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Kaohsiung Harbor, a natural deep-water port at the southern end of Taiwan, is a major transshipment center for the Asia-Pacific region. (Berlin Chi) |
Taiwan’s solid economic fundamentals ensured that it escaped relatively unscathed from the adverse effects of the Asian financial turmoil in the late 1990s. However, the island’s export-oriented economy has left it susceptible to the economic downturn resulting from the current global financial crisis. The real GDP growth rate for 2008 was revised downward to 0.12 percent. Nonetheless, according to the World Trade Organization, Taiwan was the world’s 18th-largest merchandise exporter and importer in 2008. It also had the fourth-largest foreign exchange reserves in the world at the end of that year.
Authoritative annual surveys of the world’s economies—including those conducted by the World Economic Forum, Business Environment Risk Intelligence, the International Institute for Management Development (IMD) and the Economist Intelligence Unit—have consistently ranked Taiwan among the world’s top nations with respect to potential for long-term economic growth and technological development. Survey results for 2008-2009 (see table “Global Survey Rankings”) were no exception.
Small and medium-sized enterprises, accounting for nearly 98 percent of all enterprises in Taiwan, play a critical role in the nation’s economy. Their efficiency in asset utilization, strong innovation capacity and increased R&D spending have facilitated faster growth than larger enterprises in both capital and labor productivity over recent years. Their outstanding performance ranked them fourth in the world and second in Asia in world competitiveness in a 2008 IMD survey.
As in preceding years, the information and electronics industry continued to perform well, registering a year-on-year increase of 6.82 percent in production volume despite a decline of 1.56 percent in the manufacturing production index. The lion’s share of high-tech revenues were generated by companies located in the Hsinchu Science Park, Southern Taiwan Science Park and Central Taiwan Science Park. According to the National Science Council, the combined revenues of these three parks amounted to US$59 billion in 2008.
The Hsinchu Science Park, with 70 percent of its revenues coming from the integrated-circuit (IC) industry, helped Taiwan maintain its dominant hold on the world IC market. In 2008, Taiwan enjoyed a 64-percent global market share in the IC chip contract manufacturing sector—an industry pioneered here—as well as 47 percent of the IC packaging market and 65 percent of the IC testing market. With eighteen 12-inch IC wafer foundries currently in operation and six more under construction, Taiwan’s chipmakers are solidly positioned to keep the lead in contract manufacturing for years to come.
The ROC government has moved quickly to stimulate domestic demand as a means of sustaining economic growth momentum until the prospects for global economic recovery become clearer. A NT$500-billion (US$15.86-billion), four-year economic stimulus package has been launched. It incorporates part of the “i-Taiwan 12 Projects,” covering transportation, industry and environmental conservation, which were a major plank in President Ma Ying-jeou’s campaign platform. About 10 percent of the budget will be allocated to green energy development, a high priority on the administration’s agenda, with a view to stimulating investment and reducing Taiwan’s carbon emissions.
Economic Profile (2008)
GDP (nominal): US$391.278 billion
GDP per capita (nominal): US$17,083
GDP per capita (PPP estimate by IMF): US$30,881
Services accounted for 73.17 percent of GDP. Key players in this sector included wholesale and retail operations (19.23 percent of GDP), financial services and insurance (10.02 percent), real estate and leasing businesses (8.59 percent), and transportation, storage and communications providers (5.85 percent).
Manufacturing accounted for 21.85 percent of GDP. Important manufactured goods included IC chips, LCD panels, other semiconductor and electronic components, precision instruments, electrical machinery, mechanical and electrical appliances, textiles, plastics and other petrochemical products, and iron and steel.
Agriculture and other sectors (such as construction, mining and gas) accounted for 4.98 percent of GDP.
Trade and Investment Profile (2008)
Bilateral trade volume: US$496.08 billion
Exports: US$255.63 billion
Imports: US$240.45 billion
Trade balance: US$15.18 billion surplus
Top export destinations: Chinese mainland (including Hong Kong) 39.0 percent, ASEAN-6* 15.0 percent (Singapore 4.6 percent), United States 12.0 percent, European Union 11.0 percent (Germany 2.2 percent), Japan 6.9 percent, South Korea 3.4 percent
Top import sources: Japan 19.3 percent, mainland China (including Hong Kong) 13.7 percent, United States 10.9 percent, European Union 8.2 percent (Germany 3.1 percent), Saudi Arabia 6.3 percent, South Korea 5.5 percent
Foreign exchange reserves: US$317.56 billion (June 2009)
Registered inward investment: US$8.23 billion
Registered outward investment: US$15.16 billion (Chinese mainland-bound: US$10.69 billion)
*ASEAN-6: Six of the 10 member states of the Association of Southeast Asian Nations, namely Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam
|
Global Survey Rankings |
Topic of Survey
(Date of Publication) |
Rank |
Countries Surveyed |
Surveying Institution |
Investment climate
(April 2009) |
5 |
50
|
Business Environment Risk Intelligence |
Global competitiveness
for 2008-2009
(October 2008) |
17
|
134
|
World Economic Forum |
Business environment ranking for 2009-2013
(April 2009) |
16
|
82
|
Economist Intelligence Unit |
| Information Technology Industry Competitiveness Index (September 2008) |
2
|
66
|
Economist Intelligence Unit |
Networked Readiness Index for 2008-2009
(March 2009) |
13
|
134
|
World Economic Forum |
| Information and Communication Technology Development Index for 2007 (March 2009) |
25
|
154
|
U.N. International Telecommunication Union |
E-government performance
(August 2008) |
2 |
198 |
Brookings Institution |
