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Evaluating the Malaysian Export Processing Zones With special focus on the electronic industry

Author

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  • Mats Furby

    (Scholl of Economics, Lund)

Abstract

Export Processing Zones are geographical enclaves that have legally been excepted from the country´s normal customs barriers and other constraining legislations. Malaysia has used them to foster its manufacturing industries, particularly the electronic sector. They are intended to attract foreign exchange, create employment and increase exports. In a longer perspective they are also supposed to have indirect effects through the creation of backward linkages, transfer of knowledge and positive catalytic effects on the host country. The aim of this essay is to evaluate the EPZs’ impact on Malaysia and see if their objectives have been reached and what other effects they might have had. This essay is specifically focused on recent developments and what effect the increasing product fragmentation, the Asian crisis and the new regional free trade area (AFTA) have had on Malaysia and on the electronic industry in particular. This study shows that the EPZ has been a success when it comes to direct effects, but that the indirect effects are still relatively limited and concentrated to certain areas (Penang). It also concludes that the Malaysian EPZ will probably diminish in importance if the mentioned trend continues.

Suggested Citation

  • Mats Furby, 2005. "Evaluating the Malaysian Export Processing Zones With special focus on the electronic industry," International Trade 0510004, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpit:0510004
    Note: Type of Document - pdf; pages: 46
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/it/papers/0510/0510004.pdf
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    References listed on IDEAS

    as
    1. Miyagiwa, Kaz F., 1986. "A reconsideration of the welfare economics of a free-trade zone," Journal of International Economics, Elsevier, vol. 21(3-4), pages 337-350, November.
    2. Prema-chandra Athukorala, 2005. "Product Fragmentation and Trade Patterns in East Asia," Asian Economic Papers, MIT Press, vol. 4(3), pages 1-27, Fall.
    3. Jean-Pierre Cling & Gaëlle Letilly, 2001. "Export processing zones : A threatened instrument for global economy insertion ?," Working Papers DT/2001/17, DIAL (Développement, Institutions et Mondialisation).
    4. 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.
    5. Hamilton, Carl & E.O. Svensson, Lars, 1982. "On the welfare effects of a duty-free zone," Journal of International Economics, Elsevier, vol. 13(1-2), pages 45-64, August.
    6. repec:dau:papers:123456789/4582 is not listed on IDEAS
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    Cited by:

    1. Jongwanich, Juthathip & E. James, William & J. Minor, Peter & Greenbaum, Alexander, 2009. "Trade Structure and the Transmission of Economic Distress in the High-Income OECD Countries to Developing Asia," ADB Economics Working Paper Series 161, Asian Development Bank.

    More about this item

    Keywords

    Export Processing Zones; Malaysia; backward linkage; product fragmentation; export; catalytic effects; Asian crisis; electronic;

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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