Many of the challenges that Penang is facing stem from the difficult transformation from an industrial society to a knowledge-based economy. What needs doing is a more conscious development of its “epistemic landscape”.
STUDIES HAVE SHOWN THAT industrial clusters enhance the competitive advantage of states or regions. The clustering of related industries reduces transaction costs, stimulates innovations, and drives development. Silicon Valley in California, US and the automotive cluster of Stuttgart, Germany are examples of successful clusters. The Japanese Government as well as European Commission facilitate the growth of industrial clusters and research on their development.
