Silviase/jgov_v1.4_full_ann huggingface dataset:
d) length of the product cycle, would however require a different classification. In particular, Household electrical appliances, consumer electronic goods and some not particularly high-technology intensive products otherwise classified as industrial equipment goods (like telephone machines or copiers) should be included in a wider “electrical and electronics equipment” industry; industrial equipment goods be divided into the “computer” and the “telecommunication” industry and finally the sub-sector of electronic parts be separated in order to identify the “microelectronics” industry and the more fragmented, low technology-intensive “electronic components” industry.

Although data availability for international comparison limits the observation to the sub-sector composition as in figure 2.1, when referring to its peculiar characteristics and to the transmission of the industrial development process, the electronics industry (though still in broad terms) should be more properly analysed according to its sub-industry composition as in the following scheme :

Sub-Sectors:	Sub-Industries:
a) Household Electrical Appliances	->	1. Electrical and
b) Consumer Electronic Goods	Electronics Equipment
c) Industrial Equipment Goods	->	2. Computer
->	3. Telecommunication
d) Electronic Parts	->	4. Microelectronics
5. Electronic components

## Characteristics

The electronics industry, as previously defined, covers a wide spectrum of products whose economic characteristics are not easily treatable as homogeneous. However, accepting a certain loss in consistency for the purpose of generalization and differentiation from the other manufacturing activities, some basic and very important peculiarities can be underlined.

1) A first main characteristic of the electronics industry is the very high degree of technology intensity required in production and the rapid pace of technological change occurring through innovation. This is especially true for microelectronics, computer and telecommunication industries, whose research and innovation activities are one of the most dynamic sources of the overall technological development and originate spillovers which greatly benefit all the sectors of the economy. Furthermore, the need of huge investments in R&D imposes big dimensions for the firms involved in these production activities. Large dimensions is a condition also forced by the presence of economies of scale, like in the case of electrical and electronics equipment, where huge plants and expensive machinery are required to reach the mass production size. Small and medium enterprises (SMEs) usually manage the production of intermediate goods, in particular electronic components, where the process is more labor-intensive, less sophisticated and requires fewer investments. Moreover, firms of medium sizes are frequently present in some specialized operations of the computer
FIGURE 2.1 Composition of Japanese Electrical and Electronics Industry (Sub-sectors and Main Products)

1) HOUSEHOLD ELECTRICAL APPLIANCES (*)
- Refrigerators
- Washing machines
- Electric fans
- Microwave ovens
2) CONSUMER ELECTRONIC GOODS (**)
- Radios	- Stereos
- Television sets	- Car stereos
- VTRs	- Video cameras
- Tape recorders	- CD players
3) INDUSTRIAL EQUIPMENT GOODS (**)
- Computers	- Telephones
- Calculators	- Communications systems
- Copiers	- Electrical measuring instruments
4) ELECTRONIC PARTS (**)
(Components)	(Active parts)
- Resistors	- Semiconductors
- Connectors	- Integrated circuits
- Acoustic components	- Transistors
- Motor and machine parts	- Cathodic ray tubes
- Modifiers
- Switches
Definitions:
ELECTRICAL AND ELECTRONICS INDUSTRY	(1+2+3+4)
ELECTRONICS INDUSTRY	(2+3+4)
HOME APPLIANCES	(1+2)

Japan’s Association for Electrical Home Appliances $ (*) $

Electronics Industry Association of Japan ( $ ^{*} $ )
(SITC 382) (1975 - 1980 - 1985 - 2000 $ ^{*} $ ) (percentage)

Manufacturing Output	GDP
1975	1980	1985	2000 $ ^{*} $	1975	1980	1985	2000 $ ^{*} $
USA	8.1	9.7	11.1	15.0	1.8	2.2	2.5	3.3
JAPAN	9.3	11.5	17.5	22.0	2.3	3.5	6.2	7.0
S.KOREA	9.7	8.1	12.0	25.0	2.1	2.3	3.6	7.0
TAIWAN	NA	11.6	14.6	20.5	NA	4.8	6.1	7.0

Note: Adapted from L. Richard “The International Electronics Industry”,1990

$ ^{*} $ Forecasts by Line Richard

Source: Unido, Industry and Development, “Global Report, 1987”

