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New Industries in Southeast Asia’s Late Industrialization: Evolution versus Creation - The Automation Industry in Penang (Malaysia) considered

  • Leo van Grunsven

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    Discourse on industry development and policy practice in late industrialization countries in East and Southeast Asia has predominantly tended to relate the emergence of new industries to ‘creation’ by the state and thereby to the role of state intervention or involvement in industrial growth and restructuring. On the other hand the role and position of (local) entrepreneurship in the genesis of new industries has been rather neglected, as little room was perceived for ‘autonomous’ development. Southeast Asian late industrialization is currently being confronted with the limits of development and expansion of specific (FDI-driven) export industries and thus with the necessity to devise new growth paths in industry (on the basis of high tech industries). This compels a reconsideration of policy practice and perceptions of modes of industry development on which it is based. In this paper we argue that a state-orchestrated ‘creation’ of priority industries is not the only possible route to new high tech industries in Southeast Asian late industrialization. This emanates from an analysis - based on field research - of the emergence and development of a recent growth industry in Malaysia, i.e. the manufacturing of automated equipment (or, automation industry) and its constituent firms in the Penang region. The analysis demonstrates that the mode of development of this industry conforms rather well to a number of notions from evolutionary economics on firm genesis and development in new industries. This suggests that successful industrial policies can be based on supporting an evolutionary ‘birth and development’ path, i.e. industry genesis and evolution as a more or less autonomous incremental process of the development of firms and their capabilities.

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    File URL: http://econ.geo.uu.nl/peeg/peeg0611.pdf
    File Function: Version December 2006
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    Paper provided by Utrecht University, Section of Economic Geography in its series Papers in Evolutionary Economic Geography (PEEG) with number 0611.

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    Length: 22 pages
    Date of creation: Dec 2006
    Date of revision: Dec 2006
    Handle: RePEc:egu:wpaper:0611
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    1. Ron A. Boschma & Koen Frenken, 2006. "Why is economic geography not an evolutionary science? Towards an evolutionary economic geography," Journal of Economic Geography, Oxford University Press, vol. 6(3), pages 273-302, June.
    2. Michael S. Dahl & Christian Ø.R. Pedersen & Bent Dalum, 2003. "Entry by Spinoff in a High-tech Cluster," DRUID Working Papers 03-11, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    3. Uwe Cantner & Kristina Dreßler & Jens J. Krüger, 2006. "Firm survival in the German automobile industry," Empirica, Springer, vol. 33(1), pages 49-60, March.
    4. Steven Klepper, 2002. "The capabilities of new firms and the evolution of the US automobile industry," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 645-666, August.
    5. Rasiah, Rajah & Shari, Ishak, 2001. "Market, Government and Malaysia's New Economic Policy," Cambridge Journal of Economics, Oxford University Press, vol. 25(1), pages 57-78, January.
    6. Rasiah, Rajah, 2002. "Systemic Coordination and Human Capital Development: Knowledge Flows in Malaysia's MNC-Driven Electronics Clusters," UNU-INTECH Discussion Paper Series 07, United Nations University - INTECH.
    7. Tae Sung & Bo Carlsson, 2003. "The evolution of a technological system: the case of CNC machine tools in Korea," Journal of Evolutionary Economics, Springer, vol. 13(4), pages 435-460, October.
    8. Klepper, Steven, 2001. "Employee Startups in High-Tech Industries," Industrial and Corporate Change, Oxford University Press, vol. 10(3), pages 639-74, September.
    9. Kim, Linsu, 1999. "Building Technological Capability for Industrialization: Analytical Frameworks and Korea's Experience," Industrial and Corporate Change, Oxford University Press, vol. 8(1), pages 111-36, March.
    10. Ron A. Boschma & Rik Wenting, 2004. "The spatial evolution of the British automobile industry," Papers in Evolutionary Economic Geography (PEEG) 0504, Utrecht University, Section of Economic Geography, revised Aug 2004.
    11. Dieter Ernst, 1998. "Catching-Up, Crisis and Industrial Upgrading. Evolutionary Aspects of Technological Learning in Korea's Electronics Industry," DRUID Working Papers 98-16, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    12. Mathews, John A. & Cho, Dong-Sung, 1999. "Combinative capabilities and organizational learning in latecomer firms: the case of the Korean semiconductor industry," Journal of World Business, Elsevier, vol. 34(2), pages 139-156, July.
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