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Agglomeration Effects versus Policy Effects: The Case of the Electronics Industry in Malaysia
Author(s) -
Togo Ken,
Arikawa Yasuhiro
Publication year - 2002
Publication title -
asian economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.345
H-Index - 28
eISSN - 1467-8381
pISSN - 1351-3958
DOI - 10.1111/1467-8381.t01-1-00150
Subject(s) - economies of agglomeration , economics , urban agglomeration , industrial policy , economic geography , electronics , industrial organization , manufacturing , business , international trade , economic growth , engineering , marketing , electrical engineering
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 nd that agglomeration and the use of industrial estates as development policy have had positive effects on rms’ location choice. However, agglomeration has a much larger effect than industrial estates. In addition, we nd 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 difcult in reality.