Video #18 - Taiwan: Moving to a Knowledge-Based Economy
Tuesday, January 10, 2006BACKGROUND INFORMATION
Taiwan's economic progress since World War II has been remarkable. Thanks to economic liberalization and international cooperation, Taiwan (Republic of China) has enjoyed quick industrialization and a steady rise of per capita income for its 23 million people. It has also been able to maintain stability amid global economic fluctuations. Taiwan's is now the 14th largest trading entity in the world.
At the end of the 1950's, the ROC became the world's principal exporter of labor-intensive products. The government adopted policies of minimal intervention, allowing market forces to determine the direction of its industry's development. As a result, a large number of small and medium-sized businesses developed to serve global markets.
However, by the 1980s, trade surpluses which paralleled Taiwan's rapid growth in exports led its New Taiwan Dollar to appreciate rapidly. Then other developing nations imitated Taiwan's formula for success. As competition began to take its toll on the ROC's economy, the government went about upgrading its industry to create a mix of products closer to those in most developed nations.
According to the ROC's Government Information Office, "Ten years ago, only 18 percent of Taiwan's total exports were highly capital and technology intensive products, but today, over 40 percent are. Labor-intensive products used to make up 48 percent of all Taiwan's exports, but now comprise less than 20 percent." Additionally, Taiwan is the world's third-largest producer of information products, behind only the US and Japan.
In September, 2003 The Taipei Economic and Cultural Office announced "Challenge 2008: Six-year National Development Plan." It was described as a "two star, double trillion" plan. The "two star" refers to the digital-content and biotechnology industries. The "double trillion" are the semiconductor and display industries. Each is targeted to exceed the NT 1$ trillion mark (or US $29.33 billion) by 2006.
Premier Yu Shyi-kin added that the government would invest US$14.6 billion over the next five years to establish the island as a functioning wireless environment. Those funds will increase Taiwan's wireless broadband and Internet-surfing capability. Meanwhile, research centers have been set up by Hewlett-Packard, Microsoft, Dell and Sony at a total investment of US$234 million and 30 other multinational companies are expected to follow. That should boost Research & Development's share of gross domestic product from the present 2.1 percent to 3 percent.
Intel's Chief Executive Officer Craig Barrett reacted by saying: "Taiwan has a unique opportunity to build upon its strengths in design and manufacturing to play a key role in the creation of future technologies." Mr. Barrett suggested that in order to offset the exodus of manufacturing sector companies to China, Taiwan must integrate the computer and communications industries. (Manufacturing dropped from 46.2% of its GDP in 1985 to 30.5% in 2003).
The Taiwan News reports that the photonics industry in Taiwan will also lead the way into the future. According to Jason Pan: "By combining new nanotechnology and laser applications, the local photonics R&D is ahead of rival competitors in Japan and South Korea. He noted that an NTU team "has came out with an optical disk innovation that is capable of containing over 100 gigabytes data, which is 150 times the current CD-R storage and 20 times that of available DVD."
Taiwan's plans for future development will be hampered by the Closer Economic Partnership Arrangement (CEPA) that went into effect on January 1, 2004. This agreement, between China and Hong Kong, will mean greater competition for Taiwan's the service industry-which accounted for 67.6% of Taiwan's GDP in 2003. Businesses such as legal services, medical services, banking and insurance will certainly suffer. Ironically, these are the same businesses Taiwan is counting on to make up for the migration of its manufacturing industries to Mainland China.
SOURCES
"Intel, Phoenix reveal plans for R&D centers." Taipei Economic and Cultural Office, September, 2003
"Growth in Taiwan Manufacturing Industry Hits 26-Year Low." People's Daily Online. http://english.peopledaily.com.cn/
"Specific Measures for Taiwan's Economic Development and Liberalization over the Past Decade and into the Future." Government Information Office, Republic of China.
Chi-chang, Hong, "New era for cross-strait economy." Taipei Times, January 5, 2004 http://www.taipeitimes.com.
Heaney, Bill, "Tech sector needs to face change." Taipei Times, November 18, 2002. http://www.taipeitimes.com
Pan, Jason, "Taiwan photonics industry to reach NT$640b in 2003." Taiwan News, December 24, 2003. TaiwanNews.com
LESSON PLAN
GRADE LEVEL/SUBJECT:
10-12 grade Economics, International Relations, World History, Geography, International Baccalaureate Programs (IB), Current Events.
PURPOSE:
To present activities to be used in a variety of classroom situations in order to enhance student understanding of the Asian economy and its significance globally.
OBJECTIVES:
Students will be able to:
- Analyze Taiwan's geographic, political and economic advantages and disadvantages in the Asian region.
- Synthesize the economic history of Taiwan.
- Predict the future of Taiwan's economy.
MATERIALS:
- Background information provided.
- Resources on Taiwan available at your school's Media Center and the Public Library System in your area.
- Background information available through Internet "search engines".
ACTIVITIES:
May be assigned as group activities or as individual tasks. They may also be designed as preparation for related presentations either by individuals or groups.
- Illustrate the location of Taiwan, The People's Republic of China, Hong Kong and Japan.
- Use charts and graphs to illustrate the development of Taiwan's economy since World War II.
- Create a timeline of events to depict the history of Taiwan's economy.
- List the major industries in Taiwan.
- Allow cooperative learning groups to research similar economic data for Japan, The People's Republic of China and Hong Kong.
- Draw conclusions about the competition in the area from the information gathered by writing editorials about the economic future of the area.
- Role play a meeting of an Economic Development Council in Taiwan and use the information gathered above to create a plan for the next ten years.
EVALUATION:
Individual assignments should be graded by the teacher using established criteria.
Group activities, presentations and projects may be evaluated by teachers and students using the following criteria and scale: Content 1 = Superior (A) Creativity 2 = Excellent (B) Clarity 3 = Good (C) 4 = Fair (D) 5 = Poor (F)
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