Economy of Taiwan
Encyclopedia
Taiwan
has a developed
capitalist
economy that ranks as the 19th largest in the world by Purchasing power parity
(PPP) and 24th in nominal GDP of investment and foreign trade by the Republic of China
(ROC) government which governs Taiwan. In keeping with this trend, most large government-owned banks and industrial firms have been privatized. Real growth in GDP
has averaged about 8% during the past three decades. Exports have grown even faster and since World War II
, have provided the primary impetus for industrialization. Inflation and unemployment are low; the trade surplus is substantial; and foreign reserves are the world's fourth largest. Agriculture contributes 3% to GDP, down from 35% in 1952, and the service sector makes up 73% of the economy. Traditional labor-intensive industries are steadily being moved off-shore and replaced with more capital- and technology-intensive industries, as well as creative industries
.
Taiwanese
investors and businesses have become major investors in mainland China
, Vietnam
, Thailand
, Indonesia
, the Philippines
, and Malaysia. The tightening of labor markets has led to an influx of foreign workers, both legal and illegal. Because of its conservative financial approach and its entrepreneurial strengths, Taiwan suffered little from the Asian Financial Crisis of 1997-1999 compared to many of its neighbors. Unlike in neighboring Japan
and South Korea
, small and medium-sized businesses make up a large proportion of businesses in Taiwan.
Taiwan is a member of the Asian Development Bank
(ADB), the World Trade Organization
(WTO), and the Asia-Pacific Economic Cooperation
(APEC) forum. Taiwan is also an observer at the Organisation for Economic Co-operation and Development
(OECD). Taiwan's top five trade partners in 2010 are China
, Japan
, USA
, the European Union
, and Hong Kong
.
.
Taiwan has historically benefited from the flight of many well-educated, wealthy Chinese to settle on the island: during early Qing Dynasty
, the preceding Ming dynasty supporters
survived for a brief period of time in exile in Taiwan, and in 1949, as the Chinese Communist Party gained control of mainland China, two million Kuomintang
(KMT) supporters fled to the island.
The first step towards industrialization was land reforms, a crucial step in modernizing the economy, as it created a class of landowners with capital they can invest in future economic endeavors. US aid was also important to stabilize post-war Taiwan, and it constituted more than 30 percent of domestic investment from 1951 to 1962. These factors, together with government planning and universal education, brought huge advancement in industry and agriculture, and living standards. The economy shifted from an agriculture-based economy (32% of GDP in 1952) to an industry-oriented economy (47.% of GDP in 1986). Between 1952 and 1961, the economy grew by an average of 9.21% each year.
Once again, the transformation of Taiwan's economy cannot be understood without reference to the larger geopolitical framework. Although aid was cut back in the 1970s, it was crucial in the formative years, spurring industrialization and security and economic links were maintained. Uncertainty about the US commitment accelerated the country’s shift from subsidized import-substitution in the 1950s to export-led growth. Development of foreign trade and exports helped absorb excess labor from the decreased importance of agriculture in the economy. Like Korea
, Taiwan
moved from cheap, labor-intensive manufactures, such as textiles and toys, into an expansion of heavy industry and infrastructure in the 1970s, and then to advanced electronics
in the subsequent decade. By the 1980s, the economy was becoming increasingly open and the government moved towards privatization of government enterprises. Technological development led to the establishment of the Hsinchu Science Park in 1981. Investments in mainland China
spurred cross-strait trade, decreasing Taiwan's independence on the United States market. From 1981-1995, the economy grew at an annual rate of 7.52%, and the service sector became the largest sector at 51.67%, surpassing the industrial sector and becoming a major source of the economy's growth.
and China grow and its efforts to develop European markets produce results. Taiwan's accession to the WTO and its desire to become an Asia-Pacific "regional operations center" are spurring further economic liberalization.
development, small and medium-sized businesses, tax breaks for new investments, and low-income households. Boosting shipments to new overseas markets, such as Russia
, Brazil
, and the Middle East
was also a main goal of the stimulus. The economy has since slowly recovered; by November 2010, Taiwan's unemployment
rate had fallen to a two-year low of 4.73% and is expected to continue to drop through the first half of 2011. The average salary
has also been rising steadily for each month in 2010, up 1.92% from the same period in 2009. Industrial output
for November 2010 reached another high, up 19.37% from a year earlier, indicating strong export
s and a growing local economy. Private consumption
is also increasing, with retail
sales up 6.4% compared to 2009. After 10.5% economic growth in 2010, the World Bank
expects growth to continue and reach 5% for 2011.
(WTO) as Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (often shortened to "Chinese Taipei"-both names resulting from PRC interference on the WTO) in January 2002. In a 2011 report by Business Environment Risk Intelligence (BERI), Taiwan ranked third-best globally for its investment environment.
Taiwan is the world's largest supplier of contract computer chip manufacturing (foundry services) and is a leading LCD panel
manufacturer, DRAM computer memory, networking equipment, and consumer electronics designer and manufacturer. Textile
s are another major industrial export sector, though of declining importance as Taiwan due to labor shortage
s, increasing overhead costs, land prices, and environmental protection
. Imports are dominated by raw materials and capital goods, which account for more than 90% of the total. Taiwan imports most of its energy needs. The United States is Taiwan's third largest trading partner, taking 11.4% of Taiwanese exports and supplying 10.0% of its imports. China has recently become Taiwan's largest import and export partner. In 2010, the PRC accounted for 28.0% and 13.2% of Taiwan's exports and imports respectively (excluding Hong Kong
). This figure is growing rapidly as both economies become ever more interdependent. Imports from China consist mostly of agricultural and industrial raw materials. Exports to the United States are mainly electronics and consumer goods. As Taiwanese per capita income level has risen, demand for imported, high-quality consumer goods has increased. Taiwan's 2002 trade surplus with the United States was $8.70.
The lack of formal diplomatic relations between the Republic of China (Taiwan) with Taiwan's trading partners appears not to have seriously hindered Taiwan's rapidly expanding commerce. The Republic of China maintains cultural and trade offices in more than 60 countries with which it does not have official relations to represent Taiwanese interest. In addition to the WTO, Taiwan is a member of the Asian Development Bank
as "Taipei, China" (a name resulting from PRC influence on the bank) and the Asia-Pacific Economic Cooperation
(APEC) forum as "Chinese Taipei
" (for the same reason as above). These developments reflect Taiwan's economic importance and its desire to become further integrated into the global economy.
