THE ECONOMY OF TAIWAN UNDERWENT A MIRACULOUS RISE BY WITNESSING GROWTH RATES NEVER SEEN BEFORE IN ECONOMICS. HERE'S HOW.
Nestled between its archnemesis China & an ultracompetitive ASEAN, Taiwan was destined for economic depravity and backwardness. What followed has been the stuff of economic legends. A mere glance below at its explosive growth rate will tell you why.
Regarded by all as one of the four Asian Tigers (which also includes South Korea, Singapore & Hong Kong), Taiwan underwent rapid industrialization in the late 1970s and completely transformed its economy.
WHAT WORKED IN ITS FAVOR
The Taiwanese economy rapidly shifted from textiles to small appliances to capital goods in a span of a few decades. Such rampant development in the industries was never seen before as nations like Germany, Britain & the US took almost a century to undergo the same change.
The biggest saviour of Taiwan has been its cutting edge electronics manufacturing industry, which has an impressive world rank of four by volume. Taiwan's high public expenditure on research and development has paid a rich economic dividend for the country. Even today, electronic goods make up 34% of its total exports.
In the early 1960s, Taiwan underwent a land redistribution programme that made agriculture more equitable, akin to the one seen in China under Mao Zedong. The country faced no famines & the redistribution was a grand success as productivity actually improved to a certain extent.
The lack of resources in Tawan might have actually worked in its own favour. Instead of going over the traditional route of exporting raw materials without any value addition, Taiwan instead did the opposite. It started processing raw materials for other countries. Thus, Taiwan had a reliable product to export which has always been in demand.
The rise of machine tools industry along with solid steel production diversified its exports. This reduced its dependence on electronics manufacturing which gave breathing space to the industry & allowed it to develop.
However, the main driver of Taiwan's recent economic growth has been the semiconductor industry. Semiconductors are found in every modern device be it a mobile phone or an electrical car. Taiwan's flagship company TSMC has been a recent pioneer in the manufacturing of semiconductor (known as Fabrication).
Unlike Japan & South Korea, the economy of Taiwan is not over-reliant on a few conglomerates. Taiwan's economic fortune resides in its own hands as it prompted smaller family businesses and discouraged monopolies or over dominance of a particular company. The system of keiretsu & chaebol had an opposite impact on their economies.
FUN FACT
China believes the current democratic government of the Republic of China (the official name of Taiwan) is illegitimate. Hence, Taiwan is not a full member of any important global institution like the UN, WHO or ASEAN. In fact, it has diplomatic relations with only a handful of small nations.
NOTE: Swaziland & Paraguay no longer recognize ROC due to Chinese influence.
Hope you gained some new insights after reading this.
Check out the economic profiles of other countries below.
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