Expanding trading partners crucial for Taiwan's economy: Nobel laureate

Taipei, June 11 (CNA) Heavily dependent on trade, Taiwan should protect itself in this period of global economic gloom by expanding its trading partners, a visiting Nobel laureate in economics said on Monday.

"That's not going to solve the problem completely, but it will help spread the risk a little bit," Eric Maskin told reporters on the sidelines of a speech he gave in Taipei.

Maskin, who received his Nobel Prize in 2007 along with Leonid Hurwicz and Roger Myerson for laying the foundations of mechanism design theory, was invited to give speeches in Taiwan by Academia Sinica, Taiwan's highest research institute.

As Taiwan is an island country that relies heavily on trade, its economy would be closely affected by its trading partners' when the world is experiencing an economic downturn, Maskin said.

"I'm afraid that in a globalized world, countries like Taiwan which rely heavily on trade are vulnerable," said Maskin, who is currently an economics professor at Harvard University.

When asked for his opinion about the global economic outlook, Maskin said the United States economy will take another couple of years to "get back to something resembling (what it used to be before the economic downturn)," while the situation in the European Union is "clearer now than perhaps it was a few years ago."

"The recovery (of the U. S.) has been slow and I don't see any reason why it should speed up," he said, adding that the U. S. government has been doing nothing to promote recovery.

U.S. President Barack Obama wants to use stimulus measures, but Congress blocks them, according to the Nobel laureate. "The two cancel each other out. I don't see any prospects of that (deadlock) changing anytime soon," he said.

"In fact, it very well may continue till after the (presidential) election," he said, adding that even if Obama gets re-elected, "we'll see the same kind of deadlock for another two years, at least."

As for the euro zone, the economist suggested unification of the fiscal policy, which some countries would not appreciate, but is "essential" and "the only way it is going to survive in the long run."

"There are two choices: either you unify both, monetary and fiscal policies, or unify neither," Maskin said.

"Unifying one and not the other doesn't work at all. We're seeing that, but if you can't do that, then probably going back to the not so great but at least tolerable situation before the monetary union would be the best," he added.

However, Maskin still expressed optimism that unification of fiscal policy is possible.

Maskin, who is also famous for his contribution to game theory, the economics of incentives, and contract theory, is scheduled to give a talk entitled "Elections and Strategic Voting: Condorcet and Borda" on Tuesday.

(By James Lee)
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