Taiwan has a developed capitalist economy that ranks as the 19th- largest in the world by Purchasing power parity (PPP), ranks as 18th in the world by gross domestic product (GDP) at purchasing power parity per capita (person) and 24th in nominal GDP of investment and foreign trade by the Republic of China (ROC) government, which commonly referred to as Taiwan. In keeping with this trend, most large government-owned banks and industrial firms have been privatized. With the Technocracy-centered economic planning [7] under Martial Law until 1987, real growth in GDP has averaged about 8% during the past three decades. Exports have grown even faster and since World War II, have provided the primary impetus for industrialization. Inflation and unemployment are low; the trade surplus is substantial; and foreign reserves are the world's fourth largest. Agriculture contributes 3% to GDP, down from 35% in 1952, and the service sector makes up 73% of the economy. Traditional labor-intensive industries are steadily being moved off-shore and replaced with more capital- and technology-intensive industries. Economy of Taiwan is an indispensable partner in the Global Value Chains of Electronics Industry. [8] Electronic components and personal computer are two areas of international strength of Taiwan's Information Technology industry. [9] Institute for Information Industry [10][11] with its international recognitions [12] is responsible for the development of IT industry and ICT industry [13] in Taiwan. Industrial Technology Research Institute [14] with its global partners [15] is the advanced research center for applied technology for the economy of Taiwan. Directorate-General of Budget, Accounting and Statistics [16] and Ministry of Economic Affairs (Republic of China) [17] release major economic indicators of the economy of Taiwan. Chung-Hua Institution for Economic Research provides economic forecast at the forefront for the economy of Taiwan [18] and authoritatively researches on the bilateral economic relations with ASEAN by The Taiwan ASEAN Studies Center (TASC). [19][20] Taiwan Stock Exchange is the host to the listed companies of local industries in Taiwan with weighted financial exposures to the FTSE Taiwan Index and MSCI Taiwan Index.
Taiwanese investors and businesses have become major investors in mainland China, Vietnam, Thailand, Indonesia, the Philippines, and Malaysia. Because of the conservative and stable financial policy [21] by the Central Bank of Republic of China and the entrepreneurial strengths, Taiwan suffered little from the Asian Financial Crisis of 1997-1999 compared to many economies in the region. Other two major banks in Taiwan are Bank of Taiwan and Mega International Commercial Bank. Unlike the neighboring Japan and South Korea, small and medium-sized businesses make up a significant proportion of the businesses in Taiwan. Taiwan is characterized as one of the Newly industrialized economy in the wake of the Ten Major Construction Projects since 1970's. Since 1990's, the economy of Chinese Taipei has adopted economic liberalization with the successive regulatory reforms. [22] The economy of Taiwan has the world's highest modern convenience store concentration density. [23]
Taiwan is a member of the Asian Development Bank (ADB), the World Trade Organization (WTO), and the Asia-Pacific Economic Cooperation (APEC). Taiwan is also an observer [24] at the Organisation for Economic Co-operation and Development (OECD) under the name of Chinese Taipei. [25] Taiwan is a member of International Chamber of Commerce as Chinese Taipei. [26] The economy of Taiwan of Chinese Taipei is seeking to join the Trans-Pacific Partnership no later than 2020 if economic requirements are met. [27][28] Taiwan's top five trade partners in 2010 are China, Japan, USA, the European Union, and Hong Kong.[29][30]
Contents
· 1 History
· 2 Economic outlook
o 2.1 Global financial crisis
· 3 Foreign trade
· 4 Industry
o 4.1 Information technology
o 4.2 Agriculture
o 4.3 Energy
· 5 Science and industrial parks
· 6 Economic research institutes
· 7 See also
· 8 References
· 9 External links
History
Main article: Economic history of Taiwan
See also: Taiwan Miracleand Four Asian Tigers
Taiwan has transformed itself from a recipient of U.S. aid in the 1950s and early 1960s to an aid donor and major foreign investor, with investments primarily centered in Asia. Private Taiwanese investment in mainland China is estimated to total in excess of US$150 billion,[31] and official tallies cite Taiwan as having invested a comparable amount in Southeast Asia.
