The creation of a cluster A case study of Malaysia's Multimedia Super Corridor

Abstract: Multinational companies (MNCs) often choose to locate near other MNCs in order to gain advantages from each other. This is one ingredient in creating a cluster, an area composed of companies, institutions and/or organisations, sharing a similar technology or knowledge base with mutual benefits for the cluster participants. Market forces have created the majority of the clusters in the world. Still, governments frequently aim at creating clusters in order to promote regional development and growth. This is the case with the Multimedia Super Corridor (MSC) in Malaysia that was launched in 1996. My purpose with this thesis is to examine if the creation and running of the MSC has had economical benefits for Malaysia and to examine the MSC’s potential to become profitable and productive. The MSC is a new technological area and it is still under construction. The return on investment seems to be negative and the area is dependent on the Malaysian government for its development. The infrastructure, political and economical factors seem, according to my analysis, to be sufficient for creating the MSC. However, the low level of human resource is a problem for the cluster. Furthermore, Malaysia’s comparative advantage does not seem to be in high-technology production but rather in high-quality manufacturing. Even though the MSC is unlikely to develop into a world leading high-technology cluster, it can help to transfer Malaysia into a new phase of development.