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International Student Team

 

PhD student, Centre of Development Studies, Smuts Research Grant recipient

Industrial Policy and Global Value Chains: The Experience of Guangdong, China and Malaysia in the Electronics Sector

Industrial policy is firmly back on the agenda in developed countries, aiming to stem the trend of deindustrialization, find and support new growth areas, reduce environmental externalities and respond to the rise of BRICS. However, the rules of WTO and the increasing financial liberalisation have led to a different context for developing countries willing to pursue industrial policy today. Moreover, the internationalisation of the production system, captured by the term Global Value Chains (GVCs), has changed the picture, presenting unique opportunities but also challenges for developing country catch-up. Since this research project aims to understand the conditions of success for industrial policy in sectors with high GVC participation, the electronics sector in Guangdong (China) and Malaysia has been chosen as a case study.

In the two chosen case studies we see different trajectories. Electronics has been promoted with a number of initiatives over the years but the results have been mixed. We can see that even though the early large-scale foreign investments in Malaysia led to the creation of some domestic linkages and limited technology transfer, the domestic sector has not upgraded to the same extent as in early industrialisers such as Korea and Taiwan. Guangdong on the other hand, started from more humble beginnings and still lags behind other Chinese regions in high-tech components, but has gradually created some strong domestic brands, especially in consumer electronics and telecommunications.

What emerges from this research is that the rationale of GVC expansion does not always lead to predetermined outcomes for developing countries.

Understanding the Guangdong and Malaysian experience in depth can help us reach useful policy conclusions with relevance to current developing countries that attempt to embark on a GVC-oriented development strategy.

Impact of the funding received:

The funding received allowed me to conduct fieldwork in Malaysia over the course of two months, enabling me to gather qualitative and quantitative information that could substantiate one of the case studies I am concerned with in my PhD thesis. During this trip I was able to collect vital data, such as important archival information found at the Malaysian Investment Development Authority (MIDA), statistical data found in the Department of Statistics Archive not available online or for purchase, interviews with high ranking government officials and visits to firms.