Innovation critical to growth: study

REFORM::Industrial transformation and investment expansion, with the government creating a friendly environment, are keys to sustainable growth, Academia Sinica said

By Crystal Hsu  /  Staff reporter

Fri, Oct 06, 2017 - Page 12

Sustainable economic growth hinges on innovation and the enhancement of soft skills, while the government can help by creating a friendly environment, Academia Sinica said yesterday, as it unveiled its study on industrial reform and competition strategy.

Taiwan is heading toward an economic inertia, with GDP growth slowing to 3.82 percent in the past decade and wages rising a meager 1 percent, leaving workers numb to the benefits of growth, the institute said after wrapping up its year-long study.

“It is necessary and urgent to address this predicament,” academician Wang Ping (王平) said at a news conference, adding that the research targeted different aspects of the Taiwanese economy, including existing industries, international competitiveness, industrial safety, government efficiency, talent recruitment and emerging industries.

Ultimately, economic growth requires industrial transformation and investment expansion to spur wage growth for all, Wang said.

Taiwan’s semiconductor industry, with output second only to the US globally, has made significant contributions to the economy, but most Taiwanese IC designers, producers, testers and packagers are small and medium enterprises, limiting their ability to become global leaders, the study showed.

This goal is achievable if the government encourages integration and strategic alliances through favorable policies, the institute said.

The government should help flat-panel makers raise industry competitiveness by building new applications, as companies have lagged in technological advancement and capital spending, and suffer from a lack of product differentiation, the study found.

While the local machinery supply chain is well-established and has grown in scale, industry upgrade and talent recruitment remain key issues, it said.

The petrochemical industry is still reliant on foreign technology and know-how because of a lack of research and development at home, the study showed.

The development of “green” energy has achieved modest success, with most efforts focused on solar and offshore wind power, it said.

The government needs to seek more international collaborations to shortern the learning curve and overcome technology bottlenecks, the study found.

“Policymakers inevitably have to resolve environmental protection issues along the way,” Wang said.

The financial industry is also in need of innovation and upgrade, and the government must approach the matter without undermining financial stability, the institute said.

All these challenges require the participation of skilled professionals and the government must do its share by being competent and cooperate with the private sector, it said.