Systemic Quad and Dynamic Clustering: Learning and Innovation in Penang and Johor
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This paper examines the impact of the embedding environment on learning, innovation and productivity in the computer and related component industries in Penang and Johor – two regions in Malaysia facing similar federal policies but different state-level coordination. Following a review of the works of economists such as Marshall (1890), Perroux (1950, 1970), Myrdal (1957), Hirschman (1958; 1970) and Krugman (1980), geographers such as Saxenian (1994), Cooke and Morgan (1998), Garofoli (1992), Darwent (1969), Scott (1988) and Storper (1997), industrial district exponents such as Piore and Sabel (1984), Sabel (1989), Sengenberger and Pyke (1988), Hirst and Zeitlin (1991), Brusco (1986), Wilkinson and You (1995), Rasiah (1994) and Becatini (1992) and subsequently business exponents such as Porter (1990) and Best (2001) and evolutionary economists such as Nelson and Winter (1982), Freeman (1986), Lundvall (1988; 1992), Dosi (1982), Pavitt (1984), Kim (1997) and Edquist (2004) the paper constructs a stylized model for evaluating the development of learning and innovation synergies in Penang and Johor. Four policy pillars that require simultaneous coordination are identified in the systemic quad as the basis for promoting systemically technological and productivity synergies. The four pillars are: one, basic infrastructure to provide systemic stability and efficiency; two, high tech infrastructure to provide systemic support for participation in learning and innovation; three, network cohesion to provide the systemic price, technological and social relationships necessary to drive interactive and interdependent coordination; and four, integration in global markets and value chains to provide the scale, scope and competition to drive learning and innovation. This paper is organized as follows. Section 2 reviews past literature related to agglomeration economies and provides the justification for using the systemic quad as the approach for comparing computer and related component firms in Penang and Johor. Section 3 presents the methodology used and breakdown of data collected from Penang and Johor. Section 4 examines the state of development of the four pillars that drive systemic synergies in the two states. Section 5 assesses the impact of these developments on technological capabilities and productivity in these states. Section 6 finishes with the conclusions.