[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/4971.html
   My bibliography  Save this paper

Can Malaysia escape the middle-income Trap ? a strategy for Penang

Author

Listed:
  • Yusuf , Shahid
  • Nabeshima, Kaoru
Abstract
How can Penang upgrade and diversify its economy? This paper addresses this question using a number of methodologies that have been developed for assessing competitiveness and identifying the direction of future industrial evolution. The results show that although Penang was successful in attracting foreign direct investment to the electronics industry, this has not translated into a deepening of industrial capabilities or the nurturing of innovation capacity in Penang. No large Malaysian firms in Penang have taken the lead in innovation and there is little new entry by local firms, despite incentives provided by local and national governments are generous. Universiti Sains Malaysia, the principal university in Penang, is contributing through provision of skills, and it is beginning to multiply university industry linkages. However, the university’s research activities are too limited and too diffuse to significantly initiate innovation by local industry. Under the current circumstances, and given its relatively small size, Penang will have to try much harder to strengthen its competitive advantage in its most important industry -electronics- through actions that build research capital. It will also have to increase its efforts to develop the potential of other value-adding activities, such as medical services and tourism. A strategy focused on localization economies is likely to be the most feasible option.

Suggested Citation

  • Yusuf , Shahid & Nabeshima, Kaoru, 2009. "Can Malaysia escape the middle-income Trap ? a strategy for Penang," Policy Research Working Paper Series 4971, The World Bank.
    • Handle: RePEc:wbk:wbrwps:4971
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2009/06/19/000158349_20090619092524/Rendered/PDF/WPS4971.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Berry, Christopher R. & Glaeser, Edward L., 2005. "Divergence of Human Capital Levels across Cities," Working Paper Series rwp05-057, Harvard University, John F. Kennedy School of Government.
    2. John M. Quigley, 2008. "Urbanization, Agglomeration, and Economic Development," World Bank Publications - Books, The World Bank Group, number 28042.
    3. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    4. Shahid Yusuf & Kaoru Nabeshima, 2007. "How Universities Promote Economic Growth," World Bank Publications - Books, The World Bank Group, number 6631.
    5. Rice, Patricia & Venables, Anthony J. & Patacchini, Eleonora, 2006. "Spatial determinants of productivity: Analysis for the regions of Great Britain," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 727-752, November.
    6. Allen J. Scott, 2009. "World Development Report 2009: reshaping economic geography," Journal of Economic Geography, Oxford University Press, vol. 9(4), pages 583-586, July.
    7. Kodama, Toshihiro, 2008. "The role of intermediation and absorptive capacity in facilitating university-industry linkages--An empirical study of TAMA in Japan," Research Policy, Elsevier, vol. 37(8), pages 1224-1240, September.
    8. Christopher R. Berry & Edward L. Glaeser, 2005. "The divergence of human capital levels across cities," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 407-444, August.
    9. Bruno Pottelsberghe de la Potterie, 2008. "Europe's R&D: Missing the Wrong Targets?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 43(4), pages 220-225, July.
    10. Wright, Mike & Clarysse, Bart & Lockett, Andy & Knockaert, Mirjam, 2008. "Mid-range universities' linkages with industry: Knowledge types and the role of intermediaries," Research Policy, Elsevier, vol. 37(8), pages 1205-1223, September.
    11. Overman, Henry G. & Venables, Anthony J., 2005. "Cities in the developing world," LSE Research Online Documents on Economics 19887, London School of Economics and Political Science, LSE Library.
    12. Christopher R. Berry & Edward L. Glaeser, 2005. "The Divergence of Human Capital Levels Across Cities," NBER Working Papers 11617, National Bureau of Economic Research, Inc.
    13. Au, Chun-Chung & Henderson, J. Vernon, 2006. "How migration restrictions limit agglomeration and productivity in China," Journal of Development Economics, Elsevier, vol. 80(2), pages 350-388, August.
    14. Richard Florida & Charlotta Mellander & Kevin Stolarick, 2008. "Inside the black box of regional development: human capital, the creative class and tolerance," Journal of Economic Geography, Oxford University Press, vol. 8(5), pages 615-649, September.
    15. Lall, Sanjaya & Weiss, John & Zhang, Jinkang, 2006. "The "sophistication" of exports: A new trade measure," World Development, Elsevier, vol. 34(2), pages 222-237, February.
    16. Fan, Peilei & Watanabe, Chihiro, 2006. "Promoting industrial development through technology policy: Lessons from Japan and China," Technology in Society, Elsevier, vol. 28(3), pages 303-320.