The Economic Cooperation Framework Agreement
(ECFA) with the People's Republic of China
was signed on June 29, 2010, in Chongqing. It could potentially widen the market for Taiwan's exports. However, the true benefits and impacts brought by ECFA to Taiwan's overall economy are still in dispute. The newly-signed agreement will allow for more than 500 products made in Taiwan to enter China at low or no tariff
s. The government is also looking to establish trade agreements with Singapore
and the United States
.
industry has played an important role in the worldwide IT market over the last 20 years. In 1960, the electronics
industry in Taiwan was virtually nonexistent. However, with the government's focus on development of expertise with high technology, along with marketing and management knowledge to establish its own industries, companies such as TSMC
and UMC
were established. The industry used its industrial resources and product management experience to cooperate closely with major international suppliers to become the research and development
hub of the Asia-Pacific
region. The structure of the industry in Taiwan includes a handful of companies at the top along with many small and medium-sized enterprises (SME) which account for 85% of industrial output. These SMEs usually produce products on an original equipment manufacturer
(OEM) or original design manufacturer
(ODM) basis, resulting in less resources spent on research and development. Due to the emphasis of the OEM/ODM model, companies are usually unable to make in-depth assessments for investment
, production, and marketing
of new products, instead relying upon importation of key components and advanced technology from the United States
and Japan
. Twenty of the top information and communication technology (ICT) companies have International Procurement Offices set up in Taiwan. As a signer of the Information Technology Agreement
, Taiwan phased out tariff
s on IT products since January 1, 2002.
The "e-Taiwan" project launched by the government seeks to use US$1.83 billion to improve the information and communications infrastructure in Taiwan in five major areas: government, life, business, transport, and broadband
. The program seeks to raise industry competitiveness, improve government efficiency, and improve the quality of life
, and aims to increase the number of broadband users on the island to 6 million. In 2010, Taiwan's software market grew by 7.1% to reach a value of US$4 billion, accounting for 3.3% of the Asia-Pacific region market value. The digital content production industry grew by 15% in 2009, reaching US$14.03 billion. The optoelectronics
industry (including flat panel display
s and photovoltaics
) totaled NT$2.2 trillion in 2010, a 40% jump from 2009, representing a fifth of the global market share.
The semiconductor
industry, including IC manufacturing, design, and packing, forms a major part of Taiwan's IT industry. Due to its strong capabilities in OEM wafer manufacturing and a complete industry supply chain
, Taiwan has been able to distinguish itself from its competitors. The sector output reached US$39 billion in 2009, ranking first in global market share in IC manufacturing, packaging, and testing, and second in IC design. Taiwan Semiconductor Manufacturing Company
(TSMC) and United Microelectronics Corporation
(UMC) are the two largest contract chipmakers in the world, while MediaTek
is the fourth-largest fabless
supplier globally. In 1987, TSMC pioneered the fabless foundry
model, reshaping the global semiconductor industry. From ITRI
's first 3-inch wafer fabrication plant built in 1977 and the founding of UMC in 1980, the industry has developed into a world leader with 40 fabs in operation by 2002. In 2007, the semiconductor industry overtook that of the United States
, second only to Japan
. Although the global financial crisis from 2007 to 2010 affected sales and exports, the industry has rebounded with companies posting record profits for 2010. Taiwan has the largest share of 300 nm, 90 nm, and 60 nm manufacturing capacities worldwide, and is expected to pass Japan in total IC fab capacity by mid-2011.
. After retrocession
from Japan in 1945, the government announced a long-term development strategy of "developing industry through agriculture, and developing agriculture through industry". Thus, agriculture became the foundation for Taiwan's economic development, while promoting growth in industry and commerce. In 1951, agricultural production accounted for 35.8% of its GDP
. Today, agriculture only comprises about 2.6% of Taiwan's GDP or about US$1 billion. In 2002, farming accounted for 43.33% of the industry, with livestock
(30.02%) and fishing
(26.41%) making up a significant portion of the rest. Since its accession into the World Trade Organization
and the subsequent trade liberalization, the government has implemented new policies to develop the sector into a more competitive and modernized green industry.
Although only about one-quarter of Taiwan's land area is suitable for farming, virtually all farmland is intensely cultivated, with some areas suitable for two and even three crops a year. However, increases in agricultural production have been much slower than industrial growth. Agricultural modernization has been inhibited by the small size of farms and the lack of investment in better facilities and training to develop more profitable businesses. Taiwan's agricultural population has steadily decreased from 1974 to 2002, prompting the Council of Agriculture (COA) to introduce modern farm management, provide technical training, and offer counseling for better production and distribution systems. Promotion of farm mechanization
has helped to alleviate labor shortages while increasing productivity; both rice
and sugar cane production are completely mechanized. Taiwan's main crops are rice, sugar cane, fruits (many of them tropical), and vegetables. Although self-sufficient in rice production, Taiwan imports large amounts of wheat, mostly from the United States. Meat production and consumption has risen sharply, reflecting a high standard of living. Taiwan has exported large amounts of frozen pork, although this was affected by an outbreak of hoof and mouth disease in 1997. Other agricultural exports include fish, aquaculture and sea products, canned and frozen vegetables, and grain products. Imports of agriculture products are expected to increase due to the WTO accession, which is opening previously protected agricultural markets.
on the island, Taiwan is forced to import many of its energy needs (currently at 98%). Imported energy totaled US$11.52 billion in 2002, accounting for 4.1% of its GDP
. Although the industrial sector has traditionally been Taiwan's largest energy consumer, its share has dropped in recent years from 62% in 1986 to 58% in 2002. Taiwan's energy consumption is dominated by oil (51.8%), followed by coal
(30.4%), nuclear power
(8.7%), natural gas
(8.6%), and hydroelectric power (0.3%). The island is also heavily-dependent on imported oil, with 72% of its crude oil coming from the Middle East
in 2002. Although the Taiwan Power Company
(Taipower), state-owned enterprise, is in charge of providing electricity for the Taiwan area, a 1994 measure has allowed independent power producers
(IPPs) to provide up to 20% of the island's energy needs. Indonesia
and Malaysia supply most of Taiwan's natural gas needs. It currently has three operational nuclear power plants with a fourth expected to come into operation by the end of 2012 at a cost of NT$280 billion (US$9.65 billion).
Although Taiwan's per capita
energy use is on part with neighboring Asia
n countries, in July 2005 the Ministry of Economic Affairs
announced plans to cut 170 million-tons of carbon dioxide
emissions by 2025. In 2010, carbon dioxide emissions have been reduced by 5.14 million metric tons. In order to further reduce emissions, the government also plans to increase energy efficiency
by 2% each year through 2020. In addition, by 2015 emissions are planned to be reduced by 7% compared to 2005 levels.
