1. Economic Development of Taiwan
LECTURER: JACK WU
吳文傑

2. How big is Taiwan’s Economy (GDP)?
Ranking
Country 1
USA 11
Canada 21
Iran 2
China 12
Australia 22
Sweden 3
Japan 13
Spain 23
Norway 4
Germany 14
Mexico 24
Poland 5
France 15
Korea 25
Belgium 6 UK 16
Indonesia 26
Argentina 7
Brazil 17
Turkey 27
Taiwan 8
Russia 18
Netherland 28
Austria 9
Italy 19
Saudi Arabia 29
South Africa 10
India 20
Switzerland 30
UAE

3. GDP Per Capita 2012 GDP per capita (nominal) GDP per capita
(Purchasing Power Parity)
Singapore
51162
60410
Japan
46736
36266
Hong Kong
36667
51494
South Korea
23113
32272
Taiwan
20328
38749
Malaysia
10304
16922
China
6076
9162
Thailand
5678
10126

4. GDP Per Capita (PPP) world ranking
GDP (PPP)
GDP(PPP)
3. Singapore
60410
19. Taiwan
38749
5. Hong Kong
51494
20. Belgium
37883
6. USA
49922
21. Denmark
37657
8. Switzerland
45418
22. UK
36941
9. Canada
42734
23. Finland
36395
10. Australia
42640
24. Japan
36266
11. Austria
42409
25. France
35548
15. Sweden
41191
26. Israel
32312
18. Germany
39028
27. Korea
32272

5. Credit Suisse Ranking of Net Wealth of Middle Class
1. Australia
11.Austria
21 Arab Emirates
2. Luxembourg
12.Canada
22. Taiwan
3. Japan
13. France
23. Germany
4. Italy
14.Norway
24.Sweden
5. Belgium
15.Finland
25. Cyprus
6. UK1
16.New Zealand
26. Kuwait
7. UK2
17. Netherland
27. USA
8. Iceland
18.Ireland
9. Singapore
19.Qater
10. Switzerland
20.Spain

6. Top Export Countries Ranking Country 1 China 11 Italy 2 USA 12 Canada3
Germany 13
Spain 4
Japan 14
Singapore 5
France 15
Saudi Arabia 6
Korea 16
Mexico 7
Netherlands 17
UAE 8
Russia 18
India 9 HK 19
Switzerland 10 UK 20
Taiwan

7. Top Import Countries Ranking Country 1 USA 11 Netherlands 2 China 12
Italy 3
Germany 13
Thailand 4
Japan 14
Mexico 5 UK 15
Russia 6
France 16
Spain 7
Korea 17
Belgium 8
India 18
Switzerland 9 HK 19
Taiwan 10
Canada 20
Australia

8. Which Ones are Taiwanese Companies?
Foxconn
Hon Hai
TSMC
Formosa Plastic Co.
HTC
ACER
ASUS
Trend Micro
MASTER KONG
WANT-WANT
GIANT
SYNNEX
MAXXIS
85 C
ADVANTECH
MERIDA
D-LINK
UNI-PRESIDENT
ZYXEL
JOHNSON
CYBERLINK
TRANSCEND
DELTA
WOWPRIME

9. Major Economic Indicator of Taiwan
Year
GDP Per Capita(US$)
GDP Growth Rate(%)
Average GDP Growth Rate(10 year,%)
Unemployment Rate(%)
CPI Growth Rate(%)
AverageCPI Growth Rate(%)
Gini coefficient
Foreign reserve(billion US$)
1970
393
11.40
9.4
1.70
3.60
3.4
0.294
1975
978
4.90 -
2.40
5.20
0.312
1980
2385
7.80
9.8
1.23
19.00
10.4
0.277
1985
3290
13.50
2.91
-0.20
0.290
225.6
1990
8124
3.80
7.7
1.67
4.10
3.1
724.4
1995
12918
6.38
1.79
3.70
0.317
903.1
2000
14704
5.80
6.2
2.99
1.30
2.6
0.326
1067.4
2001
13147
-1.65
4.57
-0.01
0.350
1222.1
2002
13404
5.26
5.17
0.345
1616.6
2003
13773
3.67
4.99
-0.28
0.343
2066.3
2004
15012
6.19
4.44
1.62
0.338
2417.4
2005
16051
4.70
4.13
2.30
0.340
2532.9
2006
16491
5.44
3.91
0.60
0.339
2661.5
2007
17154
5.98
1.80
2703.0
2008
17399
0.73
4.14
3.53
0.341
2917.1
2009
16359
-1.87
3.2
5.85
-0.87
0.9
3482.0
2010
18503
4.72
5.21
-0.96
0.342
3820.1
2011
20006
4.07
5.39
1.42
3855.5
2012
20386
1.32
4.24
1.93
4031.7
Source: Directorate-General of Budget, Accounting and Statistics, Statistic Abstract of National Income, Executive Yuan, Taiwan.