    17. Lall, Somik V. & Shalizi, Zmarak & Deichmann, Uwe, 2004. "Agglomeration economies and productivity in Indian industry," Journal of Development Economics, Elsevier, vol. 73(2), pages 643-673, April.
    18. Hiratsuka, Daisuke, 2006. "Outward FDI from and intraregional FDI in ASEAN : trends and drivers," IDE Discussion Papers 77, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    19. Kodama, Fumio & Suzuki, Jun, 2007. "How Japanese Companies have used Scientific Advances to Restructure their Businesses: The Receiver-Active National System of Innovation," World Development, Elsevier, vol. 35(6), pages 976-990, June.
    20. World Bank, 2005. "Malaysia : Firm Competitiveness, Investment Climate and Growth," World Bank Publications - Reports 8310, The World Bank Group.
    21. William J. Baumol, 2004. "Education for Innovation: Entrepreneurial Breakthroughs vs. Corporate Incremental Improvements," NBER Working Papers 10578, National Bureau of Economic Research, Inc.
    22. Shahid Yusuf & Kaoru Nabeshima & Shoichi Yamashita, 2008. "Growing Industrial Clusters in Asia : Serendipity and Science," World Bank Publications - Books, The World Bank Group, number 6429.
    23. Deichmann, Uwe & Kaiser, Kai & Lall, Somik V & Shalizi, Zmarak, 2005. "Agglomeration, transport, and regional development in Indonesia," Policy Research Working Paper Series 3477, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Prema-chandra Athukorala, 2011. "Growing with Global Production Sharing: The Tale of Penang Export Hub," Departmental Working Papers 2011-13, The Australian National University, Arndt-Corden Department of Economics.
    2. Amir Lebdioui & Keun Lee & Carlo Pietrobelli, 2021. "Local-foreign technology interface, resource-based development, and industrial policy: how Chile and Malaysia are escaping the middle-income trap," The Journal of Technology Transfer, Springer, vol. 46(3), pages 660-685, June.
    3. World Bank, 2010. "Ecuador : Diversification and Sustainable Growth in an Oil - Dependent Country," World Bank Publications - Reports 18503, The World Bank Group.
    4. Satoru Kumagai, 2015. "The Middle-Income Trap from the Viewpoint of Trade Structures: Are the Geese Trapped or Still Flying?," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 6(03), pages 1-23.
    5. Doraisami, Anita, 2015. "Has Malaysia really escaped the resource curse? A closer look at the political economy of oil revenue management and expenditures," Resources Policy, Elsevier, vol. 45(C), pages 98-108.
    6. Szunomár, Ágnes, 2019. "A digitális nagy ugrás. Lassulás és modernizációs stratégiaváltás Kínában [The great digital leap. Deceleration and a change in modernisation strategy in China]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1312-1346.
    7. Richard Harrison & William Scheela & P. C. Lai & Sivapalan Vivekarajah, 2018. "Beyond institutional voids and the middle-income trap: The emerging business angel market in Malaysia," Asia Pacific Journal of Management, Springer, vol. 35(4), pages 965-991, December.
    8. Rigg, Jonathan & Promphaking, Buapun & Le Mare, Ann, 2014. "Personalizing the Middle-Income Trap: An Inter-Generational Migrant View from Rural Thailand," World Development, Elsevier, vol. 59(C), pages 184-198.
    9. Linxiu Zhang & Hongmei Yi & Renfu Luo & Changfang Liu & Scott Rozelle, 2013. "The human capital roots of the middle income trap: the case of China," Agricultural Economics, International Association of Agricultural Economists, vol. 44(s1), pages 151-162, November.
    10. International Monetary Fund, 2015. "Republic of Estonia: Selected Issues," IMF Staff Country Reports 2015/337, International Monetary Fund.
    11. Wonkyu Shin & Keun Lee & Walter G. Park, 2016. "When an Importer's Protection of IPR Interacts with an Exporter's Level of Technology: Comparing the Impacts on the Exports of the North and South," The World Economy, Wiley Blackwell, vol. 39(6), pages 772-802, June.
    12. Lee, Keun, 2020. "Diverse Tools of Industrial Policy in Korea: A Schumpterian and Capability-based View," MPRA Paper 111035, University Library of Munich, Germany.
    13. Lee, Keun & Lee, Jongho & Lee, Juneyoung, 2021. "Variety of national innovation systems (NIS) and alternative pathways to growth beyond the middle-income stage: Balanced, imbalanced, catching-up, and trapped NIS," World Development, Elsevier, vol. 144(C).
    14. Lee, Keun & Kim, Byung-Yeon & Park, Young-Yoon & Sanidas, Elias, 2013. "Big businesses and economic growth: Identifying a binding constraint for growth with country panel analysis," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 561-582.
    15. Longfeng Ye & Peter E. Robertson, 2016. "On the Existence of a Middle-Income Trap," The Economic Record, The Economic Society of Australia, vol. 92(297), pages 173-189, June.
    16. Han, Junhee & Lee, Keun, 2022. "Heterogeneous technology and specialization for economic growth beyond the middle-income stage," Economic Modelling, Elsevier, vol. 112(C).
    17. Fernando Gabriel Im & David Rosenblatt, 2015. "Middle-Income Traps: A Conceptual and Empirical Survey," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 6(03), pages 1-39.
