Penang's Secret

Malaysians call it Silicon Island. Once a sleepy tropical outpost of the British empire, Penang boasts nearly 700 factories owned and operated by a who's who of global electronics players, from Dell Computer (DELL) to Intel (INTC) to Sony (SNE) to Seagate Technology (SEG). Its tidy industrial parks have generated jobs for nearly 200,000 people and have spearheaded the country's phenomenal export-led growth.

For those who doubt that globalization can transform poor nations, there's no better example than Malaysia's two-decade ascent. Its economy, which used to rely on fickle commodities such as tin and palm oil, is now powered by high-tech electronics.