TABLE 2.2 TREND OF JAPANESE ELECTRONICS INDUSTRY

(1965-1988) - Billion US$

1965	1970	1975	1980	1985	1988
Production	(S)	2.4	9.4	14.6	39.7	77.8	165.3
Export	(X)	0.6	2.4	6.7	20.1	40.6	70.9
Import	(M)	0.1	0.6	1.1	3.1	4.3	9.8
Int.Demand	(D)	1.9	7.6	9.3	22.7	41.5	104.2
growth %
Production	(S)	291.7	55.3	171.9	96.0	112.5
Export	(X)	75.0	215.0	200.0	102.0	74.6
Import	(M)	500.0	45.5	181.8	38.7	127.9
Int.Demand	(D)	300.0	22.4	144.1	82.8	151.1
Ratios
X/S	0.25	0.26	0.46	0.51	0.52	0.43
M/D	0.05	0.08	0.12	0.14	0.10	0.09

Source: Adapted from EIAJ “A perspective on the Japanese Electronics Industry, 1990”
TABLE 3.1 REGIONAL CONTRIBUTION TO THE COMBINED OUTPUT OF ELECTRONICS INDUSTRY

(1988) - percentages

JAPAN	E.ASIA	USA	EUROPE	TOTAL
Consumer Electronics	54.4	17.9	7.8	19.9	100.0
Industrial Equipment	22.1	4.7	41.6	31.6	100.0
Electronic Parts	37.9	10.6	33.9	17.6	100.0
Total Electronics	35.9	7.7	29.8	26.6	100.0

Note: E.Asia = NIEs + ASEAN4

Source: EIAJ “Facts and figures on the Japanese Electronics Industry 1989”

### TABLE 3.2 JAPAN : SHARE OF ELECTRICAL MACHINERY ON MANUFACTURING INDUSTRY

Some Major Indicators (1989)

TOTAL MANUFACTURING	ELECTRICAL MACHINERY	SHARE (%)
Number of Facilities	421,479	35,005
Employment	10,960,000	1,918,000
FDI Stock (51-89 - US$ Mil.)	66,127	14,676
Production (US$ Bil.) (*)	540.2	165.3
Exports (US$ Bil.) (*)	205.5	70.9

Note: $ (*) $ = 1988

Source: Adapted from B. Yamada “International Strategies for Japanese Electronics Companies. Implications for Asian NIEs”, 1990 - and EIAJ “A perspective on the Japanese Electronics Industry, 1990”
### TABLE 3.3 PERFORMANCE OF JAPANESE ELECTRONICS INDUSTRY

Internal Production, Exports, Imports, Domestic Demand Billion Yen - (1981, 1985, 1990)

1981(%)	1985(%)	1990(%)
BIL.Yen
PRODUCTION
Consumer Goods	3,669	33.9	4,912
Industrial Goods	3,817	35.3	7,614
Electronic parts	3,333	30.8	6,027
Total	10,819	100.0	18,553

EXPORTS
Consumer Goods	2,600	45.8	3,805
Industrial Goods	1,344	23.7	2,919
Electronic parts	1,729	30.5	2,971
Total	5,673	100.0	9,695

IMPORTS
Consumer Goods	33	4.7	24
Industrial Goods	274	38.8	398
Electronic parts	398	56.5	613
Total	705	100.0	1,035

DOMESTIC DEMAND
Consumer Goods	1,102	18.9	1,131
Industrial Goods	2,747	46.9	5,093
Electronic parts	2,002	34.2	3,669
Total	5,851	100.0	9,893

Note: Domestic Demand is obtained by the sum of Internal Production and Imports, less Exports Source: EIAJ “A perspective on the Japanese Electronics Industry, 1990”
### TABLE 3.4 JAPANESE ELECTRONICS INDUSTRY : OVERSEAS PRODUCTION FACILITIES

