Taiwan economy: features, development plans

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:45

A small island nation that calls itself the Republic of China is known around the world as Taiwan. It is recognized by 23 countries. Taiwan received two waves of emigrants from mainland China. The first occurred when we althy Ming members fled from persecution by Qing supporters (after about 1644).

The second - after the formation of the People's Republic of China, when the armed detachments of the Chinese Communist Party defeated and forced out 1.5 million supporters of the conservative Kuomintang party to the island. Already at the end of the 20th century, educated and hardworking emigrants created a prosperous, developed economy, of course, with Chinese characteristics.

A bit of history

The Chinese, having settled the island, gradually replaced the indigenous population (Austronesians), who now make up about 2.3% of the 23.5 million population of the country. In 1895, the Qing Empire suffered a military defeat. The island was ruled by the Japanese for 50 years. They laid the foundations for the industrialization of the island, building a hydroelectric power station and enterprises for the production of numerous types ofproducts. For Taiwan's economy, the history of colonization has been rather positive. The island served as a kind of showcase showing the achievements of the peoples conquered by the Japanese.

After World War II, the Kuomintang created the Republic of China on the island, whose sovereignty, in his opinion, extended to mainland China. Land reform was an important first step towards improving the economy. At the same time, surplus land was forcibly bought from the landowners and sold to the peasants with payment by installments for a long time. Economic policy stimulated industrialization.

Since the 50s, it has continued, mostly growing. As a sign of merit to the country, the obverse of the coins of Taiwan depicts a bust of the Kuomintang and President (1949-1975) Chiang Kai-shek, the initiator of major reforms. Until 1987, martial law was in effect on the island, but since the end of the 80s, the democratization of public life began. In 2000, the first peaceful transfer of presidential power took place. Over the years, from a backward country with a command economy, Taiwan has become the "Asian tiger". He has become a major investor in mainland China.

Overview

Taiwan's national economy has gone through a path much like that observed in Hong Kong and Singapore. The dynamic capitalist economy of the country is based on industrial production. Electronics, shipbuilding, light industry, mechanical engineering and petrochemistry are developing especially well. There is also a negative side to this, due to the strong dependence on global demand.

Another weak point isdiplomatic isolation, since most countries in the world believe that the island belongs to the PRC. Enterprises mainly belong to the sector of small and medium-sized businesses. The country's economic policy stimulates the production of competitive high-tech products. However, s alt, tobacco, alcoholic beverages and a number of other products are produced and sold by the government, which controls the prices of vital products.

In recent years, the policy of the country's government is aimed at reducing the role of the state in business. In 2017, the Taiwanese economy performed especially well. In terms of WFP, this tiny state ranked 23rd in the world, beating China, Korea, and Singapore. Economic growth since 2012 in Taiwan has been stable, about 2% per year.

Starting conditions

The beginning of the development of Taiwan's economy was greatly influenced by the fact that far from poor supporters of the Kuomintang moved here. In addition to part of the state treasury and ancient Chinese treasures, they removed a lot of industrial equipment from neighboring China. Many entrepreneurs, engineers and other educated people, highly skilled workers moved here. Taiwan's economy received good start-up capital.

Like some other Asian countries, in order to resist world communism, the country received generous technical assistance from the United States. For 15 years (from 1950 to 1965), $1.5 billion a year was sent to the island. These funds went mainly to the construction of infrastructure (74%). Moneyreceived by electrical, communications and transportation companies.

Initial Benefits

Taiwan made good use of its favorable geographical position. The island is located at the crossroads of world trade routes from the American Pacific coast and East Asia to Europe. The second important step in successful development was the exit from the list of countries with a command economy. Taiwan has gone its own way. The political regime emphasized the development of industry, ensured political stability and the protection of foreign investment. Loy alty to the industrialized countries of the West also brought certain dividends: in response, they turned a blind eye to the authoritarian power, the lack of basic freedoms. The main asset of the country was a disciplined, hardworking and skilled workforce.

The path to success

Good starting conditions had to be converted into economic growth. At the first stage, Taiwan's economy focused on the light industry, including the production of clothing, shoes, blankets, and wigs. Relatively low cost and high productivity have given Taiwanese exports a road to the global market.

From the 80s, the heavy and petrochemical industries, as well as shipbuilding, began to develop. Production focused on foreign technologies and imported raw materials, sending a significant part of the products for export. Together with other modern economically developed Asian countries, Taiwan began to invest in the electronics industry, which alsodemanded at that time a sufficiently large number of skilled labor. The transition to more expensive industries was also necessary, because the cost of labor has risen sharply.

