Sub-national governments and technological upgrading in the integrated circuit cluster in Northern Malaysia

Most accounts of successful technological catch up and the diffusion of foreign sources of knowledge have focused on the role of federal governments. Little is known of how successful sub-national government strategies have evolved to stimulate technological upgrading in particular locations. This paper shows how a network of unique collaboration links that evolved between the Penang government and organizations, foreign multinationals and national firms helped forge strong flows of knowledge among integrated circuits (IC) firms in the sub-national region. Although Penang’s and Kulim High Tech Park’s IC firms still lag technologically behind IC firms in Korea and Taiwan, the evolution of productive networking at the sub-national level has helped stimulate technological upgrading in the region.