Taiwan is the world's 4th largest producer of solar-powered batteries and largest LED manufacturer by volume. In 2010, Taiwan had over 1.66 million square meters of solar heat collectors
installed, with an installation density that ranks it as third in the world. The government has already built 155 sets of wind turbine
s capable of producing 281.6 MW of energy, and additional projects are planned or under construction. Renewable energy accounts for 6.8% of Taiwan's energy usage as of 2010. In 2010, the green energy
sector generated US$10.97 billion in production value. The government also announced plans to invest US$838 million for renewable energy
promotion and an additional US$635 million for research and development
.
s and specialized lending rates to attract investment. The first of these, the Hsinchu Science Park was established in 1980 by the National Science Council
with a focus on research and development
in information technology
and biotechnology
. It has been called Taiwan's "Silicon Valley
" and has expanded to six campuses covering an area of 1140 hectare (0.0114 km³). Over 430 companies (including many listed on TAIEX
) employing over 130,000 people are located within the park, and paid in capital
totaled US$36.10 billion in 2008. Both Taiwan Semiconductor Manufacturing Company
and United Microelectronics Corporation
, the world's largest and second largest contract
chipmakers, are headquartered within the park. Since 1980, the government has invested over US$1 billion in the park's infrastructure, and further expansion for more specialized parks have been pursued. The Industrial Technology Research Institute
(ITRI), headquartered within the park, is the largest nonprofit research organization in Taiwan and has worked to develop applied technological research for industry, including for many of Taiwan's traditional industries (such as textiles).
Following the success of the first park, the Southern Taiwan Science Park
(STSP), consisting of the Tainan Science Park
and the Kaohsiung Science Park
, was established in 1996. In addition to companies, several research institutes (including Academia Sinica
) and universities have set up branches within the park with a focus on integrated circuit
s (ICs), optoelectronics
, and biotechnology. The Central Taiwan Science Park (CTSP) was established more recently in 2003. While the CTSP is still under development, many firms (including AU Optronics
) have already moved into the park and begun manufacturing operations. Like the other parks, CTSP also focuses on ICs, optoelectronics, and biotechnology, with the optoelectronics industry accounting for 78% of its revenue in 2008. These three science parks alone have attracted over NT$4 trillion (US$137 billion) worth of capital inflow, and in 2010 total revenue
within the parks reached NT$2.16 trillion (US$72.8 billion).
The Linhai Industrial Park
, established in Kaohsiung in 1960, is a well-developed industrial zone with over 490 companies focusing on other industries including base metals, machinery and repairs, nonmetallic mineral products, chemical products, and food and beverage manufacturing. The Changhua Coastal Industrial Park, located in Changhua County, is a newer industrial cluster with many different industries such as food production, glass, textiles, and plastics.
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...
has a developed
Developed country
A developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...
capitalist
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
economy that ranks as the 19th largest in the world by Purchasing power parity
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
(PPP) and 24th in nominal GDP of investment and foreign trade by the Republic of China
Republic of China
The Republic of China , commonly known as Taiwan , is a unitary sovereign state located in East Asia. Originally based in mainland China, the Republic of China currently governs the island of Taiwan , which forms over 99% of its current territory, as well as Penghu, Kinmen, Matsu and other minor...
(ROC) government which governs Taiwan. In keeping with this trend, most large government-owned banks and industrial firms have been privatized. Real growth in GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
has averaged about 8% during the past three decades. Exports have grown even faster and since World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, have provided the primary impetus for industrialization. Inflation and unemployment are low; the trade surplus is substantial; and foreign reserves are the world's fourth largest. Agriculture contributes 3% to GDP, down from 35% in 1952, and the service sector makes up 73% of the economy. Traditional labor-intensive industries are steadily being moved off-shore and replaced with more capital- and technology-intensive industries, as well as creative industries
Creative industries
The creative industries refers to a range of economic activities which are concerned with the generation or exploitation of knowledge and information...
.
Taiwanese
Taiwanese people
Taiwanese people may refer to individuals who either claim or are imputed cultural identity focused on the island of Taiwan and/or Taiwan Area which have been governed by the Republic of China since 1945...
investors and businesses have become major investors in mainland China
Mainland China
Mainland China, the Chinese mainland or simply the mainland, is a geopolitical term that refers to the area under the jurisdiction of the People's Republic of China . According to the Taipei-based Mainland Affairs Council, the term excludes the PRC Special Administrative Regions of Hong Kong and...
, Vietnam
Vietnam
Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...
, Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
, Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
, the Philippines
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...
, and Malaysia. The tightening of labor markets has led to an influx of foreign workers, both legal and illegal. Because of its conservative financial approach and its entrepreneurial strengths, Taiwan suffered little from the Asian Financial Crisis of 1997-1999 compared to many of its neighbors. Unlike in neighboring Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
and South Korea
South Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
, small and medium-sized businesses make up a large proportion of businesses in Taiwan.
Taiwan is a member of the Asian Development Bank
Asian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
(ADB), the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
(WTO), and the Asia-Pacific Economic Cooperation
Asia-Pacific Economic Cooperation
Asia-Pacific Economic Cooperation is a forum for 21 Pacific Rim countries that seeks to promote free trade and economic cooperation throughout the Asia-Pacific region...
(APEC) forum. Taiwan is also an observer at the Organisation for Economic Co-operation and Development
Organisation for Economic Co-operation and Development
The Organisation for Economic Co-operation and Development is an international economic organisation of 34 countries founded in 1961 to stimulate economic progress and world trade...
(OECD). Taiwan's top five trade partners in 2010 are China
Economy of the People's Republic of China
The People's Republic of China ranks since 2010 as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of...
, Japan
Economy of Japan
The economy of Japan, a free market economy, is the third largest in the world after the United States and the People's Republic of China, and ahead of Germany at 4th...
, USA
Economy of the United States
The economy of the United States is the world's largest national economy. Its nominal GDP was estimated to be nearly $14.5 trillion in 2010, approximately a quarter of nominal global GDP. The European Union has a larger collective economy, but is not a single nation...
, the European Union
Economy of the European Union
The economy of the European Union generates a GDP of over €12,279.033 billion according to the International Monetary Fund , making it the largest economy in the world...
, and Hong Kong
Economy of Hong Kong
As one of the world's leading international financial centres, Hong Kong has a major capitalist service economy characterised by low taxation and free trade, and the currency, Hong Kong dollar, is the ninth most traded currency in the world. Hong Kong has remained as the world's freest economy,...
.
History
Taiwan has transformed itself from a recipient of U.S. aid in the 1950s and early 1960s to an aid donor and major foreign investor, with investments primarily centered in Asia. Private Taiwanese investment in mainland China is estimated to total in excess of US$150 billion, and official tallies cite Taiwan as having invested a comparable amount in Southeast AsiaSoutheast Asia
Southeast Asia, South-East Asia, South East Asia or Southeastern Asia is a subregion of Asia, consisting of the countries that are geographically south of China, east of India, west of New Guinea and north of Australia. The region lies on the intersection of geological plates, with heavy seismic...
.
