Agglomeration effects versus policy effects: The case of the electronics industry in Malaysia

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Abstract

The present study analyses investments within the Malaysian electronics industry in 1991 to assess the effectiveness of development policy in light of strong agglomeration effects in the electronics industry. We find that agglomeration and the use of industrial estates as development policy have had positive effects on firms' location choice. However, agglomeration has a much larger effect than industrial estates. In addition, we find that the marginal effect of industrial estates is positively correlated with the degree of agglomeration. This suggests that improvement of problems of regional inequality by industry estates would be very difficult in reality.

Original languageEnglish
Pages (from-to)229-245
Number of pages17
JournalAsian Economic Journal
Volume16
Issue number3
Publication statusPublished - 2002 Sep
Externally publishedYes

Keywords

  • Agglomeration
  • Electronics industry
  • Industrial estates
  • Malaysia
  • Regional inequality

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development

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