Resource information
This report responds to a request by the
Government of Malaysia to examine how Malaysia can move up
the value chain in the solar and medical device industries.
Through the lens of long-term development, the overall
growth performance of the Malaysian economy has been a
resounding success story. The Commission on growth and
development listed Malaysia as one of only 13 countries that
registered sustained growth of 7 percent or more for a
period of 25 years or longer. Much of this growth occurred
on the back of a buoyant manufacturing sector, which was
spurred by Malaysia's export-led industrialization
model reliant on foreign direct investment (FDI).
Multinational firms favored the country for its geographical
location, political stability, reliable infrastructure,
elastic supply of low-cost labor and attractive incentives.
As a result of this success, Malaysia became the
region's third-most open economy to trade, with the
electrical and electronics (E&E) industry accounting at
its peak for approximately half of all trade. Moving up the
value chain concerns the process of shifting the productive
activity of a nation, an industry or a firm into those goods
and services that generate higher value added. Moving up the
value chain is a highly complex undertaking it requires a
fundamental reorientation towards innovation as the
fundamental driver of growth, supported by a healthy level
of investment in human and physical capital. This process
should not be confused with simply producing the same mix of
products more efficiently and neither should it be construed
as implying a shift in focus towards anything high-tech.
Moving up the value chain entails new, more complex, and
more skill-intensive activities in the manufacturing of
products; it requires conducting these at world-class
standards of quality, productivity and competitiveness; and,
as long as higher value is created, it does not matter
whether these final products are low-tech, medium-tech or
high-tech. This study is as much a process as a product.
This report is the outcome of the study. The report sets out
a conceptual framework, examines the global industry
context, analyzes Malaysia's position in the global
value chain, identifies industry opportunities and
bottlenecks, and suggests policy adjustments. This study is
however more than just a report. The study is also
accompanied by a process of capacity building to train
policymakers and industry participants in global value chain
analysis, so that this work can be updated, extended, and
replicated to other industries. The study also constitutes
an attempt to promote a novel way of thinking about
identifying and seizing value chain opportunities in ways
that emphasize bottom-up, decentralized, collaborative and
consultative approaches.
