Incorporating transnational labour: Migration rent, combined relocation, and offshore production networks in Malaysia

Abstract

Abstract The article explores the interactions between transnational labour migration, multinational corporations’ (MNCs) location strategies, and public policies in the context of contemporary Malaysia. My main hypothesis is that the country’s position in global production networks is dependent on the presence of a large pool of foreign workers. To demonstrate this relationship, I develop the concept of ‘migration rent’ in order to account for the specific characteristics of migrant labour in Malaysia. By showing that this rent allows the optimisation of labour, as a production factor, beyond the sole issue of labour costs, the concept allows an explanation for why foreign direct investment does not move to lower-wage countries. By allowing and organising the recruitment of foreign workers on a large scale, the government has shaped territories where both capital and labour can be relocated to achieve effective production factor combinations. To understand this process, I articulate the concept of ‘combined relocation’, which describes transnational investment strategies where both capital and labour are moved to a third country—here Malaysia—under the former’s command. In so doing, the paper thus adds to the literature on MNCs’ spatial strategies, on transnational labour migration, and on Malaysia’s political economy.