ABSTRACT
Global production by transnational corporations (TNCs) has become a major driver of economic growth and trade expansion worldwide. TNCs are estimated to account for around two-thirds of total world trade and the world value of exports has doubled between 2000 and 2006, reflecting this deepening of global economic integration. Both endogenous and exogenous factors are involved in creating the pressures and opportunities for Indonesian furniture clusters to restructure. In order to examine those issues empirically, this chapter analyzes the case of the furniture cluster in the region around the town of Jepara, Central Java Province. This case study raises development questions regarding whether participation of developing country clusters in global production, especially clusters supplying to value chains with a quasi-hierarchical governance structure, can lead to a virtuous cycle where expanded production. SMEs are an important source of job creation in developing countries and frequently receive special policy attention.