Sub-sectorial, Regional, Time distribution - N. of firms established abroad

A)
NIEs	ASEAN4	OTHER	TOT.ASIA	EUROPE	N.AMERICA	OTHER	TOTAL
Cons. Goods	12	7	-	19	4	4	7	34
Ind. Goods	7	-	-	7	2	6	2	17
Elect. Parts	25	1	-	26	3	6	2	37
TOTAL	39	7	-	46	7	13	9	75
B)
NIEs	ASEAN4	OTHER	TOT.ASIA	EUROPE	N.AMERICA	OTHER	TOTAL
Cons. Goods	24	16	10	50	21	23	14	108
Ind. Goods	19	4	2	25	7	18	5	55
Elect. Parts	112	23	7	142	23	33	14	212
TOTAL	144	41	14	199	47	70	31	347
C)
NIEs	ASEAN4	OTHER	TOT.ASIA	EUROPE	N.AMERICA	OTHER	TOTAL
Cons. Goods	8	32	3	43	20	18	1	82
Ind. Goods	8	12	10	30	23	20	1	74
Elect. Parts	47	74	15	136	27	38	2	203
TOTAL	65	112	26	204	67	73	4	348
D)
NIEs	ASEAN4	OTHER	TOT.ASIA	EUROPE	N.AMERICA	OTHER	TOTAL
Cons. Goods	44	55	13	112	45	45	22	224
Ind. Goods	34	16	12	62	32	44	8	146
Elect. Parts	182	98	22	304	53	77	18	452
TOTAL	248	160	41	449	121	156	44	770

Source: Adapted from EIAJ “'90 Kaigai Houjin Risuto", 1991
### TABLE 3.5 JAPANESE DIRECT INVESTMENTS IN MALAYSIA : MANUFACTURING SECTOR AND ELECTRICAL MACHINERY INDUSTRY

Projects Approved - Thousand Ringgits - 1986-1990

1986	1987	1988	1989	1990
TOTAL
MANUFACTURING SECTOR
Number of Projects	45	54	82	127
Called-up Capital	58,065	230,848	561,105	1,065,343
Total Investment	116,303	715,139	1,221,976	2,690,367
ELECTRICAL MACHINERY INDUSTRY
Number of Projects	15	24	31	43
Called-up Capital	16,569	116,982	362,535	468,106
Total Investment	31,093	393,291	669,878	1,146,867

Source: MIDA and JETRO, Kuala Lumpur
### TABLE 3.6(A) PRODUCTION FACILITIES OF JAPANESE ELECTRONICS INDUSTRY IN MALAYSIA

Sectors Classification - Number of firms established until 1990

Malaysia	ASEAN4	Tot.ASIA	TOTAL
Televisions	8	20	33
VTRs and Telecameras	7	7	12
Radios (no Car radios)	4	6	13
Headphone systems	4	7	13
Radio Cassettes	4	8	22
Stereos	7	9	28
CD Players	3	3	17
HiFi Speaker Systems	-	-	1
Car Audio Systems	5	6	15
Other Telecommunications	5	6	23
Microwave ovens	-	1	4
Electric Fans	2	12	15
Refrigerators	3	14	18
Washing Machines	2	9	12
Air Conditioners	4	12	19
Compressors	2	3	6
Others	8	28	54
CONSUMER GOODS	30	59	112
Telephones (incl. Cordless)	2	4	16
Car Telephones	-	-	1
Pocket Bells	-	1	3
Facsimile	-	1	3
Other Communic. Apparatus	1	3	8
Personal Computers	-	-	1
Computers (main frame)	-	-	3
Computers (memories)	1	1	4
Computers (printers)	-	-	4
Other Calcul. Machines	1	3	13
Electronic Measurement Machinery	-	3	12
Electronic Calculators	-	-	5
Copiers	-	-	1
Other Office Machinery	-	-	1
INDUSTRIAL GOODS	5	16	62

(continued)
### TABLE 3.6(B) PRODUCTION FACILITIES OF JAPANESE ELECTRONICS INDUSTRY IN MALAYSIA

Sectors Classification - Number of firms established until 1990

Malaysia	ASEAN4	Tot.ASIA	TOTAL
Resistors	7	10	31
Accumulators	5	10	50
Transformers	14	18	60
Sound Machinery	1	3	20
Magnetic Heads	4	6	22
Small Size Motors	8	11	31
Connectors	4	5	20
Switches	10	14	41
Small Mechanisms Parts	9	9	30
Complex Parts	10	14	45
Magnetic Record. Machinery	-	-	1
Other Components	11	21	43
Semiconductors	5	10	25
Integrated Circuits	5	7	21
Cathodic Ray Tubes	-	1	5
Other Active Parts	3	5	14
ELECTRONIC PARTS	64	98	304
TOTAL ELECTRONICS INDUSTRY	94	160	449

