Abstract
Industrial strategies and policies play a fundamental role in the overall development goal. The basic arguments and models surrounding industrialization in the developing countries are reviewed. Malaysia's industrial progress is atypical in the Third World and reflects the recent attempt to achieve an export orientation. A primary tool in the industrial strategy has been the export processing zone. The utility and function of this mechanism is discussed and evaluated within the Malaysian context. Employment in the zones represented about 8 % of manufacturing in 1980. Despite a recent deficit, exports and the zones' contribution to total exports display an upward trend. However, technology transfer and linkage creation have not been great. The lack of these developments results from the impact of the international product cycle mechanism. On an international scale, the locational pattern of zones is unstable since many firms are footloose and may, therefore, shift location in response to strong incentives. Housing and administration problems of the zones must be solved. In addition, a new package of incentives and a viable bargaining position must be developed in order for success to continue.
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