Global production sharing and local entrepreneurship in developing countries: evidence from Penang export hub, Malaysia

Abstract

This article examines opportunities and policy options for developing countries to promote engagement of local firms in global production networks. The article begins with a stagesetting overview of the ongoing process of global production sharing and the emerging opportunities local firm’s engagement. It then undertakes an illustrative case study of the export hub in the state of Penang in Malaysia. Forging operational links between multinational enterprises, which set up assembly plants in Penang, and local firms was an integral part of the export-led development strategy of the state. This policy emphasis was instrumental in fostering a domestic supplier network around the operations of the multinational enterprise subsidiaries. A number of local firms, which emerged de novo through production sharing, have become global players in their own right, with production bases in a number of other countries.