Globalization and the Benefits of a Broad-based Approach to Postharvest Systems Development

The paper is organized in three parts. The first part argues that global trends tend to strengthen the importance of postharvest systems in many developing countries. The global changes are accompanied by the emergence of large domestic and international enterprises in economies previously dominated by small and medium enterprises. The second part argues that a broad-based approach to postharvest and agroindustry development may be more adequate than a large-enterprise model of development to respond to the challenges of rural poverty. The broad-based approach recognizes the scope for economies of scale in the long run, but it is also aware that in the short and medium term transaction costs, niche markets, intra-industry linkages might actually make small and medium enterprises more conducive to growth than large enterprises. The third part of the paper presents the case of the starch industry in Viet Nam, an industry largely characterized by small enterprises that have been able to grow and adapt to rapid change over the past decade. High transaction costs suggest a role for small and medium enterprises in a continuum of firm sizes that include large enterprises and multinational companies. Modeling work shows the employment and growth benefits of a broad-based approach that promotes small and medium enterprises.

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last updated: May 18, 2000