Economics of catching up and leapfrogging: how have Malaysia and Thailand fared against South Korea and Taiwan in the electronics industry?

Rajah Rasiah and Miao Zhang

Journal of the Asia Pacific Economy, 2025, vol. 30, issue 4, 1727-1750

Abstract: This paper uses evidence to argue that effective active industrial policies helped stimulate industrial upgrading from low and medium value-added activities to high value-added activities in the electronics industry of South Korea and Taiwan. However, passive industrial policies, largely driven by foreign direct investment have restricted industrial upgrading so that the electronics industry in Malaysia and Thailand have not upgraded beyond low and medium value-added activities. Consequently, the paper suggests that it is possible to attract foreign multinational operations in labour-intensive activities by countries endowed with surplus trainable labour, efficient customs coordination, financial incentives, and political stability, but active industrial policies focused on developing the embedding science, technology, and innovation infrastructure and stringent appraisal and monitoring are necessary to stimulate upgrading to high value-added activities.

Date: 2025
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DOI: 10.1080/13547860.2024.2398828

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