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Economic Dynamics in the Perak Diamond a Consideration of Functional Polycentricity

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Economic Dynamics in the Perak Diamond a Consideration of Functional Polycentricity Economic dynamics in the Perak Diamond A consideration of functional polycentricity Giacomo A. M. Bianchi, 5597382 Under supervision of Dr. Leo van Grunsven Faculty of Geosciences- Department of Human Geography and Planning Master’s in Human Geography Specialization in Economic Geography: Business and Location Wordcount (excluding Appendix and Bibliography): 23530 Giacomo A. M. Bianchi Utrecht University- Department of Human Geography and Planning 2 Giacomo A. M. Bianchi Utrecht University- Department of Human Geography and Planning Table of Contents 1. Introduction…pp.5-9 1.1 Peninsular Malaysia’s urban system configuration…p.5 1.2 Polycentric urban development…pp.5-6 1.3 Scientific relevance…p.6 1.4 Approach of the Research: main theme and focus…pp.6-7 1.5 Aim of the Research…pp.7-8 1.6 Research question…pp.8-9 1.7 Outline of the Research…p.9 2. Context of the Research…pp.10-16 2.1 Introduction to the study area…p.10 2.2 Demography…p.11 2.3 Economy…p.12 2.4 Infrastructure…p.12 2.5 Cities’ profiles…pp.12-15 2.6 Current and future development plans…pp.15-16 3. Theoretical framework…pp.17-24 3.1 Relatedness in economic development dynamics…pp.17-18 3.2 Relatedness and agents…pp.18-19 3.3 Relatedness and urban structure…pp.19-20 3.4 Diversification and Specialization of spatial entities…p.21 3.5 Relatedness in functional and morphological polycentricity…pp.21-22 3.6 Polycentricity framework: the role of Relatedness…pp.22-23 3.7 Model conceptualization…pp.23-24 4. Methodology…pp.25-35 4.1 Quantitative analytical methods…pp.26-34 4.1.1 Regional level…pp.26-28 3 Giacomo A. M. Bianchi Utrecht University- Department of Human Geography and Planning 4.1.2 District level…pp.28-29 4.1.3 City level…pp.29-30 4.1.4 Relatedness measures: an in-depth analysis…pp.30-34 4.2 Qualitative analytical methods…pp.34-35 4.2.1 Firm level…pp.34-35 5. Analysis of specialization and diversification dynamics…pp.36-77 5.1 Quantitative analysis…pp.36-73 5.1.1 Regional level…pp.36-51 5.1.2 District level…pp.51-66 5.1.3 City level…pp.66-73 5.2 Qualitative analysis…pp.73-77 5.2.1 Firm level…pp.73-76 5.2.2 Insight knowledge from economic and institutional agents…p.77 6. Conclusion and discussion…pp.78-81 6.1 Limitations and future investigations…pp.80-81 7. Bibliography… 8. Appendix… 4 Giacomo A. M. Bianchi Utrecht University- Department of Human Geography and Planning List of figures Figure 1: Malaysia Straits Diagonal and Perak Diamond (Fundacion Metropoli/ThinkCity 2018)…p.7 Figure 2: Perak urban system and demarcation of potential settlements for regional polycentricism (ResearchProposal, van Grunsven 2019)…p.8 Figure 3: Location of Perak (GoogleMaps, 2019)…p.11 Figure 4: Districts of Perak (Bureau of Statistics, 2010)…p.12 Figure 5: Perak Population per district (DOSM, 2017) & Population in major urban centers (Daan Florijn’s Research, Authors calculations, based on the population census (2000, 2010) and Data Asas) Negeri Perak (2016)…p.12 Figure 6: Perak basic Infrastructure, (PerakBaselineStudy, 2015)…p.13 Figure 7: GDP share per State, divided per Industry, 2010, 2016 (adapted from DOSM, 2017)…p.38 Figure 8: GDP per capita, divided per State, 2016 (adapted from DOSM, 2017)…p.39 Figure 9: GDP by Industry 2010, 2016 in Perak (adapted from DOSM, 2017)…p.40 Figure 10: GDP in Perak by Industry, 2010-2016 & GDP in Perak by Industry, annual % change 2010-2016 (adapted from DOSM, 2017)…pp.40-41 Figure 11: GDP in Perak by Industry, percentage share to GDP 2010, 2016 (adapted from DOSM, 2017)…p.42 Figure 12: Employment per State, by Industry, percentage share 2017 (adapted from DOSM, 2017)…p.43 Figure 13: Employment distribution by Industry, percentage share in Perak and Penang 2017 (adapted from DOSM, 2017)…p.44 Figure 14: Labor force RCA by Industry in Perak 1987-2017 (adapted from DOSM, 2017)…pp.45-47 Figure 15: Labor force distribution by Industry per Sate 1987,2017 (adapted from DOSM, 2017)…p.48 Figure 16: Labor force Relatedness computations (2017)…p.49 Figure 17: Incorporated Companies per Industry in Perak in 1987-2018 & Active, Expired and Winding up Companies in Perak in 2018 (SSM, 2019)…pp.50-51 Figure 18: Establishments per district in Perak, 2016 (adapted from DOSM, 2016)…p.52 Figure 19: Establishments per district in Perak, adjusted for population size, 2016 (adapted from DOSM, 2016)…p.53 Figure 20: Establishments by Industry per district in Perak, adjusted for population size, 2016 (adapted from DOSM, 2016)…p.54 Figure 21: Relative Competitive Advantage per district for Incorporated Companies, 1987-2018 (SSM, 2019)…pp.56-60 Figure 22: Related Variety computations, 1987-2018…pp.62-63 Figure 23: Related Variety computations, 