Note: A single production facility may be involved in more than one category, so the total does not necessarily equal the sum of the items

Source: Adapted from EIAJ “'90 Kaigai Houjin Risuto", 1991
of domestic competitors. However, this last factor is ineffective in Malaysia, as local electronics firms are very few in number and size and cannot afford to compete with the Japanese ones, especially in terms of the standards required by the MNEs.

The trade pattern followed by the SMEs usually varies according to the time length of their overseas presence. During the first years, almost 100% of parts are imported from Japan and 100% of sales are exported, principally to Japan. However, as time goes by and they get more accustomed to work overseas, they may eventually increase the share of parts locally sourced and of those provided by the other Asian Pacific countries $ ^{31} $ .

In conclusion, the process of industrial transfer occurring by Japanese electronics firms in Malaysia can be summarized according to size (MNEs, SMEs), sub-industry (consumer goods, industrial goods, electronic parts) and output market (Export, Internal) into the following five types :

## Until 1985 :

1) MNEs - consumer goods - internal market

2) MNEs - electronic parts - export market

1986 - 1990 :

3) MNEs - consumer goods - export market

4) MNEs - industrial goods - export market

5) SMEs - electronic parts - export market

As previously observed, despite the growth of the internal Malaysian market, the concentration on export markets occurred after 1985 is due from the one hand to the privileges accorded to the export-oriented projects by the investment incentives packages and from the other hand to the initial export orientation to Japan of SMEs' output. As these two conditions will change, the share of the internal market on the sales destination will tend to increase.

Finally, table 3.7 presents some indicators about procurements and sales of Japanese affiliates in Malaysia, obtained from a survey conducted in 1990 by JETRO Kuala Lumpur and the Embassy of Japan in Malaysia. According to these results, during the period 1987-1989 the value of production for electrical and electronics (E&E) industry increased about 2.5 times in value (from 1,835 to 4,671 million ringgits) and from 51.5% to 55.8% as a share of the manufacturing sector. Such a trend underlines that the process of industrial transfer from Japan is concentrated in electronics. As previously discussed, the relocation of the MNEs' production system offers increasing opportunities for local sourcing of parts, but due to the scarce presence of Malaysian firms and their low quality standards, Japanese SMEs are able to maintain a high position inside the network of the MNEs. In fact, data show that the share of local procurements supplied by Japanese affiliates is increasing. The number of Japanese subcontractors grew more than five times during the three years observed, from 78 in 1987 to 406 in 1989 and the share of local procurements supplied by Japanese firms increased from 18.8% to 23.8% $ ^{32} $ . Furthermore, imports from Japan increased more than two times during the three years observed (from 698 to 1,518 million ringgits). With regard to sales, the share of output destined to exports increased from 79.7% in 1987 to 83.1% in 1989 and consequently
### TABLE 3.7 INDICATORS OF JAPANESE AFFILIATES' LOCAL PRODUCTION IN MALAYSIAN ELECTRICAL AND ELECTRONICS INDUSTRY (E&E)

Million Ringgits (1987-1989)

1987	1988	1989
ALL SECTORS
Value of Production	3,562	5,637	8,365
Local Procurements	700	1,236	1,981
E&E INDUSTRY
Value of Production	1,835	2,982	4,671
Domestic sales	373	518	788
Exports	1,462	2,464	3,883
Exports to Japan	239	490	592
“ to USA	41	142	271
“ to Singapore	222	417	540
Import from Japan	698	1,070	1,518
Import from Singapore	251	359	679
Local Procurements	546	901	1,519

Local Procurement/Production (all sectors)	19.6	21.9	23.7
Production E&E/Production (all sectors)	51.5	52.9	55.8
Local Procurements E&E/Production E&E	29.8	30.2	32.5
Domestic sales E&E/Production E&E	20.3	17.4	16.9
Exports E&E/Production E&E	79.7	82.6	83.1