Taiwan has historically benefited from the flight of many well-educated, wealthy Chinese to settle on the island: during early Qing Dynasty
Qing Dynasty
The Qing Dynasty was the last dynasty of China, ruling from 1644 to 1912 with a brief, abortive restoration in 1917. It was preceded by the Ming Dynasty and followed by the Republic of China....
, the preceding Ming dynasty supporters
Kingdom of Tungning
The Kingdom of Tungning was a government that ruled Taiwan between 1661 and 1683. A pro-Ming Dynasty state, it was founded by Koxinga after the Ming government in mainland China was replaced by the Manchu-ruled Qing Dynasty...
survived for a brief period of time in exile in Taiwan, and in 1949, as the Chinese Communist Party gained control of mainland China, two million Kuomintang
Kuomintang
The Kuomintang of China , sometimes romanized as Guomindang via the Pinyin transcription system or GMD for short, and translated as the Chinese Nationalist Party is a founding and ruling political party of the Republic of China . Its guiding ideology is the Three Principles of the People, espoused...
(KMT) supporters fled to the island.
The first step towards industrialization was land reforms, a crucial step in modernizing the economy, as it created a class of landowners with capital they can invest in future economic endeavors. US aid was also important to stabilize post-war Taiwan, and it constituted more than 30 percent of domestic investment from 1951 to 1962. These factors, together with government planning and universal education, brought huge advancement in industry and agriculture, and living standards. The economy shifted from an agriculture-based economy (32% of GDP in 1952) to an industry-oriented economy (47.% of GDP in 1986). Between 1952 and 1961, the economy grew by an average of 9.21% each year.
Once again, the transformation of Taiwan's economy cannot be understood without reference to the larger geopolitical framework. Although aid was cut back in the 1970s, it was crucial in the formative years, spurring industrialization and security and economic links were maintained. Uncertainty about the US commitment accelerated the country’s shift from subsidized import-substitution in the 1950s to export-led growth. Development of foreign trade and exports helped absorb excess labor from the decreased importance of agriculture in the economy. Like Korea
South Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
, Taiwan
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...
moved from cheap, labor-intensive manufactures, such as textiles and toys, into an expansion of heavy industry and infrastructure in the 1970s, and then to advanced electronics
Electronics
Electronics is the branch of science, engineering and technology that deals with electrical circuits involving active electrical components such as vacuum tubes, transistors, diodes and integrated circuits, and associated passive interconnection technologies...
in the subsequent decade. By the 1980s, the economy was becoming increasingly open and the government moved towards privatization of government enterprises. Technological development led to the establishment of the Hsinchu Science Park in 1981. Investments in mainland China
Mainland China
Mainland China, the Chinese mainland or simply the mainland, is a geopolitical term that refers to the area under the jurisdiction of the People's Republic of China . According to the Taipei-based Mainland Affairs Council, the term excludes the PRC Special Administrative Regions of Hong Kong and...
spurred cross-strait trade, decreasing Taiwan's independence on the United States market. From 1981-1995, the economy grew at an annual rate of 7.52%, and the service sector became the largest sector at 51.67%, surpassing the industrial sector and becoming a major source of the economy's growth.
Economic outlook
Taiwan now faces many of the same economic issues as other developed economies. With the prospect of continued relocation of labor-intensive industries to economies with cheaper work forces, such as in China and Vietnam, Taiwan's future development will have to rely on further transformation to a high technology and service-oriented economy. In recent years, Taiwan has successfully diversified its trade markets, cutting its share of exports to the United States from 49% in 1984 to 20% in 2002. Taiwan's dependence on the United States should continue to decrease as its exports to Southeast AsiaSoutheast Asia
Southeast Asia, South-East Asia, South East Asia or Southeastern Asia is a subregion of Asia, consisting of the countries that are geographically south of China, east of India, west of New Guinea and north of Australia. The region lies on the intersection of geological plates, with heavy seismic...
and China grow and its efforts to develop European markets produce results. Taiwan's accession to the WTO and its desire to become an Asia-Pacific "regional operations center" are spurring further economic liberalization.
Global financial crisis
Taiwan has recovered quickly from the global financial crisis of 2007-2010, and its economy has been growing steadily. Its economy faced a downturn in 2009 due to a heavy reliance on exports which in turn made it vulnerable to world markets. Unemployment reached levels not seen since 2003, and the economy fell 8.36% in the fourth quarter of 2008. In response, the government launched a US$5.6 billion economic stimulus package (3% of its GDP), provided financial incentives for businesses, and introduced tax breaks. The stimulus package focused on infrastructureInfrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
development, small and medium-sized businesses, tax breaks for new investments, and low-income households. Boosting shipments to new overseas markets, such as Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
, Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
, and the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
was also a main goal of the stimulus. The economy has since slowly recovered; by November 2010, Taiwan's unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...
rate had fallen to a two-year low of 4.73% and is expected to continue to drop through the first half of 2011. The average salary
Salary
A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis....
has also been rising steadily for each month in 2010, up 1.92% from the same period in 2009. Industrial output
Industrial production
Industrial production is a measure of output of the industrial sector of the economy. The industrial sector includes manufacturing, mining, and utilities. Although these sectors contribute only a small portion of GDP , they are highly sensitive to interest rates and consumer demand...
for November 2010 reached another high, up 19.37% from a year earlier, indicating strong export
Export
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...
s and a growing local economy. Private consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...
is also increasing, with retail
Retailing
Retail consists of the sale of physical goods or merchandise from a fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be...
sales up 6.4% compared to 2009. After 10.5% economic growth in 2010, the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
expects growth to continue and reach 5% for 2011.
Foreign trade
Foreign trade has been the engine of Taiwan's rapid growth during the past 40 years. Taiwan's economy remains export-oriented, thus it depends on an open world trade regime and remains vulnerable to downturns in the world economy. The total value of trade increased over fivefold in the 1960s, nearly tenfold in the 1970s, and doubled again in the 1980s. The 1990s saw a more modest, slightly less than twofold, growth. Export composition changed from predominantly agricultural commodities to industrial goods (now 98%). The electronics sector is Taiwan's most important industrial export sector and is the largest recipient of U.S. investment. Taiwan, as an independent economy, became a member of the World Trade OrganizationWorld Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
(WTO) as Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (often shortened to "Chinese Taipei"-both names resulting from PRC interference on the WTO) in January 2002. In a 2011 report by Business Environment Risk Intelligence (BERI), Taiwan ranked third-best globally for its investment environment.
