TAIWANAND ITS ECONOMIC DEVELOPMENT

Taiwan is an islandnation located inthe Pacific Oceanoff the southeastcoast of China.

History

• The island of Taiwan has been inhabited for thousands of years. It was first discovered by Europeans in 1544 by the Portuguese. They called the island Formosa, meaning beautiful island. In 1624 the Dutch made the island a colony and established settlements there. In 1683 the Chinese defeated the Dutch and eventually Taiwan would become a full province of the Chinese Empire.

History• After a war between China and Japan,

Japan gained control of the island in 1895. Japan did a lot to help develop Taiwan's economy. However, Taiwan went back to Chinese rule after Japan was defeated in World War II. At the same time, a civil war was being fought between the communists, led by Mao Zedong, and the KMT government, let by Chiang Kai-shek. When the communists won, 2 million refuges fled mainland China to Taiwan. Chiang Kai-shek established the People's Republic of China on the Island of Taiwan in 1949.

Total Size: 36, 193 square km

Size Comparison: slightly smaller than Maryland and Delaware combined

Geographical Coordinates: 23 30 N, 121 00 E

World Region or Continent: Southeast Asia

General Terrain: eastern two-thirds mostly rugged mountains; flat to gently rolling plains in west

Geographical Low Point: South China Sea 0 m

Geographical High Point: Yu Shan 3,952 m

Climate: tropical; marine; rainy season during southwest monsoon (June to August); cloudiness is persistent and extensive all year

Official language of Taiwan is Mandarin Chinese.

Taiwanese (Min), Hakka dialects

The population in Taiwan is 23, 373,517.

female: 11,688,843 male: 11,684,674

Type of Government: multiparty democracy

Independence: 10 October (1911)

National Holiday: Republic Day (Anniversary of the Chinese Revolution), 10 October (1911)

Nationality: Taiwan (singular and plural)

Religions: mixture of Buddhist, Confucian, and Taoist 93%, Christian 4.5%, other 2.5%

National Symbol: white, 12-rayed sun on blue field

National Anthem or Song: Zhonghua Minguo guoge (National Anthem of the Republic of China)

electronics

petroleum refining

armaments

chemicals

iron and steels

machineries

cement

rice

corn

vegetables

fruits

poultry

fish

small deposits of coal

limestone

marble

asbestos

TAIWAN’S ECONOMIC DEVELOPMENT

• The rapid progress of Taiwan’s SMEs is attributable to the economic, social and educational policies adopted by their government, such as:

• The Land to the Tiller Program (1953)

• The Economic Construction Plan (1953)

• Ten Major Construction Projects (1973)

TAIWAN’S ECONOMIC DEVELOPMENT

• Along with other measures adopted in the areas of economic development, manpower resources, social stability and public construction, provided the SMEs with excellent environment in which to grow and develop.

• After the Asian financial crisis in 1987, Taiwan was able to readily recover from the impact of the crisis, hence, its SMEs became models for other Asian countries to follow.

THE DEVELOPMENT OF TAIWAN’S SMALL & MEDIUM ENTERPRISES

(SMEs)

THE FIRST PERIOD – the 1940s :A PERIOD OF ECONOMIC RECONSTRUCTION

• Taiwan's economy suffered heavily during the 2nd World War. Their agricultural sector was the least affected and easily recovered, which served as Taiwan's foundation for development in the early post-war years.

THE FIRST PERIOD – the 1940s :A PERIOD OF ECONOMIC RECONSTRUCTION• The government focused on

agricultural and industrial construction, reconstruction of the transportation network and implemented land reform.

• Development of the textile and electric power industries was prioritized so as to increase agricultural and industrial production.

THE SECOND PERIOD – the 1950s :THE IMPORT SUBSTITUTION PERIOD

• This stage consists of Taiwan's period of import substitution based on labor-intensive light industries, with the use of simple production technology.

• Measures were adopted by the government which helped to increase agricultural production, thereby providing raw materials required by the agricultural products processing industry. With the exportation of agricultural products, both processed and unprocessed, Taiwan was able to earn foreign exchange.

THE SECOND PERIOD – the 1950s :THE IMPORT SUBSTITUTION PERIOD

• Private enterprises were encouraged to import raw materials, semi-finished products and machinery to produce consumer goods which could replace imports in the domestic market.

• The progress of SMEs speeded up, and enterprises with ten or fewer employees came to account for over 90% of all enterprises in Taiwan. Most of these enterprises were producing for the domestic market.

THE THIRD PERIOD – the 1960s :A PERIOD OF RAPID EXPORT GROWTH

• When the government implemented the Statute for the Encouragement of Investment and promulgated regulations governing the establishment of export processing zones, private enterprises in Taiwan began to display ever-increasing vitality.

• Aside from export-oriented firms in the food and textiles industries, enterprises in the electromechanical, electrical appliance and plastics industries also exhibited high production value and export growth, and this signaled the emergence of SMEs producing components for the larger firms.

THE THIRD PERIOD – the 1960s :A PERIOD OF RAPID EXPORT GROWTH

• Flexibility, coupled with abundant supply of cheap labor, made Taiwan's SMEs very competitive in the international scene. The percentage of enterprises accounted for by enterprises with ten or fewer employees fell to under 70%, while the percentage accounted for by medium-sized enterprises rose to over 25%. Large enterprises accounted for around 5% of the total.

