PUBLICATIONS & REPORTS

Contents Introduction

After reviewing the previous literature on MNCs in Malaysian manufacturing, aggregate trends of MNC involvement, and related economic policies, this paper first emphasizes how MNC involvement has always been relatively large in Malaysia. The paper emphasizes how MNCs have generally accounted for relatively small shares of employment, intermediate shares of production, and large shares of exports, both in the aggregate for most of the last three to four decades, and in 52 manufacturing industries following the 1997-1998 crisis. MNC activities were found to be heavily concentrated in a relatively few industries, notably three large electronics-related industries, but MNCs had relatively large shares of activity in a number of smaller industries as well. There was also a strong tendency for MNCs to pay higher wages and a weaker tendency for them to have relatively high labor productivity, but these differences are probably related to fact that MNCs tend to be relatively large and employ relatively large shares of educated workers, though MNCs did not show a strong tendency to be more capital and/or R&D intensive at the industry level. Finally, the paper showed that MNC-local differences in average labor productivity, wages, size, and educated worker shares may also be related to the degree of concentration in an industry. These findings highlight the important point that the simple MNC-local differentials calculated in this paper do not account for other possible influences (e.g., concentration) that might affect such differentials. Nonetheless, it is clear that MNCs remained very large in Malaysian manufacturing after the 1997-1998 crisis and continue to play very important roles in a wide range of Malaysia’s manufacturing industries.