SME Clusters for Spurring Growth

7 Pages Posted: 3 Oct 2014

Date Written: August 07, 2014


Michael Porter, father of the concept of 'industrial cluster', defined cluster as a 'geographic concentration of interconnected businesses and associated institutions in a particular field'. In this definition, we are getting three criteria of an industrial cluster. These are (a) a geographic concentration, (b) a group of interconnected business, (c) in a particular field. Besides this fundamental definition, industrial cluster could also be defined on the basis of common activities, single origin, size of business, used technology, and focused market or target market etc. Many countries define clusters based on different criteria. For example, 'One village, one product' or 'One town, one industry' concept is very popular in the East like Japan or China. India has defined cluster based on a particular number of similar production units in a specific geographical location. The United Nations Industrial Development Organisation (UNIDO) has described industrial cluster as a 'geographic and economic concentration of manufacturing activities which produce and sell a domain of interrelated and complementary products and having common problems and opportunities.'

For the first time in 2011-12 fiscal year, the Small and Medium Enterprise Foundation (SME Foundation) took an initiative to define SME Cluster in Bangladesh. After a thorough discussion with relevant stakeholders like the Bangladesh Bank, the Ministry of Industries, the Bangladesh Small and Cottage Industries Corporation, the Export Promotion Bureau, and the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), etc. the SME Foundation defined cluster as 'a concentration of enterprises producing similar products or services and is situated within an adjoining geographical location and having a common strengths, weaknesses, opportunities and threats.'

The key criteria selected to define a SME cluster are the following:

(i) Products or services should be similar or homogenous and related,

(ii) The enterprises must be production or service units which number at least 50 and above,

(iii) There must be adjoining geographical location and

(iv) The location may comprise several villages, wards, unions and industrial estates which might be scattered within an area of 3-5 kilometre radius.

Keywords: SME Cluster, Industrial Cluster, Cluster Development, SME Clusters in Bangladesh

Suggested Citation

Abdin, Md. Joynal, SME Clusters for Spurring Growth (August 07, 2014). Available at SSRN: or

Md. Joynal Abdin (Contact Author)

DCCI Business Institute (DBI) ( email )

DCCI Building (11th Floor), 65-66 Motijheel C/A
Dhaka, 1000

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