% Composition of Local Procurements by nationality of suppliers
TOTAL	100.0	100.0	100.0
Local	45.2	49.7	44.5
Japan	18.8	15.9	23.8
Usa + Europe	21.2	29.4	21.9
Other ASEAN	10.2	3.2	7.0
NIEs	4.6	1.8	2.8
Number of Subcontractors
TOTAL	400	733	1,214
Local companies	299	433	675
Japanese Affiliates	78	163	406
USA + Europe	11	17	25
Other ASEAN	12	16	21
NIEs	10	108	93

Source: Adapted by the author on the basis of surveys by JETRO Kuala Lumpur and Embassy of Japan in Malaysia, March 1990
### TABLE 3.8 JAPANESE TRADE OF ELECTRONICS INDUSTRY

Sub-sectors, Regions - 1990 - Million yen

ASIA (%)	EUROPE (%)	N.AMERICA (%)	TOTAL (%)
EXPORTS
Consumer goods	590278	5.4	930452	8.5	937971	8.6	2617798	23.9
Industrial goods	588563	5.4	1146678	10.5	1510968	13.8	3442747	31.5
Electronic parts	1824817	16.7	1163481	10.6	1697082	15.4	4879772	44.6
TOTAL	3003658	27.5	3240611	29.6	4140038	37.8	10940316	100.0
IMPORTS
Consumer goods	91615	4.5	9332	0.4	11968	0.6	130090	5.5
Industrial goods	113421	5.6	75407	3.7	479245	23.5	692421	34.0
Electronic parts	445236	21.8	101595	5.0	671917	33.0	1233011	60.5
TOTAL	650273	31.9	186334	9.1	1163129	57.1	2038522	100.0
Trade Balance (Exp-Imp)	2353385	3054277	2976909	8901794

Source: Ministry of Finance of Japan, Trade Statistics
### TABLE 3.9 MALAYSIAN TRADE FIGURES :

TOTAL TRADE AND TRADE WITH JAPAN - ALL SECTORS AND SITC-7 Million Ringgits

1965	1970	1975	1980	1985	1990
TOTAL TRADE
EXPORTS	3,783	5,163	9,231	28,172	38,017	79,549
IMPORTS	3,356	4,288	8,530	23,451	30,438	79,120
TRADE BALANCE	427	875	701	4,631	7,579	429
TRADE OF SITC-7
EXPORTS	64	83	572	3,240	7,071	28,717
IMPORTS	728	1,196	2,722	9,099	13,271	39,876
TRADE BALANCE	-664	-1,113	-2,150	-5,859	-6,200	-11,159
TRADE WITH JAPAN:
(Total)	1980	1985	1988	1990	90/80
EXPORTS	6,423	9,276	9,347	12,184	1.9
IMPORTS	5,365	7,006	10,153	19,079	3.6
TRADE BALANCE	1,085	2,270	-806	-6,895
(SITC-7)	1980	1985	1988	1990	90/80
EXPORTS	149	473	915	2,269	15.2
IMPORTS	3,149	4,379	6,406	12,825	4.1
TRADE BALANCE	-3,045	-3,906	-5,491	-10,556

Source: MIDA and JETRO, Kuala Lumpur
### TABLE 3.10 JAPANESE TRADE FIGURES : TRADE FLOW WITH MALAYSIA OF ELECTRONICS INDUSTRY

Million Yen - 1975-1990

1975	1980	1985	1989	1990
EXPORTS
Consumer Goods	3,263	12,763	19,374	6,476	12,518
Industrial Goods	2,792	7,183	15,236	13,799	22,928
Electronic Parts	6,850	31,867	65,183	121,525	166,556
TOTAL	12,095	51,813	99,793	141,800	202,002
IMPORTS
Consumer Goods	-	1,272	266	3,703	7,453
Industrial Goods	180	531	492	1,378	4,682
Electronic Parts	2,861	7,982	12,979	19,971	36,195
TOTAL	3,041	9,785	13,737	25,052	48,330

