. Furthermore with the rise in the relative scarcity of tacit knowledge and with the increasing need of transforming knowledge output into commercial products the critical input of entrepreneurship and the notion of autonomy in the work process assume greater importance. Such an ensemble of multidimensional changes favors a flexible production organization distinctly different from the authoritarian command structures compatible to Fordist large industries. To be precise these are considered to be the emerging trends that constitute the dominant narrative on the rise of small enterprise clusters.