Taiwan is the world's largest supplier of contract computer chip manufacturing (foundry services) and is a leading LCD panel
Liquid crystal display
A liquid crystal display is a flat panel display, electronic visual display, or video display that uses the light modulating properties of liquid crystals . LCs do not emit light directly....
manufacturer, DRAM computer memory, networking equipment, and consumer electronics designer and manufacturer. Textile
Textile
A textile or cloth is a flexible woven material consisting of a network of natural or artificial fibres often referred to as thread or yarn. Yarn is produced by spinning raw fibres of wool, flax, cotton, or other material to produce long strands...
s are another major industrial export sector, though of declining importance as Taiwan due to labor shortage
Labor shortage
In its narrowest definition, a labor shortage is an economic condition in which there are insufficient qualified candidates to fill the market-place demands for employment at any price...
s, increasing overhead costs, land prices, and environmental protection
Environmental protection
Environmental protection is a practice of protecting the environment, on individual, organizational or governmental level, for the benefit of the natural environment and humans. Due to the pressures of population and our technology the biophysical environment is being degraded, sometimes permanently...
. Imports are dominated by raw materials and capital goods, which account for more than 90% of the total. Taiwan imports most of its energy needs. The United States is Taiwan's third largest trading partner, taking 11.4% of Taiwanese exports and supplying 10.0% of its imports. China has recently become Taiwan's largest import and export partner. In 2010, the PRC accounted for 28.0% and 13.2% of Taiwan's exports and imports respectively (excluding Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
). This figure is growing rapidly as both economies become ever more interdependent. Imports from China consist mostly of agricultural and industrial raw materials. Exports to the United States are mainly electronics and consumer goods. As Taiwanese per capita income level has risen, demand for imported, high-quality consumer goods has increased. Taiwan's 2002 trade surplus with the United States was $8.70.
The lack of formal diplomatic relations between the Republic of China (Taiwan) with Taiwan's trading partners appears not to have seriously hindered Taiwan's rapidly expanding commerce. The Republic of China maintains cultural and trade offices in more than 60 countries with which it does not have official relations to represent Taiwanese interest. In addition to the WTO, Taiwan is a member of the Asian Development Bank
Asian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
as "Taipei, China" (a name resulting from PRC influence on the bank) and the Asia-Pacific Economic Cooperation
Asia-Pacific Economic Cooperation
Asia-Pacific Economic Cooperation is a forum for 21 Pacific Rim countries that seeks to promote free trade and economic cooperation throughout the Asia-Pacific region...
(APEC) forum as "Chinese Taipei
Chinese Taipei
Chinese Taipei is the designated name used by the Republic of China , commonly known as Taiwan, to participate in some international organizations and almost all sporting events, such as the Olympics, Paralympics, Asian Games and Asian Para Games...
" (for the same reason as above). These developments reflect Taiwan's economic importance and its desire to become further integrated into the global economy.
The Economic Cooperation Framework Agreement
Economic Cooperation Framework Agreement
The Economic Cooperation Framework Agreement is a preferential trade agreement between the governments of the People's Republic of China and the Republic of China that aims to reduce tariffs and commercial barriers between the two sides...
(ECFA) with the People's Republic of China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
was signed on June 29, 2010, in Chongqing. It could potentially widen the market for Taiwan's exports. However, the true benefits and impacts brought by ECFA to Taiwan's overall economy are still in dispute. The newly-signed agreement will allow for more than 500 products made in Taiwan to enter China at low or no tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
s. The government is also looking to establish trade agreements with Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
.
Industry
Industrial output has gradually decreased from accounting for over half of Taiwan's GDP in 1986 to just 31% in 2002. Industries have gradually moved to capital and technology-intensive industries from more labor-intensive industries, with electronics and information technology accounting for 35% of the industrial structure. Industry in Taiwan primarily consists of many small and medium-sized enterprises (SME) with fewer large enterprises.Information technology
Taiwan's information technologyInformation technology
Information technology is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications...
industry has played an important role in the worldwide IT market over the last 20 years. In 1960, the electronics
Electronics
Electronics is the branch of science, engineering and technology that deals with electrical circuits involving active electrical components such as vacuum tubes, transistors, diodes and integrated circuits, and associated passive interconnection technologies...
industry in Taiwan was virtually nonexistent. However, with the government's focus on development of expertise with high technology, along with marketing and management knowledge to establish its own industries, companies such as TSMC
TSMC
Taiwan Semiconductor Manufacturing Company, Limited or TSMC is the world's largest dedicated independent semiconductor foundry, with its headquarters and main operations located in the Hsinchu Science Park in Hsinchu, Taiwan.-Overview:...
and UMC
United Microelectronics Corporation
UMC was founded as Taiwan's first semiconductor company in 1980 as a spin-off of the government-sponsored Industrial Technology Research Institute .-Overview:...
were established. The industry used its industrial resources and product management experience to cooperate closely with major international suppliers to become the research and development
Research and development
The phrase research and development , according to the Organization for Economic Co-operation and Development, refers to "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of...
hub of the Asia-Pacific
Asia-Pacific
Asia-Pacific or Asia Pacific is the part of the world in or near the Western Pacific Ocean...
region. The structure of the industry in Taiwan includes a handful of companies at the top along with many small and medium-sized enterprises (SME) which account for 85% of industrial output. These SMEs usually produce products on an original equipment manufacturer
Original Equipment Manufacturer
An original equipment manufacturer, or OEM, manufactures products or components that are purchased by a company and retailed under that purchasing company's brand name. OEM refers to the company that originally manufactured the product. When referring to automotive parts, OEM designates a...
(OEM) or original design manufacturer
Original Design Manufacturer
An original design manufacturer is a company which designs and manufactures a product which is specified and eventually branded by another firm for sale. Such companies allow the brand firm to produce without having to engage in the organization or running of a factory...
(ODM) basis, resulting in less resources spent on research and development. Due to the emphasis of the OEM/ODM model, companies are usually unable to make in-depth assessments for investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
, production, and marketing
Marketing
Marketing is the process used to determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments...
of new products, instead relying upon importation of key components and advanced technology from the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
. Twenty of the top information and communication technology (ICT) companies have International Procurement Offices set up in Taiwan. As a signer of the Information Technology Agreement
Information Technology Agreement
The Information Technology Agreement is an agreement enforced by the World Trade Organization and concluded in the Ministerial Declaration on Trade in Information Technology Products in 1996, and entered into force 1 July 1997...
, Taiwan phased out tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
s on IT products since January 1, 2002.
The "e-Taiwan" project launched by the government seeks to use US$1.83 billion to improve the information and communications infrastructure in Taiwan in five major areas: government, life, business, transport, and broadband
Broadband
The term broadband refers to a telecommunications signal or device of greater bandwidth, in some sense, than another standard or usual signal or device . Different criteria for "broad" have been applied in different contexts and at different times...
. The program seeks to raise industry competitiveness, improve government efficiency, and improve the quality of life
Quality of life
The term quality of life is used to evaluate the general well-being of individuals and societies. The term is used in a wide range of contexts, including the fields of international development, healthcare, and politics. Quality of life should not be confused with the concept of standard of...
