To compete for FDI effectively, Penang needs to target specific industrial clusters that leverage on the existing competencies of the state and the natural resources in its regional hinterland. Examples of possible industrial clusters where Penang could forge comparative advantages might include the marine & agro-technology sector, opto-electronics and precision engineering, as these are sectors where Penang has already built some foundations over the years. In addition to improving the technical contents of its educational system, Penang should also look into injecting an entrepreneurial dimension to its university research and education system, for example by offering educational programmes involving experiential learning of entrepreneurship among the students of science and engineering, and other disciplines and by providing seed funding and mentoring of entrepreneurial start-ups by university professors and students. (