Source: Electronics Industry Association of Japan
### TABLE 4.1 INVESTMENT PROJECTS IN MALAYSIAN MANUFACTURING SECTOR - 1990

Applications Received and Projects Approved

Number of projects (N), Potential employment (E), Million Ringgits (R)

Applications Received	Projects Approved
(N)	(E)	(R)	(N)	(E)	(R)
TOTAL	1,862	286,372	48,733	906	169,764	28,168
Propriety:
Joint-Ventures	453	92,832	34,856	370	64,334	19,878
Wholly Foreign Owned	594	164,077	13,877	339	79,862	6,817
E&E Industry
TOTAL	360	139,861	7,335	213	65,369	4,212
Foreign Owned	332	6,818	198	3,773

Source: MIDA and JETRO, Kuala Lumpur

### TABLE 4.2 FOREIGN DIRECT INVESTMENTS IN MALAYSIAN MANUFACTURING SECTOR

Countries of Origin - 1985, 1988, 1990 Number of Projects Approved and Thousand Ringgits

1985	1988	1990
Number	Amount	Number	Amount	Number	Amount
TOTAL	304	324,869	470	2,010,475	709	6,227,979
Japan	46	81,748	82	561,105	134	1,777,694
Taiwan	25	14,647	111	384,333	270	2,353,396
Singapore	92	47,185	134	172,137	147	321,382
Hong Kong	18	18,415	50	129,515	43	136,138
S. Korea	9	10,410	11	23,310	25	164,237
USA	26	36,760	55	252,582	29	187,120
U.K.	17	10,700	19	94,806	13	315,420
France	3	2,675	4	131,750	3	6,450
W.Germany	12	2,570	10	25,575	11	57,945
Holland	-	-	4	2,515	5	15,975
Others	nd	99,722	nd	232,848	nd	892,231

Note: The figures include also Joint-Ventures which account for more than 50% of ownership Source: MIDA & JETRO Kuala Lumpur
### TABLE 4.3 JAPANESE SHARE OF DIRECT INVESTMENT IN MALAYSIAN ELECTRONICS INDUSTRY

Number of Projects Approved and Thousand Ringgits (1985, 1988, 1990)

1985	1988	1990
Number	Amount	Number	Amount	Number	Amount
TOTAL FDI in Manuf.Industry	304	324,869	470	2,010,475	709	6,227,979
Japanese FDI in Manuf.Industry	46	81,748	82	561,105	134	1,777,694
Total FDI in E&E Industry	44	27,516	84	596,534	198	1,654,823
Japanese FDI in E&E Industry	12	10,805	31	362,535	51	897,139
Shares (%)
Japanese FDI Total FDI	15.1	25.2	17.4	27.9	18.9	28.5
FDI E&E Ind Total FDI	14.5	8.5	17.9	29.7	27.9	26.6
Japan FDI E&E Total FDI	3.9	3.3	6.9	18.0	7.2	14.4
Japan FDI E&E Tot Japan FDI	26.1	13.2	37.8	64.6	38.1	50.0
Japan FDI E&E FDI E&E Ind	27.3	39.3	36.9	60.8	25.8	54.2

Source: Calculations from data published by MIDA & JETRO Kuala Lumpur
### TABLE 4.4 COMPOSITION OF MALAYSIAN ELECTRONICS INDUSTRY

Selected Products - Annual physical production

1982	1985	1988	1990	90/82
ELECTRICAL APPLIANCES (units)
Room air conditioners	184,013	148,253	273,082	981,245	5.3
Household refrigerators	192,615	148,424	197,134	212,018	1.1
CONSUMER ELECTRONICS (units)
Radio receivers	3,538	8,828	21,070	37,019	10.5
Television sets	249,000	568,387	1,221,336	2,168,817	8.7
INDUSTRIAL GOODS (tonnes)
Teleph.& Telegraph cables	25,360	22,370	4,667	10,757	0.4
Insulated wire-cables	21,098	13,765	16,936	33,623	1.6
ELECTRONICS PARTS (million units)
Integrated circuits	2,193	2,561	4,709	6,084	2.8
Semiconductors	1,663	1,468	2,182	2,656	1.5
Transistors	2,212	3,450	5,545	5,956	2.7