, and aims to increase the number of broadband users on the island to 6 million. In 2010, Taiwan's software market grew by 7.1% to reach a value of US$4 billion, accounting for 3.3% of the Asia-Pacific region market value. The digital content production industry grew by 15% in 2009, reaching US$14.03 billion. The optoelectronics
Optoelectronics
Optoelectronics is the study and application of electronic devices that source, detect and control light, usually considered a sub-field of photonics. In this context, light often includes invisible forms of radiation such as gamma rays, X-rays, ultraviolet and infrared, in addition to visible light...
industry (including flat panel display
Flat panel display
Flat panel displays encompass a growing number of electronic visual display technologies. They are far lighter and thinner than traditional television sets and video displays that use cathode ray tubes , and are usually less than thick...
s and photovoltaics
Photovoltaics
Photovoltaics is a method of generating electrical power by converting solar radiation into direct current electricity using semiconductors that exhibit the photovoltaic effect. Photovoltaic power generation employs solar panels composed of a number of solar cells containing a photovoltaic material...
) totaled NT$2.2 trillion in 2010, a 40% jump from 2009, representing a fifth of the global market share.
The semiconductor
Semiconductor
A semiconductor is a material with electrical conductivity due to electron flow intermediate in magnitude between that of a conductor and an insulator. This means a conductivity roughly in the range of 103 to 10−8 siemens per centimeter...
industry, including IC manufacturing, design, and packing, forms a major part of Taiwan's IT industry. Due to its strong capabilities in OEM wafer manufacturing and a complete industry supply chain
Supply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...
, Taiwan has been able to distinguish itself from its competitors. The sector output reached US$39 billion in 2009, ranking first in global market share in IC manufacturing, packaging, and testing, and second in IC design. Taiwan Semiconductor Manufacturing Company
TSMC
Taiwan Semiconductor Manufacturing Company, Limited or TSMC is the world's largest dedicated independent semiconductor foundry, with its headquarters and main operations located in the Hsinchu Science Park in Hsinchu, Taiwan.-Overview:...
(TSMC) and United Microelectronics Corporation
United Microelectronics Corporation
UMC was founded as Taiwan's first semiconductor company in 1980 as a spin-off of the government-sponsored Industrial Technology Research Institute .-Overview:...
(UMC) are the two largest contract chipmakers in the world, while MediaTek
MediaTek
MediaTek Inc. is a fabless semiconductor company, designing and selling components for wireless communication, optical storage, GPS, high-definition digital TV and DVD products. The company was founded on May 28, 1997...
is the fourth-largest fabless
Fabless semiconductor company
A fabless semiconductor company specializes in the design and sale of hardware devices and semiconductor chips while outsourcing the fabrication or "fab" of the devices to a specialized manufacturer called a semiconductor foundry...
supplier globally. In 1987, TSMC pioneered the fabless foundry
Fabless semiconductor company
A fabless semiconductor company specializes in the design and sale of hardware devices and semiconductor chips while outsourcing the fabrication or "fab" of the devices to a specialized manufacturer called a semiconductor foundry...
model, reshaping the global semiconductor industry. From ITRI
Industrial Technology Research Institute
The Industrial Technology Research Institute is a non-profit research institute located in Taiwan under the supervision of the Republic of China Ministry of Economic Affairs. It conducts research and development in applied technologies to advance private sector growth...
's first 3-inch wafer fabrication plant built in 1977 and the founding of UMC in 1980, the industry has developed into a world leader with 40 fabs in operation by 2002. In 2007, the semiconductor industry overtook that of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, second only to Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
. Although the global financial crisis from 2007 to 2010 affected sales and exports, the industry has rebounded with companies posting record profits for 2010. Taiwan has the largest share of 300 nm, 90 nm, and 60 nm manufacturing capacities worldwide, and is expected to pass Japan in total IC fab capacity by mid-2011.
Agriculture
Agriculture has served as a strong foundation for Taiwan's economic miracleTaiwan Miracle
The Taiwan Miracle or Taiwan Economic Miracle refers to the rapid industrialization and economic growth of Taiwan during the latter half of the twentieth century...
. After retrocession
Retrocession Day
Retrocession Day is an annual observance in the Republic of China to commemorate the end of 50 years of Japanese colonial rule of Taiwan on October 25, 1945.-Background:...
from Japan in 1945, the government announced a long-term development strategy of "developing industry through agriculture, and developing agriculture through industry". Thus, agriculture became the foundation for Taiwan's economic development, while promoting growth in industry and commerce. In 1951, agricultural production accounted for 35.8% of its GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
. Today, agriculture only comprises about 2.6% of Taiwan's GDP or about US$1 billion. In 2002, farming accounted for 43.33% of the industry, with livestock
Livestock
Livestock refers to one or more domesticated animals raised in an agricultural setting to produce commodities such as food, fiber and labor. The term "livestock" as used in this article does not include poultry or farmed fish; however the inclusion of these, especially poultry, within the meaning...
(30.02%) and fishing
Fishing
Fishing is the activity of trying to catch wild fish. Fish are normally caught in the wild. Techniques for catching fish include hand gathering, spearing, netting, angling and trapping....
(26.41%) making up a significant portion of the rest. Since its accession into the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
and the subsequent trade liberalization, the government has implemented new policies to develop the sector into a more competitive and modernized green industry.
Although only about one-quarter of Taiwan's land area is suitable for farming, virtually all farmland is intensely cultivated, with some areas suitable for two and even three crops a year. However, increases in agricultural production have been much slower than industrial growth. Agricultural modernization has been inhibited by the small size of farms and the lack of investment in better facilities and training to develop more profitable businesses. Taiwan's agricultural population has steadily decreased from 1974 to 2002, prompting the Council of Agriculture (COA) to introduce modern farm management, provide technical training, and offer counseling for better production and distribution systems. Promotion of farm mechanization
Mechanization
Mechanization or mechanisation is providing human operators with machinery that assists them with the muscular requirements of work or displaces muscular work. In some fields, mechanization includes the use of hand tools...
has helped to alleviate labor shortages while increasing productivity; both rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
and sugar cane production are completely mechanized. Taiwan's main crops are rice, sugar cane, fruits (many of them tropical), and vegetables. Although self-sufficient in rice production, Taiwan imports large amounts of wheat, mostly from the United States. Meat production and consumption has risen sharply, reflecting a high standard of living. Taiwan has exported large amounts of frozen pork, although this was affected by an outbreak of hoof and mouth disease in 1997. Other agricultural exports include fish, aquaculture and sea products, canned and frozen vegetables, and grain products. Imports of agriculture products are expected to increase due to the WTO accession, which is opening previously protected agricultural markets.
