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Innovation and Small Enterprises in the Third World

Innovation and Small Enterprises in the Third World

New Horizons in the Economics of Innovation series

Edited by Meine Pieter van Dijk and Henry Sandee

Innovation is crucial for small enterprises to become and remain competitive in the global economy. In this book, the authors have combined theoretical insights with comprehensive case studies on innovation among small-scale enterprises in developing countries, paying particular attention to technological change in clusters of small firms.

Chapter 7: Innovation and Competitiveness within the Small Furniture Industry in Nicaragua

Mario Davide Parrilli

Subjects: development studies, development economics, economics and finance, development economics


Chapter 7 15/3/02 9:07 am Page 3 7. Innovation and competitiveness within the small furniture industry in Nicaragua Mario Davide Parrilli The importance of the furniture industry in Nicaragua is based on the country’s comparative advantages: abundant natural resources and cheap labour. In fact, Nicaragua is a tropical country with a huge timber potential, since the growth rate of forests is much higher than for the majority of timber producing countries (4.3 million hectares of forest in 1990: Marklund and Rodriguez, 1993). Some Nicaraguan towns have a long tradition of skilled craftwork, the basis for the competitiveness of this industry. The Central Bank (BCN, 1998) estimates that there are about 2000 small furniture firms. The comparative advantage gains further strength from the geographical and sectoral concentration of small firms, which has recently become a model of development on the basis of several successful experiences with territorial or cluster development. This chapter does not deal with the typical ‘successful’ case, as in many studies on clusters of small firms, rather it deals with an embryonic case. It does not represent the illustration of the elements that mainly spurred the evolution of a successful cluster; it rather acquires its relevance from being an analysis of one of the several unknown cases of potential development in developing countries. Indeed, it represents a very challenging task to participate in a process that will certainly take many more years, but which is a clear example of what development is not: an easy task. One...

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