TNC-led Auto Industrialisation in Malaysia: An Empirical Value Chain Approach

Abstract

This study examines the development of the Malaysian automobile industry, particularly focusing on the development of Proton, a state-supported automobile company. The development was stimulated by technological and managerial assistance of Mitsubishi Motor Corporation, a Japanese Multinational car assembler. Based on value chain analysis, this study develops an input-output method to examine the value-added distribution between the Malaysian automobile industry and foreign sectors. The results show that (1) only about a half of total value-added created in the industry was preserved within Malaysia, and (2) nearly a quarter of total value-added was out-flown to Japan. Two possible explanations are examined.