Energy
Due to the lack of natural resourcesNatural Resources
Natural Resources is a soul album released by Motown girl group Martha Reeves and the Vandellas in 1970 on the Gordy label. The album is significant for the Vietnam War ballad "I Should Be Proud" and the slow jam, "Love Guess Who"...
on the island, Taiwan is forced to import many of its energy needs (currently at 98%). Imported energy totaled US$11.52 billion in 2002, accounting for 4.1% of its GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
. Although the industrial sector has traditionally been Taiwan's largest energy consumer, its share has dropped in recent years from 62% in 1986 to 58% in 2002. Taiwan's energy consumption is dominated by oil (51.8%), followed by coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
(30.4%), nuclear power
Nuclear power
Nuclear power is the use of sustained nuclear fission to generate heat and electricity. Nuclear power plants provide about 6% of the world's energy and 13–14% of the world's electricity, with the U.S., France, and Japan together accounting for about 50% of nuclear generated electricity...
(8.7%), natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
(8.6%), and hydroelectric power (0.3%). The island is also heavily-dependent on imported oil, with 72% of its crude oil coming from the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...
in 2002. Although the Taiwan Power Company
Taiwan Power Company
The Taiwan Power Company is a state-owned electric power utility providing electric power to Taiwan and off-shore islands of Republic of China. In 1994 a measure which allowed independent power producers to provide up to 20 percent of Taiwan's electricity should have ended the monopoly.- See...
(Taipower), state-owned enterprise, is in charge of providing electricity for the Taiwan area, a 1994 measure has allowed independent power producers
Independent Power Producer
An Independent Power Producer is an entity, which is not a public utility, but which owns facilities to generate electric power for sale to utilities and end users...
(IPPs) to provide up to 20% of the island's energy needs. Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
and Malaysia supply most of Taiwan's natural gas needs. It currently has three operational nuclear power plants with a fourth expected to come into operation by the end of 2012 at a cost of NT$280 billion (US$9.65 billion).
Although Taiwan's per capita
Per capita
Per capita is a Latin prepositional phrase: per and capita . The phrase thus means "by heads" or "for each head", i.e. per individual or per person...
energy use is on part with neighboring Asia
Asia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...
n countries, in July 2005 the Ministry of Economic Affairs
Ministry of Economic Affairs (Republic of China)
Ministry of Economic Affairs of the Republic of China is responsible for formulating policy and laws for industry and trade, foreign direct investment, energy, minerals, measurement standards, intellectual property, state-owned enterprises throughout the Free Area of the Republic of China. The...
announced plans to cut 170 million-tons of carbon dioxide
Carbon dioxide
Carbon dioxide is a naturally occurring chemical compound composed of two oxygen atoms covalently bonded to a single carbon atom...
emissions by 2025. In 2010, carbon dioxide emissions have been reduced by 5.14 million metric tons. In order to further reduce emissions, the government also plans to increase energy efficiency
Efficient energy use
Efficient energy use, sometimes simply called energy efficiency, is the goal of efforts to reduce the amount of energy required to provide products and services. For example, insulating a home allows a building to use less heating and cooling energy to achieve and maintain a comfortable temperature...
by 2% each year through 2020. In addition, by 2015 emissions are planned to be reduced by 7% compared to 2005 levels.
Taiwan is the world's 4th largest producer of solar-powered batteries and largest LED manufacturer by volume. In 2010, Taiwan had over 1.66 million square meters of solar heat collectors
Solar thermal collector
A solar thermal collector is a solar collector designed to collect heat by absorbing sunlight. The term is applied to solar hot water panels, but may also be used to denote more complex installations such as solar parabolic, solar trough and solar towers or simpler installations such as solar air...
installed, with an installation density that ranks it as third in the world. The government has already built 155 sets of wind turbine
Wind turbine
A wind turbine is a device that converts kinetic energy from the wind into mechanical energy. If the mechanical energy is used to produce electricity, the device may be called a wind generator or wind charger. If the mechanical energy is used to drive machinery, such as for grinding grain or...
s capable of producing 281.6 MW of energy, and additional projects are planned or under construction. Renewable energy accounts for 6.8% of Taiwan's energy usage as of 2010. In 2010, the green energy
Sustainable energy
Sustainable energy is the provision of energy that meets the needs of the present without compromising the ability of future generations to meet their needs. Sustainable energy sources include all renewable energy sources, such as hydroelectricity, solar energy, wind energy, wave power, geothermal...
sector generated US$10.97 billion in production value. The government also announced plans to invest US$838 million for renewable energy
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
promotion and an additional US$635 million for research and development
Research and development
The phrase research and development , according to the Organization for Economic Co-operation and Development, refers to "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of...
.
Science and industrial parks
In order to promote industrial research and development, the government began establishing science parks, economic zones which provide rent and utility breaks, tax incentiveTax incentive
A tax incentive is an aspect of the tax code designed to incentivize, or encourage, a certain type of behavior. This may be accomplished through means including tax holidays, tax deductions, or tax abatements...
s and specialized lending rates to attract investment. The first of these, the Hsinchu Science Park was established in 1980 by the National Science Council
National Science Council
The National Science Council is the main governmental promotion and funding body for science research in Taiwan, Republic of China. It is a governmental body under the Executive Yuan.-External links:* *...
with a focus on research and development
Research and development
The phrase research and development , according to the Organization for Economic Co-operation and Development, refers to "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of...
in information technology
Information technology
Information technology is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a microelectronics-based combination of computing and telecommunications...
and biotechnology
Biotechnology
Biotechnology is a field of applied biology that involves the use of living organisms and bioprocesses in engineering, technology, medicine and other fields requiring bioproducts. Biotechnology also utilizes these products for manufacturing purpose...
. It has been called Taiwan's "Silicon Valley
Silicon Valley
Silicon Valley is a term which refers to the southern part of the San Francisco Bay Area in Northern California in the United States. The region is home to many of the world's largest technology corporations...
" and has expanded to six campuses covering an area of 1140 hectare (0.0114 km³). Over 430 companies (including many listed on TAIEX
Taiwan Capitalization Weighted Stock Index
Taiwan Capitalization Weighted Stock Index is a stock market index for companies traded on the Taiwan Stock Exchange . TAIEX covers all of the listed stocks excluding preferred stocks, full-delivery stocks and newly listed stocks, which are listed for less than one calendar month...
) employing over 130,000 people are located within the park, and paid in capital
Paid in capital
Paid in capital refers to capital contributed to a corporation by investors through purchase of stock from the corporation . It includes share capital Paid in capital (Paid-in capital or Contributed capital) refers to capital contributed to a corporation by investors through purchase of stock...
totaled US$36.10 billion in 2008. Both Taiwan Semiconductor Manufacturing Company
TSMC
Taiwan Semiconductor Manufacturing Company, Limited or TSMC is the world's largest dedicated independent semiconductor foundry, with its headquarters and main operations located in the Hsinchu Science Park in Hsinchu, Taiwan.-Overview:...
and United Microelectronics Corporation
United Microelectronics Corporation
UMC was founded as Taiwan's first semiconductor company in 1980 as a spin-off of the government-sponsored Industrial Technology Research Institute .-Overview:...
