tion". Since the presence of local producers was lacking, American, European and Japanese firms were invited to invest in Malaysia in order to serve the internal market by replacing imports with local production. The first manufacturing projects regarded labor-intensive assembly operations destined to the internal market for simple consumer goods (like radios or black & white television sets) and electronic parts (dry cells, batteries, cables and lamps). The real take off of the industry occurred during the first half of the 1970s, when Malaysian authorities introduced a package of incentives in order to attract foreign capitals in export oriented projects. A new strategy of industrial development based on “export-expansion” was started. Microelectronics industry (semiconductors, integrated circuits, transistors) was accurately selected and Malaysia rapidly became one of the world's top producers in this field.

Until the second half of the 1980s, the three sub-sectors of electronics industry performed rather differently. The pioneering investments of consumer electronics were generally from American or Japanese MNEs, also involved in the production of electrical appliances $ ^{33} $ . The main purpose of these projects was that of serving the internal needs, but the structure of the demand limited the opportunities for a fast development of this sub-sector: the level of the GNP per-capita was rather low and the size of the domestic market was small $ ^{34} $ .

Similarly, the production of industrial equipment goods started during the 1960s, followed the import-substitution strategy, and relied on foreign capitals. However, the economic environment of a country like Malaysia concentrated on the efforts to begin the process of industrialization did not offer the proper conditions for the internal production of industrial electronic goods to expand. Consequently, the scarce industrial demand accompanied by a lack of infrastructures and technological ability caused this sub-sector to remain much underdeveloped until recent years.

On the contrary, the sub-sector which since the beginning experienced a rapid growth (benefiting from the export oriented policy) is that of electronic parts and in particular that of microelectronics. Foreign presence is dominant and local firms are only scarcely present in the field of non-active components. The abundance of low-cost, docile labour force and the active promotion from the government attracted American firms first, followed by Japanese and European ones later. Since the establishment of the first assembly plant in Penang in the early 1970s, the production for the export of semiconductor has rapidly developed to become one of Malaysia's major industries within the manufacturing sector and a significant contributor to the whole country's economy, especially in terms of employment creation, GDP growth and foreign exchange earnings.

The industrial structure started to change after the second half of the 1980s, in the wake of the currencies revaluation and the induced inflow of FDI, especially from Japan and the NIEs. The new investment pattern was characterized by an increase of two types of projects: those destined to serve the domestic market $ ^{35} $ , and those from SMEs of Asian countries (especially Japan and Taiwan). The lacking of local electronics firms certainly facilitated the transfer of these production facilities from SMEs and in turn the dependency from foreign capitals and technology was reinforced. Malaysian authorities, have succeeded in providing good infrastructures and advantageous labor market conditions, but have in fact only recently started to give more attention to the local sourcing of parts and the development of