    18. Nabeshima, Kaoru & Kang, Byeongwoo & Kashcheeva, Mila, 2016. "Descriptive analysis of the knowledge network formation in East Asia," Technology in Society, Elsevier, vol. 47(C), pages 66-100.
    19. Khorasanizadeh, Hasti & Parkkinen, Jussi & Parthiban, Rajendran & David Moore, Joel, 2015. "Energy and economic benefits of LED adoption in Malaysia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 629-637.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shahid Yusuf & Kaoru Nabeshima, 2009. "Growth through Innovation : An Industrial Strategy for Shanghai," World Bank Publications - Reports 18613, The World Bank Group.
    2. Mealy, Penny & Farmer, J. Doyne & Hausmann, Ricardo, 2018. "Determining the Differences that Matter: Development and Divergence in US States over 1850-2010," Working Paper Series rwp18-030, Harvard University, John F. Kennedy School of Government.
    3. Jos� Lobo & Charlotta Mellander & Kevin Stolarick & Deborah Strumsky, 2014. "The Inventive, the Educated and the Creative: How Do They Affect Metropolitan Productivity?," Industry and Innovation, Taylor & Francis Journals, vol. 21(2), pages 155-177, February.
    4. Krenz, Astrid, 2016. "Agglomeration of knowledge in the German regional economy," University of Göttingen Working Papers in Economics 277, University of Goettingen, Department of Economics.
    5. Paula Prenzel & Simona Iammarino, 2018. "Ageing labour: How does demographic change affect regional human capital?," Papers in Evolutionary Economic Geography (PEEG) 1832, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Aug 2018.
    6. Haifeng Qian, 2013. "Diversity Versus Tolerance: The Social Drivers of Innovation and Entrepreneurship in US Cities," Urban Studies, Urban Studies Journal Limited, vol. 50(13), pages 2718-2735, October.
    7. Ylenia Brilli & Marco Tonello, 2015. "The contemporaneous effect of education on adolescent crime. Mechanisms and evidence from regional divides," CHILD Working Papers Series 41 JEL Classification: I2, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    8. Peter Mayerhofer & Oliver Fritz & Dieter Pennerstorfer, 2010. "Dritter Bericht zur internationalen Wettbewerbsfähigkeit Wiens," WIFO Studies, WIFO, number 42430, March.
    9. Aurélie LALANNE & Guillaume POUYANNE, 2012. "Ten years of metropolization in economics: a bibliometric approach (In French)," Cahiers du GREThA (2007-2019) 2012-11, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    10. Arntz, Melanie & Brüll, Eduard & Lipowski, Cäcilia, 2021. "Do preferences for urban amenities really differ by skill?," ZEW Discussion Papers 21-045, ZEW - Leibniz Centre for European Economic Research.
    11. Fabien Candau & Elisa Dienesch, 2015. "Spatial distribution of skills and regional trade integration," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(2), pages 451-488, March.
    12. Richard Florida & Charlotta Mellander & Kevin Stolarick, 2016. "Human capital in cities and suburbs," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 57(1), pages 91-123, July.
    13. Südekum, Jens, 2008. "Convergence of the skill composition across German regions," Regional Science and Urban Economics, Elsevier, vol. 38(2), pages 148-159, March.
    14. Winters, John V., 2011. "Human capital, higher education institutions, and quality of life," Regional Science and Urban Economics, Elsevier, vol. 41(5), pages 446-454, September.
    15. Paula Prenzel & Simona Iammarino, 2021. "Labor Force Aging and the Composition of Regional Human Capital," Economic Geography, Taylor & Francis Journals, vol. 97(2), pages 140-163, March.
    16. John V. Winters, 2013. "Human capital externalities and employment differences across metropolitan areas of the USA," Journal of Economic Geography, Oxford University Press, vol. 13(5), pages 799-822, September.
    17. Jose Maria Millan & Emilio Congregado & Concepcion Roman & Mirjam van Praag & Andre van Stel, 2011. "The Value of an Educated Population for an Individual's Entrepreneurship Success," Tinbergen Institute Discussion Papers 11-066/3, Tinbergen Institute, revised 06 May 2014.
    18. Filippo Berti Mecocci & Amir Maghssudipour & Marco Bellandi, 2022. "The effect of cultural and creative production on human capital: Evidence from European regions," Papers in Regional Science, Wiley Blackwell, vol. 101(6), pages 1263-1287, December.
    19. Xinxiang Chen & Guanghua Chi & Guangqing Chi, 2018. "Do Airports Boost Economic Development by Attracting Talent? An Empirical Investigation at the Subcounty Level," Social Science Quarterly, Southwestern Social Science Association, vol. 99(1), pages 313-329, March.
    20. Winters, John V., 2014. "STEM graduates, human capital externalities, and wages in the U.S," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 190-198.

    More about this item

    Keywords

    Technology Industry; Tertiary Education; E-Business; ICT Policy and Strategies; Agricultural Knowledge&Information Systems;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:4971. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.