Staying Ahead of the Economic Curve: Taiwan and Its Rivals in East Asia and Beyond
Nearly two decades have passed since the World Bank published its landmark East Asian Miracle, citing the economic success of the region based on productivity, strategic policies, and good governance. East Asia remains an economic powerhouse, but questions arise as to how economies like Taiwan can continue to grow amid intensifying global competition and sluggishness in the technology industry.
In the latest edition of the World Bank’s annual Doing Business report, Taiwan ranks 16th out of 185 as the best country for investors to put their money. The International Finance Corporation’s Alejandro Espinosa-Wang noted that Taiwan had joined the top 20 economies for the first time this year, adding that Taiwan has been particularly successful in enforcing the rule of law, especially corporate contracts and intellectual property rights.
Still, Taiwan is facing greater competition from neighboring countries, most notably South Korea, argued Rupert Hammond-Chambers, head of the U.S.-Taiwan Business Council. He stressed that Samsung in particular casts a “long shadow” over Taiwan’s future as a technological powerhouse, especially as Taiwan’s industrial policies and market conditions have made it more difficult for it to develop a brand identity.
Peter Chow of City College of New York agreed that Taiwan needs to step up efforts to develop a brand name so that its companies too can compete with their Korean rivals. Both Chow and Hammond-Chambers agreed that there are more opportunities for Taiwan to forge alliances with Japanese companies that are struggling to develop new products but have plenty of intellectual property patents to cash in on, with Hammond-Chambers singling out Sharp as a specific example of a company facing innovation difficulties but with a slew of patents on hand, which could benefit from tie-ups with Taiwanese business groups for longer-term growth.
As for Taiwan’s trade relations, panelists agreed that while the 2010 Economic Cooperation Framework Agreement between China and Taiwan has benefitted both sides, Taiwan needs to bolster its relations across the Asia-Pacific region, including ties with Japan and the Association of Southeast Asian Nations, as well as with the European Union and the United States. Chow added that regardless of the extent to which the United States was part of any commerce treaty in the region, decisions made in Washington would have far-ranging repercussions across the Asia-Pacific.
By Shihoko Goto
Robert M. Hathaway, Director, Asia Program