ECONOMY

Taiwan holds an important position in the global economy. It is a top player in the world’s information and communication technology industry as well as a major supplier of goods across the industrial spectrum.

According to the World Trade Organization, Taiwan was the 17th largest exporter and 17th largest importer of merchandise in 2019. It was also one of the largest holders of foreign exchange reserves as of December 2019. Taiwan’s gross domestic product per capita reached US$25,909 in 2019. In terms of nominal GDP, Taiwan ranks close to Switzerland and Poland, while its GDP per capita expressed as purchasing power parity is similar to that of Sweden and Denmark and higher than that of Japan and South Korea.

After weathering the global financial crisis of 2009, Taiwan’s export-oriented economy took another hit in 2015, mainly due to the weak global demand for consumer electronics products, coupled with the falling price of crude oil. Taiwan’s economy grew only 1.47 percent and its overall trade volume decreased by 13.3 percent in 2015. The situation has improved since 2016, and statistics indicate that although in 2019 Taiwan’s overall exports decreased by 1.44 percent, imports increased by 0.32 percent, and its economy expanded 2.71 percent. While growth was modest due to the impact of the U.S.- China trade dispute, expanding domestic production driven by the reshoring of manufacturing companies helped to offset the drag. Growth had rebounded by January and February of 2020, with exports and imports respectively increasing by 6.4 percent and 5.3 percent and overall trade value rising 5.9 percent year on year.

Annual surveys of the world’s economies, including those conducted by the World Economic Forum, Business Environment Risk Intelligence and the Economist Intelligence Unit, have ranked Taiwan among the top nations year after year with respect to long-term growth and technological development. Results announced in 2019-2020 were no exception (see table “Global Survey Rankings” p. 58-59).

In July 2013, Taiwan signed an economic cooperation agreement with New Zealand, its first with a member of the Organization for Economic Cooperation and Development. An economic partnership accord was also inked with Singapore in November the same year, marking Taiwan’s first such pact with a trading partner in Southeast Asia. Both agreements go beyond WTO requirements.

Taiwan has also completed research with Indonesia and India on the feasibility of an economic cooperation agreement, with the results released in Jakarta in December 2012 and in New Delhi in September 2013, respectively. Developments such as the economic pacts with New Zealand and Singapore as well as the ECAs are expected to facilitate the country’s participation in such regional economic integration blocs as the Comprehensive and Progressive Agreement for Trans- Pacific Partnership and the Regional Comprehensive Economic Partnership.

Since May 2016, Taiwan has adopted the New Model for Economic Development. This seeks to boost growth by promoting innovation, increasing employment and ensuring the equitable distribution of economic benefits.

Under the model, Taiwan is striving to strengthen global and regional connections through initiatives such as the New Southbound Policy, which aims to diversify the nation’s international markets by expanding links with ASEAN member states, as well as South Asia, Australia and New Zealand. Taiwan will continue monitoring the development of regional economic integration and seek all possible opportunities for participation.

To boost domestic investment and enhance the nation’s global competitiveness, the New Model for Economic Development prioritizes the promotion of the 5+2 Industrial Innovation Plan. These are the five emerging and high-growth sectors of biotech and pharmaceuticals, green energy, national defense, smart machinery and Internet of Things, as well as two core concepts: the circular economy and a new paradigm for agricultural development. Also comprising the Asia Silicon Valley development plan in northern Taiwan’s Taoyuan City, the initiative seeks to cultivate core drivers of future growth.

The government is also promoting the Forward-looking Infrastructure Development Program to meet national infrastructure needs over the next 30 years. This program contains eight major elements: railway development, digital infrastructure, aquatic environments, food safety, green energy, urban-rural development, boosting birthrates and child care facilities, and nurturing talent and employment.