Taiwan has historically benefited from the flight of many well-educated, wealthy Chinese to settle on the island: during early Qing Dynasty, the preceding Ming dynasty supporters survived for a brief period of time in exile in Taiwan, and in 1949, as the Chinese Communist Party gained control of mainland China, two million Kuomintang (KMT) supporters fled to the island.[32][33][34]
The first step towards industrialization was land reforms, a crucial step in modernizing the economy, as it created a class of landowners with capital they can invest in future economic endeavors. US aid was also important to stabilize post-war Taiwan, and it constituted more than 30 percent of domestic investment from 1951 to 1962. These factors, together with government planning and universal education, brought huge advancement in industry and agriculture, and living standards. The economy shifted from an agriculture-based economy (32% of GDP in 1952) to an industry-oriented economy (47.% of GDP in 1986).[35] Between 1952 and 1961, the economy grew by an average of 9.21% each year.[35]
Once again, the transformation of Taiwan's economy cannot be understood without reference to the larger geopolitical framework. Although aid was cut back in the 1970s, it was crucial in the formative years, spurring industrialization and security and economic links were maintained. Uncertainty about the US commitment accelerated the country’s shift from subsidized import-substitution in the 1950s to export-led growth. Development of foreign trade and exports helped absorb excess labor from the decreased importance of agriculture in the economy.[35] Like Korea, Taiwan moved from cheap, labor-intensive manufactures, such as textiles and toys, into an expansion of heavy industry and infrastructure in the 1970s, and then to advanced electronics in the subsequent decade. By the 1980s, the economy was becoming increasingly open and the government moved towards privatization of government enterprises.[35] Technological development led to the establishment of the Hsinchu Science Park in 1981. Investments in mainland China spurred cross-strait trade, decreasing Taiwan's dependence on the United States market.[35] From 1981-1995, the economy grew at an annual rate of 7.52%, and the service sector became the largest sector at 51.67%, surpassing the industrial sector and becoming a major source of the economy's growth.
Economic outlook
Taiwan now faces many of the same economic issues as other developed economies. With the prospect of continued relocation of labor-intensive industries to economies with cheaper work forces, such as in mainland China and Vietnam, Taiwan's future development will have to rely on further transformation to a high technology and service-oriented economy.[36] In recent years, Taiwan has successfully diversified its trade markets, cutting its share of exports to the United States from 49% in 1984 to 20% in 2002. Taiwan's dependence on the United States should continue to decrease as its exports to Southeast Asia and mainland China grow and its efforts to develop European markets produce results.[37] Taiwan's accession to the WTO and its desire to become an Asia-Pacific "regional operations center" are spurring further economic liberalization.
Global financial crisis
Taiwan has recovered quickly from the global financial crisis of 2007-2010, and its economy has been growing steadily. Its economy faced a downturn in 2009 due to a heavy reliance on exports which in turn made it vulnerable to world markets.[37] Unemployment reached levels not seen since 2003, and the economy fell 8.36% in the fourth quarter of 2008.[36] In response, the government launched a US$5.6 billion economic stimulus package (3% of its GDP), provided financial incentives for businesses, and introduced tax breaks.[36] The stimulus package focused on infrastructure development, small and medium-sized businesses, tax breaks for new investments, and low-income households.[36] Boosting shipments to new overseas markets, such as Russia, Brazil, and the Middle East was also a main goal of the stimulus.[36] The economy has since slowly recovered; by November 2010, Taiwan's unemployment rate had fallen to a two-year low of 4.73%,[38] and continued dropping to a 40-month low of 4.18% by the end of 2011.[39] The average salary has also been rising steadily for each month in 2010, up 1.92% from the same period in 2009.[40] Industrial output for November 2010 reached another high, up 19.37% from a year earlier, indicating strong exports and a growing local economy.[41] Private consumption is also increasing, with retail sales up 6.4% compared to 2009.[42] After 10.5% economic growth in 2010, the World Bank expects growth to continue and reach 5% for 2011.[43]
Foreign trade
Computex Taipei, the second-largest technology trade show in the world,[44] is a global IT exhibition which attracts many foreign investors.[45]
Foreign trade has been the engine of Taiwan's rapid growth during the past 40 years. Taiwan's economy remains export-oriented, thus it depends on an open world trade regime and remains vulnerable to downturns in the world economy. The total value of trade increased over fivefold in the 1960s, nearly tenfold in the 1970s, and doubled again in the 1980s.[46] The 1990s saw a more modest, slightly less than twofold, growth. Export composition changed from predominantly agricultural commodities to industrial goods (now 98%). The electronics sector is Taiwan's most important industrial export sector and is the largest recipient of U.S. investment. Taiwan, as an independent economy, became a member of the World Trade Organization (WTO) as Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (often shortened to "Chinese Taipei"-both names resulting from PRC interference on the WTO) in January 2002. In a 2011 report by Business Environment Risk Intelligence (BERI), Taiwan ranked third-best globally for its investment environment.[47]
Taiwan is the world's largest supplier of contract computer chip manufacturing (foundry services) and is a leading LCD panel manufacturer,[48] DRAM computer memory, networking equipment, and consumer electronics designer and manufacturer.[37] Textiles are another major industrial export sector, though of declining importance as Taiwan due to labor shortages, increasing overhead costs, land prices, and environmental protection.[49] Imports are dominated by raw materials and capital goods, which account for more than 90% of the total. Taiwan imports most of its energy needs. The United States is Taiwan's third largest trading partner, taking 11.4% of Taiwanese exports and supplying 10.0% of its imports.[29][30] China has recently become Taiwan's largest import and export partner. In 2010, the PRC accounted for 28.0% of Taiwan's exports and 13.2% of imports (excluding Hong Kong).[29][30] This figure is growing rapidly as both economies become ever more interdependent. Imports from China consist mostly of agricultural and industrial raw materials. Exports to the United States are mainly electronics and consumer goods. As Taiwanese per capita income level has risen, demand for imported, high-quality consumer goods has increased. Taiwan's 2002 trade surplus with the United States was $8.70.
