Searching for Malaysia’s Unique Advantage: A Study on The Sustainability of National Competitive Advantage As A Global Services HubTools Yap, Huey Shan (2009) Searching for Malaysia’s Unique Advantage: A Study on The Sustainability of National Competitive Advantage As A Global Services Hub. [Dissertation (University of Nottingham only)] (Unpublished)
AbstractIn the journey to transform Malaysia from an export, distribution and industrial economy to a true knowledge based economy, the Malaysian Government has created the MSC high-tech zone and adopted an industry-cluster approach (agglomeration economics) to enable innovation and technological development in the country. The idea is to cultivate and gradually increase local enterprise R&D capacity and capability in collaboration with foreign MNC‟s, who are encouraged to invest in Malaysia through numerous economic incentives offered by the Malaysian Government. When faced with intense competition from lower cost industrial economies such as China and Vietnam, the Government realized that it has to rapidly move from a resource based economy to a knowledge based economy. The chief advocate of transformation to k-based society is Malaysia‟s former Prime Minister, Tun Dr. Mahathir Mohamad. In a speech in 2001, he stated “In our pursuit towards developing the K-economy, knowledge has to replace labour and capital as the key factors of production. The challenge for Malaysia is to develop this knowledge amongst our citizens so that our success will be due to the contributions of Malaysian talents and knowledge workers”. This study is based on the opinions of nine executives representing private firms and government agency. This is an attempt to examine the national competitive advantage of Malaysia to compete for medium and long term services foreign direct investment (FDI) specifically in the ICT and knowledge-base services industries. Presently, there are several major issues developing such as insufficient skilled/knowledge workers, inflation, and erosion of jobs and cost competitiveness to lower cost countries particularly Philippines and India. The skill pool in these areas in Malaysia needs to be continuously developed and nurtured or else growth and sustainability are at risk. A firm-level host locational determinants framework will be developed, with reference to AT Kearney and Worth Economic Forum‟s Global Competitiveness Report. The competitive advantage of Malaysia‟s offshore services industry will be examined using the Porter Diamond System. Other important ingredients to the creation of a nation‟s competitive advantage that will be examined in this study are the existence of agglomeration economies (clustering effects), reputation, capacity for innovation and entrepreneurial development “Nations, in an important sense, are either moving ahead or falling behind in the upgrading of competitive advantage. Standing still is difficult.” Michael Porter
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