2018…p.64 Figure 24: Diversity and Ubiquity Index based on Incorporated Companies, 1987-2018…p.65 Figure 25: Economic corridors complementarity in 2018…p.66 Figure 26: Economic specialization and interconnectedness of cities in the Perak Diamond & Network structure of Industry space…p.68 Figure 27: Incorporated Companies per sector, regional and sub-regional maps, 2018 (SSM, 2019)…pp.70-72 Figure 28: Companies’ Interviews…pp.75-77 Figure 29: PKNP’s interview (Goradial Singh Ban Singh [Manager])…p.77 Figure 30: Urban configuration of Perak (author’s own illustration)…p.80 5 Giacomo A. M. Bianchi Utrecht University- Department of Human Geography and Planning 1. Introduction As Peninsular Malaysia further urbanizes, economic advancement increasingly pivots on the performance of its cities. This depends on a range of characteristics in the spheres of urban economy, society, business environment, spatial structure and governance. Leveraging agglomeration economies and positive externalities of proximity, mass and density, spatial structure is a challenge in accomplishing an efficient urban system in Peninsular Malaysia. 1.1 Peninsular Malaysia’s urban system configuration It has been increasingly recognized that Peninsular Malaysia’s urban system and its main cities face several challenges in respect of spatial structure. These have been defined and analyzed in several reports and policy documents, including World bank (2015), National Urbanization Policy (NUP1 and NUP2, 2016-2026), as well as the third National Physical Plan (2015-2020), addressing the urban performance issues at city and conurbation level, whereby, in line with mainstream approach, the urban system is conceived as hierarchical. However, it is increasingly argued that there are shortcomings to the hierarchical approach at regional and sub- regional level. Indeed, concerning spatial structure, insights are advancing of the relevance to performance of dimensions beyond city size. At the regional and sub-regional scale these refer to urban configuration reflecting internal spatial structure, and, respectively, to functioning and inter-settlement structure. At both levels, density and mass related characteristics are associated with economies and productivity. Specifically, at the lower level these include land use and integration, as well as connectivity, emphasizing the role of morphological and functional features against a hierarchical inter-settlement structure mostly holding back productivity. This is translated into the view of assemblages of proximate urban centers displaying high connectivity, constituting polycentric urban regions, thus ‘producing’ agglomeration economies through ‘combined’ or ‘borrowed’ size (van Grunsven, 2019). 1.2 Polycentric urban development The notion of polycentricity has been given attention by policy makers, who widely adopted such concept development and planning strategies. As a matter of fact, the European Spatial Development Strategy (EC, 1999) placed polycentricity at the heart of current spatial planning policies across Europe (Green, 2007). In academics, Meijers et al. (2007, p. 7) define a polycentric development policy as ‘a policy that addresses the distribution of economic and/or economically relevant functions over the (spatial) system in such a way that the urban hierarchy is flattened in a territorially balanced way’. According to such policies, polycentric development in a region can be used as a strategic instrument to achieve multiple goals towards more efficient, balanced and sustainable patterns of spatial development, enhancing performance and productivity (Burgalassi, 2010; Commission of the European Union, 1999). The necessity of steering the development of the urban system and its cities in a different direction is argued on several grounds. In fact, rather than privileging higher order centers from efficiency considerations and focusing on 6 Giacomo A. M. Bianchi Utrecht University- Department of Human Geography and Planning independent growth of individual centers, the focal point should shift towards spatial structure elements of urban structure and spatial configuration. It is held that performance would benefit from defragmentation and polycentric urban structure if emphasized through connectedness and interactions (van Grunsven, 2019). 1.3 Scientific relevance The divergence between hierarchical approaches and studies on polycentric urban configurations underlines the need of a complementary Research to the ‘Malacca Straits Diagonal’ (MalaccaStraitsDiagonal, 2018). In this report, the vision entails a potential for the Western Coast of Peninsular Malaysia to be shaped by a succession of urban conurbations and so-called “Diamonds”, which are structures encompassing networks of cities forming morphological and functional polycentric urban configurations (Figure 1). In particular, the concept of “Perak
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