Business services and the knowledge economy in Malaysia

Purpose - This paper aims to argue that the World Bank-sanctioned strategy of investing in knowledge economy infrastructure will not make a developing country competitive in the highest value activities such as research, design and innovation. Design/methodology/approach - The paper examines Malaysia's efforts to increase its national income and change its position from a "middle-income'' country to one with a standard of living equivalent to a developed country by 2020. Specifically, it analyses Malaysia's strategy of constructing a multimedia super corridor, a multibillion-dollar state-led project to attract knowledge-intensive operations to Malaysia. Findings - Despite the creation of a world-class infrastructure, the Malaysian government has not been successful in realising its original aim of creating a cutting-edge multimedia research and development hub. Instead a thriving business support services sector has developed. Therefore, it is by no means a guaranteed way to close the gap between rich and poor nations. Research limitations/implications - Official data relating to the activities of firms not only are limited but also have been made problematic by changes in categorisation over the relevant years. Analysis that is more conclusive requires the publication of official data with greater detail about firm activities and a standardised reporting format over time. Originality/value - This is one of the first academic studies discussing the rise of the business services industry in Malaysia and its relationship with the MSC infrastructure development project.