LOW-TECH COMPETITIVE ADVANTAGES AND THE ROLE OF PROXIMITY - THE DANISH WOODEN FURNITURE INDUSTRY

The prevailing ethos of high-tech production makes it easy to forget t hat low-tech industries are not synonymous with low growth or low prof itability. Even countries with some of the world's highest labour cost s have based their economies on an ability to be competitive in labour -intensive, low-tech production. Furniture production is an excellent example of a huge and successful export-oriented European low-tech ind ustry, which is mainly located where labour costs are highest. This ar ticle examines the peculiarities of the industry and highlights develo pment within a single country, Denmark. It is argued that intensified exposure to international competition has led to a trend towards spati al agglomeration within the industry. It is further suggested that the enhanced demand for proximity between furniture producers is not base d on utilizing the advantages of a geographical concentration of suppl iers or customers, but rather on the ease of communication and exchang e of knowledge when co-location gives rise to shared trust. Without th e access to such intangible, localized capabilities it appears to be d ifficult for firms in this low-tech industry to survive. Sustained com petitiveness and spatial proximity are thus closely interrelated.