Role of SME Clusters in Bangladesh Economy

5 Pages Posted: 11 Apr 2018

Date Written: March 29, 2018


Michael Porter, father of the industrial cluster concept 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 geographic concentration, group of interconnected business and a particular field. Beside this fundamental definition industrial cluster could be defined based on common activities, single origin, size of the business, used technology, and focused market or target market etc. Countries like Japan or China define clusters based on different criteria for example “One village, one product” or “one town, one industry” and this notion is quite popular in the region. India define cluster based on a particular number of similar production units in a specific geographical location. The United Nations Industrial Development Organisation (UNIDO) defines 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”. There was no official definition of industrial cluster in Bangladesh. For the first time in 2011-12 fiscal years the Small and Medium Enterprise Foundation (SME Foundation) took initiative to define SME Cluster in Bangladesh. After a thorough discussion with relevant stakeholders like the Bangladesh Bank, Ministry of Industries, Bangladesh Small and Cottage Industries Corporation, Export Promotion Bureau, and the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), SME Foundation defined cluster as “A cluster is a concentration of enterprises producing similar products or services and is situated within an adjoining geographical location and having common strengths, weaknesses, opportunities and threats”. Key criteria selected to define a SME cluster are; products or services should be similar or homogenous and related, enterprises must be production or service units, At least 50 and above production units, adjoining geographical location: several villages, wards, unions and industrial estates, scattered within an area of 3-5 kilometre radius.

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

JEL Classification: O14

Suggested Citation

Abdin, Md. Joynal, Role of SME Clusters in Bangladesh Economy (March 29, 2018). Available at SSRN:

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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