THE FOURTH PERIOD – the 1970s :THE 2ND IMPORT SUBSTITUTION PERIOD

• During this period, the overall growth rate for labor-intensive light industries rose to new heights, the economy as a whole continued to grow, and Taiwan began to develop a trade surplus.

• The government launched its major construction projects in order to promote the development of capital-intensive basic industries such as iron and steel, petrochemicals, textiles, machinery manufacturing, auto manufacturing, etc…

THE FOURTH PERIOD – the 1970s :THE 2ND IMPORT SUBSTITUTION PERIOD

• Focus on the improvement of Taiwan's infrastructure with the establishment of the Industrial Technology Research Institute, and later the Hsinchu Science-based Industrial Park.

• Two oil crises occurred during the 1970s, yet Taiwan's SMEs weathered the oil crises, and was able to recover with a significant growth in the percentage of total production value, employment and capitalization.

THE FIFTH PERIOD – the 1980s :THE EMERGENCE OF TAIWAN’S HI-TECH

INDUSTRIES

• With the continuing growth rate of the business environment in Taiwan, wages increased and the New Taiwan dollar appreciated against the US dollar. There was shortage in workers and higher real estate prices for industrial use.

• The government thus started to promote the development of strategic industries that were characterized by a high level of technology, high value added and low energy consumption. With the establishment of the Hsinchu Science-based Industrial Park to facilitate the development of hi-tech industries, enterprises were encouraged to step up their research and development activities, improve productivity and quality, and enhance their international competitiveness.

THE FIFTH PERIOD – the 1980s :THE EMERGENCE OF TAIWAN’S HI-TECH

INDUSTRIES

• Taiwanese enterprises began to transform and upgrade themselves and invest overseas.

• While the importance of SMEs to the economy as a whole continued to increase, a structural transformation was taking place in the production and sales mechanism. A new breed of SMEs in technology-intensive industries began to emerge.

THE SIXTH PERIOD – the 1990s :A PERIOD OF CHANGING INDUSTRIAL

STRUCTURE

• Taiwan government worked hard to improve the investment environment and foreign technology, so as to help in the upgrading of their domestic industry.

• Taiwan gradually lost its competitive advantage in labor-intensive products with low added value. Hence, the government promulgated the Statute for Small and Medium Enterprise Development, along with the Statute for Upgrading industries and the Six-year National Development Plan.

THE SIXTH PERIOD – the 1990s :A PERIOD OF CHANGING INDUSTRIAL

STRUCTURE• In 1997, the SMEs Protection Clause was incorporated into the Constitution,

and the government began to pay more attention to the survival and development of SMEs.

• Public construction was initiated, and tax incentives were used to stimulate research and development, manpower training, the automation of production and pollution prevention.

• SMEs gradually upgraded or transformed themselves so that they became more knowledge-intensive, technology-intensive and innovation-intensive.

THE SEVENTH PERIOD – from the 2000s to the present :

A PERIOD OF INNOVATION AND R&D• The arrival of the knowledge-based economy era,

aided by the application of the Internet, e-commerce and IT, has provided SMEs with new operating model and has enhanced the speed and efficiency of business operations.

• In January 2002, Taiwan joined the World Trade Organization(WTO). Its economic environment has become more liberalized, making Taiwan a part of the global industrialized system.

• The government has disclosed its intention to build Taiwan into a Green Silicon Island, thus revealing its vision for national development in the new century.

THE SEVENTH PERIOD – from the 2000s to the present :

A PERIOD OF INNOVATION AND R&D• It has also continued to promote its Global Logistic

Development Plan, Knowledge-based Economic Development Proposal, Plan to Stimulate Conventional Industries, its Concrete Action Plan for the Implementation of Resolutions reached at the National Economic Development Conference and its Challenge for 2008: Focal Plan for National Development.

• The 2008 Challenge includes the promotion of innovation-oriented industrial policy, the creation of R&D centers in Taiwan by foreign corporations, the setting up in Taiwan of local innovation and incubation centers for SMEs, the establishment of the Nankang Software Incubation Center, Southern Science Incubation Center, and Nankang Biotech Incubation Center.

THE SEVENTH PERIOD – from the 2000s to the present :

A PERIOD OF INNOVATION AND R&D

• The ultimate objective of all these projects is to lead SMEs towards a high value-added industrial era featured by innovation, invention, and research and development.

• The economic development in 2012 emphasizes knowledge-intensive innovation. Economic development today involves far more than just traditional manufacturing industry; the key drivers of growth for Taiwan in the future will be the innovation economy and environmental protection-related demand.

• The last few years have seen a pronounced trend towards the formation of multilateral and bilateral free trade agreements (FTAs) and comprehensive economic partnership agreements (CEPAs) within the Asia region.

THE SEVENTH PERIOD – from the 2000s to the present :

A PERIOD OF INNOVATION AND R&D

• Taiwan cannot afford to isolate itself from this trend. The fifth "Chiang-Chen Meeting" saw the signing of the Economic Cooperation Framework Agreement (ECFA), marking the beginnings of a mechanism for free trade between Taiwan and China.

• On September 22, 2011 Taiwan signed a Bilateral Investment Agreement (BIA) with Japan, covering the three key areas of investment promotion, investment protection and investment liberalization.

• Also, the Trans-Pacific Strategic Economic Partnership Agreement (TPP) was a major focus of discussion at the Asia-Pacific Economic Cooperation (APEC) which can help Taiwan to gradually secure fuller participation in the process of regional economic integration in East Asia