Source: Department of Statistics, Malaysia

TABLE 4.5 MALAYSIAN GROSS EXPORTS OF ELECTRICAL AND ELECTRONICS INDUSTRY Selected years (1970-1990) - Million Ringgits

1970	1975	1980	1985	1988	1990
Electronic Components	2,292	4,439	8,716	11,664
Electronic Appliances	227	458	1,234	2,425
Other Electrics	447	1,569	5,211	12,406
TOTAL
ELECTRICAL AND ELECTRONICS	52	507	3,016	6,493	15,162	26,495
TOTAL
MANUFACTURING SECTOR	614	2,020	6,319	12,471	26,850	47,151
(%) of E&E	(8.5)	(25.1)	(47.7)	(52.1)	(56.5)	(56.2)

Source: Bank Negara Malaysia
### TABLE 4.6 PERFORMANCE OF MALAYSIAN ELECTRONICS INDUSTRY

Employment, Output, Exports (1986 - 1990)

1986	1987	1988	1989	1990
EMPLOYMENT
Thousand of workers (Annual growth %)	57	89 (56.1)	106 (19.1)	123 (16.0)	144 (17.1)
OUTPUT
Billion Ringgits (Annual growth %)	6.5	8.9 (36.9)	12.2 (37.1)	15.9 (30.3)	20.3 (27.7)
OUTPUT % COMPOSITION
Consumer Goods	12.3	15.7	18.0	22.6	23.2
Industrial Goods	6.2	7.9	10.7	13.2	19.2
Electronic Parts	81.5	76.4	71.3	64.2	57.6
EXPORT
Billion Ringgits (Annual growth %)	7.1	9.2 (29.6)	12.4 (34.8)	17.2 (38.7)	22.1 (28.5)
EXPORT % COMPOSITION
Consumer Goods	12.7	17.4	19.4	23.8	24.9
Industrial Goods	5.6	7.6	10.6
Electronic Parts	81.7	75.0	70.0	59.3	52.9

Source: MIDA, Kuala Lumpur
is not properly considered by the two hypothesis previously discussed $ ^{40} $ , because : a) the PC theory offers only the stand-point of the advanced countries in innovative industries and does not adequately consider its relevance for the process of industrialization of the developing countries towards which the transfer occurs (from the viewpoint of Malaysia) ; b) the CPC theory, although being founded on the Japanese experience as a developing country, focuses on traditional industries and does not provide a complete explanation for those where, due to the rapid speed of innovation, the product cycle is short and the high technological content entails the need of a technology transfer process through FDI from the more advanced country (from the viewpoint of electronics).

In other words, in order to fully understand the implications of the process of industrial development transmission from Japan to Malaysia in electronics, we need an explanation based on innovative industries and where the actors are the developing countries. Since the development of the local industry is largely dependent on the transfer of foreign technology, the case may be referred to as “Technology Catching-up Product Cycle” (TPC).

PC	Advanced Country	Transmission of
Innovative Industry
TPC	Developing Country	Industrial
Innovative Industry	Development
CPC	Developing Country
Traditional Industry

Although a proper analytical framework in this sense is still not available, there are at least three main problems to put on the agenda for future research.

1) How much the technology and the speed of innovation affect the process of industrial development transmission?

A highly technology-intensive industry like electronics, where the speed of innovation is typically very fast; requires huge investments in R&D as well as time for the process of skilled labor formation to take place. At first stages of the industrial transfer, in order to be competitive in international markets, the developing countries need to borrow the technology from the more advanced ones, aiming to eventually reach technological autonomy in a second phase. Without the knowledge, the network and the organization of the foreign MNEs, in fact, it will be quite difficult for local companies alone to allow the industry to take-off. The possibility of achieving effective technological autonomy in the future will be however influenced by the several different forms the process of technology transfer may assume. Furthermore, the conditions of the internal market will largely affect the pattern of development. During the initial stage, we can reasonably think that the structure of the demand for final and in particular for intermediate goods will be limited by the level of the GNP and by the overall development of the industrial structure. Therefore, if the products are competitive on international markets and are not destined to serve the internal demand, the industry can directly enter an export-expansion phase, with no need to pass through an