10. Economic Development Stages
I. Before Take-off: Prior to 1965
1. Japanese Colonial Era (before 1945)
2. Taiwan’s economy before take-off
3. Reasons for success
II. Take-off and golden years (Post-1965)
4. Export expansion policy,
5. Second import substitute policy,
6. High-tech industry, 1980-
7. Financial liberalization, 1990-
8. Macroeconomic performance

11. Economic Development Stages
III. After Golden Years (Post-1990)
9. Open direct investment in China, 1990-
10. Jie Ji Yong Ren policy 戒急用忍,
11. Join World Trade Organization, 2002-
12. Cross-strait Direct Flight, 2008-
13. Sign ECFA with China, 2010-

12. Before Takeoff Japan contributed to Taiwan’s economy
KMT brought 2 million mainlanders (human capital) to Taiwan
228 event caused tension between Taiwanese and mainlanders
Martial Law and post-war economy

13. Taiwan’s economy under Japanese colonial era
Infrastructure
irrigation system
railroad and rural road system
farmers’ association and cooperation
Education achievement and public health
GDP
Industrial structure

14. Taiwan’s economy after KMT came to Taiwan
Land reform
2) U.S. Aid ( )
3) Major Economic problems
4) Major Economic policies
5) Economic performance

15. Land Reform Reduction of farm rents (1952)三七五減租
Land-to-tiller program (1953)耕者有其田

16. US aids:

17. Major Economic Problems in the 1950s
large government deficit
high inflation rate
overvalued NTD
large trade deficit

18. Major Economic Policy: Import Substitute (1953-1965)
1953 the first four-year plan
to reduce import and to save foreign reserve
industrial consumer goods: textile products and plastic materials

22. The reasons of success between 1953-1965
1) Infrastructure of Japanese colonial era
2) US AID
3) Human capital from China (2 millions)
4) Successful land reform

23. Take Off and Golden Years (Post-1965)
Export expansion policy,
Second import substitute policy,
High-tech industry, 1980-
Financial liberalization, 1990-
Macroeconomic performance

24. Export-expansion policy : 1965-80
1965 Export Processing Zone (EPZ)
labor-intensive goods
i. clothes, shores, plastic toys, umbrella
ii. consumer electronic products
1971 first year with trade surplus
golden years

25. Key Projects in 1970s: Ten Major Projects, 1974-1979
freeway, electric rail road, inte’l airport, Taichung port
Fomorsa Plastic, China Steel, China Ship Building co.,

26. Second import-substitute policy : 1975-80
new industries: machinery, chemical, etc
technology improvement

27. . High-tech industry (IT industry): 1980-
Industrial Technology Research Institute, 1973
Hsin-Chu Science Park, 1980
High-tech companies：
ACER, TSMC, UNC,
ASUS, BENQ, Trend Micro(PC-Cellian)
Tainan Science Park,
Taichung Science Park
Nan-Hu Science Park

28. All Patents Granted in USPTO
Country
2012
Accumulated
Japan
50677
902998
Germany
13835
360194 UK
5213
146564
France
5386
134641
Taiwan
10646
104954
Korea
13233
103895
China
4637
17284

29. . Financial liberalization: 1990-
interest rate liberalization (1986,1989)
managed free exchange rate system (1979)
free foreign exchange in and out
(1987, 5 millions USD))
private banks (1991)
bubble in the asset market (real estate and stock) ( )

30. Economic performance high growth rate low inflation rate
low unemployment rate
evenly income distribution

36. Post-Golden Years Open direct investment in China, 1990-
Jie Ji Yong Ren policy 戒急用忍,
Join World Trade Organization, 2002-
Cross-strait Direct Flight, 2008-
Sign ECFA with China, 2010-

37. The Reasons for Taiwan’s FDI to mainland China
New Taiwan dollar appreciation (by 30 % from 1985 to 87)
abolished martial law (1987/11)
comparative advantage
labor-intensive industries
export-oriented industries
4.Same language and similar culture

38. Taiwan’s FDI to China

39. China’s FDI Source (2006) Country(area) Number Rank Amount Hong Kong
269555 1
279.7 billion
Taiwan
71847 2
43.8 billion 5
USA
52211 3
53.9 billion 4
Korea
43130
34.9 billion 6
Japan
37714
57.9 billion
Virgin island
16616
57.1 billion
Singapore
15556 7
30.0 billion
Macau
10697 8
6.9 billion 11
Canada
9788 9
5.4 billion 12 UK
5359 10
13.9 billion

40. Updated figures FDI from Taiwan in 2012: 2229 cases, 2.85 billion
Accumulated FDI from Taiwan ( up to Dec. 2012):88001 cases, billion (4.5%)

41. The reasons for high growth rate of bilateral trade:
1. comparative advantage:
per capita GDP in 1979: Taiwan US$ 1,763 China US$265
in 2008: Taiwan US$15,313 ChinaUS$3270
in 2012: Taiwan US$20328 China US$6076
2. trade-creating effect by Taiwan’s FDI to China:
raw materials and intermediate goods
intra-industrial trade
3. same language and similar culture

42. Bilateral Trade across the Taiwan Strait

43. Trade Dependence across the Taiwan Strait

44. Trade Across Taiwan Straits
Taiwan’s export to China in 2012: US$ billions
Taiwan’s import from China in 2012: US$36.78 billions
Total trade: US$ billions
Trade surplus: US$95.4 billions

45. Economic Cooperation Framework Agreement (ECFA) across the Strait
The emergence of Asian economic integration:
Asian Economic Integration