Taiwan was listed as the number-one country in Asia in terms of overall competitiveness in the 2003-2004 Global Competitiveness Report released this week by the World Economic Forum (WEF). Globally, Taiwan ranks fifth. The main reason for Taiwan's high ranking among the 102 countries listed is that it performed very well in the technological arena, ranking third in the world behind the US and Finland. Taiwan's high ranking in the report has swept away the gloom caused by several years of economic downturn and concern about long-term economic sluggishness and higher unemployment. It has also discredited those singing the demise of Taiwan's economy.
In 2000, Taiwan's overall competitiveness ranked 11th globally. The country then leapt to seventh place in 2001, and then to fifth last year and this year. There has been continual progress. Beating Japan and Singapore in particular is no small achievement. Feelings of satisfaction and vindication aside, the results of the WEF evaluation need to be carefully studied, defects found in Taiwan's performance and the government and political parties called upon to rectify them.
Although Taiwan has been strong on the technological front, there is still much room for improvement. After several years of joint efforts by both ruling and opposition parties, Taiwan has achieved impressive results in IT and high-tech industries.
Taiwan commands a niche in the global market for high-tech products such as notebook and desktop computers, computer accessories, display panels, liquid crystal display monitors, disk drives, wireless products and mobile phones. Particularly noteworthy is the domination of the global chip foundry industry by Taiwan Semi-conductor Manufacturing Co and United Microelectronics Corp.
However, Taiwan's industries are still relying on other people's production systems, components and technologies. Even though original equipment manufacturing chip production has reached high standards, Taiwanese firms cannot participate in the setting of specifications. Their influence in global technology industries is limited, and they lack brand names of their own -- a problem that has been debated for a long time.
Even though Taiwan is viewed internationally as Asia's leader in terms of research and development capabilities, China pumped almost US$60 billion into research and development in 2001 -- the third-largest amount in the world after the US and Japan, according to a study by the Organization for Economic Co-Operation and Development. The large Chinese investment was sourced not only from local Chinese firms but also from foreign enterprises as well. This is an indicator of China's research and development potential in the technology sector. Neither the government nor the private sector should underestimate the possible threat posed by the other side of the Taiwan Strait in respect to technology industries.
The brilliant performance of Taiwan's private enterprises -- including in technology indices and the subtlety of business operations and strategies -- has garnered a positive evaluation from the WEF. However, despite some improvement, Taiwan's standing remains relatively slack in government efficiency, its economic and business environments and its credit rating.
While the administration has some soul-searching to do, all in all, Taiwan's high ranking in the WEF report has been a welcome shot in the arm for Taiwan's economy. Rather than engaging in a war of words, the government and opposition parties should work at fortifying the economy so that Taiwan's competitiveness can grow further and that standards of living may improve.
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