Factors limiting industrial development in peripheral regions of developing countries: a case study of kedah state, peninsular Malaysia

Abstract

Many developing countries, Malaysia included, have relied quite heavily on the policy of industrial decentralization to uplift the lagging economies of their peripheral regions. In Malaysia, the Malaysian Industrial Development Authorithy (MIDA) - a federal agency - plays a major role in persuading foreign enterprises to locate in the periphery. In addition to MIDA there are plethora of state agencies which implement state industrial policy. Development officials, in their effort to attract more industries to their respective regions, work on the premise that certain locational factors are critical to investors locational decision- making process. Obviously, development officials have their own perceptions of the attractions and disadvantages of the periphery. This paper (a) examines whether the officials have a good grasp of the industrialists dominant motives for selecting Kedah as production location, and (b) discusses the implications for industrial development if officials assumptions do not concur with industrialists real reasons for selecting Kedah location.