, the world's largest and second largest contract
Contract manufacturer
A contract manufacturer is a manufacturer that contracts with a firm for components or products. It is a form of outsourcing.-Business model:...
chipmakers, are headquartered within the park. Since 1980, the government has invested over US$1 billion in the park's infrastructure, and further expansion for more specialized parks have been pursued. The Industrial Technology Research Institute
Industrial Technology Research Institute
The Industrial Technology Research Institute is a non-profit research institute located in Taiwan under the supervision of the Republic of China Ministry of Economic Affairs. It conducts research and development in applied technologies to advance private sector growth...
(ITRI), headquartered within the park, is the largest nonprofit research organization in Taiwan and has worked to develop applied technological research for industry, including for many of Taiwan's traditional industries (such as textiles).
Following the success of the first park, the Southern Taiwan Science Park
Southern Taiwan Science Park
Southern Taiwan Science Park is an industrial park established by the government of Taiwan. It consists of Tainan Science Park and Kaohsiung Science Park, covering and , respectively.-Overview:...
(STSP), consisting of the Tainan Science Park
Tainan Science Park
Tainan Science Park of Taiwan is located in Xinshi, Shanhua and Anding Districts of Tainan City with a total area of , and is a part of the Southern Taiwan Science Park .-History:...
and the Kaohsiung Science Park
Kaohsiung Science Park
The Kaohsiung Science Park, also known as Luzhu Science Park, is located in Luzhu District in Kaohsiung City, Taiwan. It is a part of the project of Southern Taiwan Science Park, and covers an area of . The park was established in early 2000s....
, was established in 1996. In addition to companies, several research institutes (including Academia Sinica
Academia Sinica
The Academia Sinica , headquartered in the Nangang District of Taipei, is the national academy of Taiwan. It supports research activities in a wide variety of disciplines, ranging from mathematical and physical sciences, to life sciences, and to humanities and social sciences.Academia Sinica has...
) and universities have set up branches within the park with a focus on integrated circuit
Integrated circuit
An integrated circuit or monolithic integrated circuit is an electronic circuit manufactured by the patterned diffusion of trace elements into the surface of a thin substrate of semiconductor material...
s (ICs), optoelectronics
Optoelectronics
Optoelectronics is the study and application of electronic devices that source, detect and control light, usually considered a sub-field of photonics. In this context, light often includes invisible forms of radiation such as gamma rays, X-rays, ultraviolet and infrared, in addition to visible light...
, and biotechnology. The Central Taiwan Science Park (CTSP) was established more recently in 2003. While the CTSP is still under development, many firms (including AU Optronics
AU Optronics
AU Optronics was formed in December 2001 by the merger of Acer Display Technology, Inc., and Unipac Optoelectronics Corporation. In October 2006, AUO merged with Quanta Display Inc. to create a leading TFT-LCD manufacturer. Additionally, the amassed production of the company's G6 reached worldwide...
) have already moved into the park and begun manufacturing operations. Like the other parks, CTSP also focuses on ICs, optoelectronics, and biotechnology, with the optoelectronics industry accounting for 78% of its revenue in 2008. These three science parks alone have attracted over NT$4 trillion (US$137 billion) worth of capital inflow, and in 2010 total revenue
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
within the parks reached NT$2.16 trillion (US$72.8 billion).
The Linhai Industrial Park
Linhai Industrial Park
Linhai Industrial Park is located in Siaogang District and Cianjhen District of Kaohsiung, Taiwan. It near the Kaohsiung International Airport, No. 5 Container Center of Port of Kaohsiung, and the terminal of National Highway No. 1. The Dalin Power Plant, a fossil fuel power plant, is located near...
, established in Kaohsiung in 1960, is a well-developed industrial zone with over 490 companies focusing on other industries including base metals, machinery and repairs, nonmetallic mineral products, chemical products, and food and beverage manufacturing. The Changhua Coastal Industrial Park, located in Changhua County, is a newer industrial cluster with many different industries such as food production, glass, textiles, and plastics.
Economic research institutes
- Taiwan Institute of Economic ResearchTaiwan Institute of Economic ResearchTaiwan Institute of Economic Research is an incorporated non-profit research institute.- History :Established on September 1, 1976, it was the first independent academic research institute in Taiwan...
- Chung-Hua Institution for Economic ResearchChung-Hua Institution for Economic ResearchChung-Hua Institution for Economic Research is a Taiwan-based international policy think tank for economic and industry-related research. It was established in 1981 in response to the severance of diplomatic relations between Taiwan and the U.S. in 1979...
- Institute of Economics, Academia SinicaInstitute of Economics, Academia SinicaAcademia Sinica Institute of Economics, was officially established February 1, 1970, after nearly seven years of preparation. It is one of the premiere economic research organizations in Taiwan...
- Industrial Technology Research InstituteIndustrial Technology Research InstituteThe Industrial Technology Research Institute is a non-profit research institute located in Taiwan under the supervision of the Republic of China Ministry of Economic Affairs. It conducts research and development in applied technologies to advance private sector growth...
- Taiwan Livestock Research InstituteTaiwan Livestock Research InstituteThe Taiwan Livestock Research Institute , in Sinhua, Taiwan, conducts research on animal breeding, physiology, nutrition and feeding techniques, animal waste treatment and utilization of byproducts, animal product processing, and forage crops...
See also
- List of banks in Taiwan
- List of companies in Taiwan
- List of metropolitan areas in Taiwan
- Made in TaiwanMade in TaiwanThe Made in Taiwan is the country of origin label affixed to products to indicate that the said product is made in the Republic of China, commonly known as Taiwan....
- Transportation in TaiwanTransportation in TaiwanThe Ministry of Transportation and Communications of the Republic of China is the cabinet level governing body for the transportation network of Taiwan and the rest of the Republic of China .- Roads :...
- Taiwan Stock ExchangeTaiwan Stock ExchangeThe Taiwan Stock Exchange Corporation is a financial institution, located in Taipei 101, in Taipei, Taiwan. The TSEC was established in 1961 and began operating as a stock exchange on 9 February 1962...
(TSE)
External links
- Statistical Information Network of the Republic of China This website serves as a national statistical portal of the Republic of China.
- Taiwan Economic Journal
- Taiwan Economic Data Center
- Taiwan Economic Association
- Research Center for Taiwan Economic Development
- Council for Economic Planning and Development