The lack of formal diplomatic relations between the Republic of China (Taiwan) with Taiwan's trading partners appears not to have seriously hindered Taiwan's rapidly expanding commerce. The Republic of China maintains cultural and trade offices in more than 60 countries with which it does not have official relations to represent Taiwanese interest. In addition to the WTO, Taiwan is a member of the Asian Development Bank as "Taipei, China" (a name resulting from PRC influence on the bank) and the Asia-Pacific Economic Cooperation (APEC) forum as "Chinese Taipei" (for the same reason as above). These developments reflect Taiwan's economic importance and its desire to become further integrated into the global economy.
The Economic Cooperation Framework Agreement (ECFA) with the People's Republic of China was signed on June 29, 2010, in Chongqing.[50][51] It could potentially widen the market for Taiwan's exports. However, the true benefits and impacts brought by ECFA to Taiwan's overall economy are still in dispute.[52] The newly-signed agreement will allow for more than 500 products made in Taiwan to enter China at low or no tariffs.[53] The government is also looking to establish trade agreements with Singapore[54] and the United States.[55]
Industry
Industrial output has gradually decreased from accounting for over half of Taiwan's GDP in 1986 to just 31% in 2002.[49] Industries have gradually moved to capital and technology-intensive industries from more labor-intensive industries, with electronics and information technology accounting for 35% of the industrial structure.[49] Industry in Taiwan primarily consists of many small and medium-sized enterprises (SME) with fewer large enterprises.
JAPAN
Quick Facts
· Population: 127.8 million
· GDP (PPP):
o $4.4 trillion
o -0.7% growth
o -0.2% 5-year compound annual growth
o $34,740 per capita
· Unemployment: 4.2%
· Inflation (CPI): -0.3%
· FDI Inflow: $-1758.3 million
Embed This Data
Japan’s economic freedom score is 71.8, making its economy the 24th freest in the 2013 Index. Its score is 0.2 point higher than last year, with improvements in fiscal freedom, freedom from corruption, and monetary freedom largely offset by declines in management of government spending and labor freedom. Japan is ranked 6th out of 41 countries in the Asia–Pacific region.
The Japanese economy benefits from relatively sound levels of economic freedom in all areas. The foundations of economic freedom have been relatively well institutionalized, supported by an effective judicial framework and a relatively low level of perceived corruption.
However, Japan’s overall record in advancing economic freedom is patchy, and its score is lower today than it was in 1995. The financial sector, though modern and well developed, remains subject to growing political interference. Seniority-based traditional labor practices persist, constraining mobility. A monetary policy aimed at preserving low interest rates has reduced any acute concern over Japan’s large debt burden, but it has also limited the political motivation to implement urgently needed fiscal reform. Japan continues to fall behind other neighboring economies in pursuing free trade agreements.
Background
After 55 years of Liberal Democratic Party rule, the Democratic Party of Japan captured both houses of parliament in 2009 and installed Yukio Hatoyama as prime minister. Hatoyama resigned abruptly in June 2010 and was succeeded by Finance Minister Naoto Kan, who was replaced in September 2011 by Yoshihiko Noda. The March 2011 earthquake and tsunami further strained an economy already struggling for two decades with slow growth and stagnation. Prime Minister Noda has strived to include Japan in the Trans-Pacific Partnership to stimulate the economy but faces strong resistance at home. Successive prime ministers have been unable or unwilling to implement necessary fiscal reforms.