Regional Development of Penang: A Shift-Share Approach

The aftermath of the Global Economic Crisis 2008/09 presents many countries with great challenges to capitalize on their competitive advantages. Understanding the characteristics of the Penang industry, the locomotive of the Northern Corridor Economic Region (NCER), is a crucial step toward formulating a strategy aimed at improving competitiveness in the recovering economy. The objective of this paper is to develop a shift-share model by analysing the industrial mix characteristics and its state competitiveness potential factors for economy development in Penang in order to compare state growth against national development. This study examined the economic competitiveness of the Penang economy using Gross Domestic Product (GDP) and employment data to determine the competitive position of the state. This study provided policy-makers systematic insights into the characteristics of the Penang industry so as to analyse the contributor of the state comparative advantage by targeting industries with strategy and implications which offer significant future growth opportunities.