High tech

The influence of the state on the economy has made it quite easy to change from the production of labor-intensive products of light and heavy industry to the production of consumer electronics, and in recent years to information technology. Since the late 1990s, Taiwan has begun to invest heavily in the digital economy, both public and private. Only state low-cost loans were issued about 20 billion dollars.

The country began to organize special economic zones and technology parks for enterprises. In Hsinchu - the largest of them. About 130 thousand people work here. In the best years, this technopark provided up to 15% of the entire marketable output of the island. Almost everyone knows the famous Taiwanese brands - Acer, Asus, which produce computers and other electronic devices.

Structure of the economy

In Taiwan's dynamic economy, services occupy the largest share (62.1% of GDP), followed by industry (36.1%) and agriculture (1.8%). The transformation of the country's economy continues. Almost every year, the share of labor-intensive products and agriculture is decreasing, which is associated with a shortage and rising costs of labor resources.

Since the beginning of the 90s, the share of production of traditional goods of the country's exports has been declining -cotton fabrics, bicycles, televisions and other consumer electronics. Coal in the energy sector has been replaced by other energy sources - oil and liquefied gas. Three nuclear power plants have now been built in the country.

Large-tonnage production - petrochemistry and metallurgy - is gradually reduced. The government is betting on the development of digital technologies (microelectronics, telecommunications, data processing), the financial sector, the food industry and biotechnology.

Small and medium businesses

Taiwan's economy can be briefly described as an economy of small and medium-sized businesses. Unlike South Korea and Japan, which encouraged the creation of diversified corporations, Taiwan took a different path. Small and medium-sized businesses make up 98% of the total number of companies here. Transparent legislation, an open market policy that promotes the flow of goods and capital, has enabled SMEs to become the backbone of Taiwan's economy. According to the index of economic freedom of the Heritage Foundation, the state is in 14th place and is classified as a country with a predominantly free economy.

Foreign economic relations

Taiwan's diplomatic "isolation" imposes restrictions on the development of the country's international trade. The signing of an economic cooperation agreement with China in 2010 contributes to the solution of this issue. As a result, the mainland Chinese market was opened up for Taiwanese goods. country alsogot the opportunity to conclude trade agreements with states with which it does not have diplomatic relations.

Taiwan's main foreign trade partners are China, the United States, Japan and the countries of Southeast Asia. Taiwan, whose economic position is heavily dependent on foreign trade with China, is taking steps to develop new trade avenues, particularly with Indonesia and the Philippines.

What sells to the world?

International trade has been the source of growth for the country's economy for the past 40 years. Taiwan is one of the largest manufacturers of integrated circuits and liquid crystal displays, network equipment and other electronics, accounting for about 32% of exports.

Main exports: semiconductors, petroleum products, automotive parts, ships, wireless communications equipment, displays, steel, electronics, plastics, computers. The volume of exports in 2017 amounted to 344.6 billion dollars. The main import items are related to the supply of raw materials and components, including oil, semiconductors, natural gas, coal, steel, cars, and textiles. The volume of imports in 2017 amounted to 272.6 billion dollars.

Economic relations with Russia

The structure of international trade between Taiwan and Russia is determined by the following factors: Taiwan's high degree of dependence on imports of raw materials, fairly low prices for Russian goods (due to the low exchange rate of the ruble), and the Russian market's high demand for high-tech products. The biggestdeliveries of raw materials and products from Russia to Taiwan are oil products and ferrous metals ($1.5 billion each). The third position is aluminum. Its deliveries amounted to 136 million dollars. Also, a large percentage falls on the supply of Russian raw materials for the Taiwanese food industry (m alt, starch, inulin, wheat gluten).

Taiwan's most important imports are electrical machinery and equipment ($670 million) and nuclear power equipment ($610 million). Ferrous metals are in the third position. Computers, laptops, smartphones made in Taiwan are also widely represented on the Russian market.

Prospects for development

The state and prospects of Taiwan's economy are reflected in the "Green Silicon Island" program, which implies the development of the "knowledge economy", environmental conservation, the widespread use of renewable energy sources and a fair society.

The government intends to build up the high-tech sector of the economy, including the opening of new industrial zones, where IT enterprises will be provided with tax incentives and all the necessary infrastructure for work. Taiwan intends to increase investment in research and development, including in the field of digital and biotechnology.

The country is already experiencing a shortage of qualified labor resources, so the system of highly specialized training and study abroad programs will be strengthened. Taiwan, economicwhose development is highly dependent on the global situation, should reconsider its concepts and reduce risks in the following positions:

• Relations with China, its largest foreign economic partner.
• Competition with other manufacturers of electronic components, primarily South Korea.
• Lack of manpower.
• Aging population.
• Diplomatic isolation.