Fri, Mar 15, 2002 - Page 12 News List

High-tech brain drain threatening Taiwan

By Chang Wei-penn

In the 1980s, scholars from top business and management schools in the US began to undertake large-scale research projects aimed at improving the global competitiveness of the US manufacturing sector, which was in a state of constant decline between 1970 and 1985. The sector was then restored, in a little over 10 years, to its leading position in the highly competitive global mar-ket, thanks to its own efforts and those of labor leaders, aca-demics and economic and trade officials.

Among the many projects conducted by the Harvard Business School on US competitiveness, the one most deserving of our attention is US Competitiveness in the World Economy, co-edited by Bruce Scott and George Lodge.

The book contains the results of studies on US industry -- from the cutting-edge computer and electronic sectors to the more traditional automobile and textile sectors -- carried out by more than a dozen scholars. The book also questions the traditional market mechanism -- the "invisible hand" premise, which posits that government should not intervene in industrial and economic development. Indeed, the scholars argue that US industry lost its competitiveness precisely because both business managers and government officials gave low priority to competitiveness and long-term development in the 1970s and 1980s.

Indeed, the European aviation consortium Airbus was able to compete with Boeing Co of the US shortly after its establishment because the French, German, British and Spanish governments were actively involved in the development of the European aviation industry. Similarly, Japan's semiconductor industry has caught up with that of the US within a decade because of the close cooperation between the Japanese government and industry.

Taiwan's information industry is another major case in point. It has been able to command the lead in today's global economy because the government has long cultivated talent, provided tax incentives, built industrial parks and invested a lot of capital in order to promote its

competitiveness.

Unfortunately, the DPP government, pressured by busi-nesses and the opposition parties, has been forced to abdicate its huge responsibility to promote the nation's long-term competitiveness by replacing restrictions on business relocation with a policy of "active opening, effective management" proposed at the Economic Development Advisory Conference last August.

How will the government conduct "effective management" of the overseas operations of Taiwanese businesses once the high-tech industries have relocated to China? Let us hope that those businesspeople who think only of their short-term interests, rather than the nation's long-term interests, will produce a balance sheet clearly detailing all the likely gains and losses of their relocation so that the people of Taiwan can examine them.

This is not about unification or independence. Rather, it is about Taiwan's ability to continue to develop.

If Taiwan's highly competitive businesses move to China, it will be possible to compensate for the capital outflow, but not for the loss of high-tech and managerial talent. The consequences will not be sustainable. The "combative Cabinet" should therefore proceed with extreme caution. Europe has actively promoted economic integration and expanded its industrial sector to raise its global competitiveness mainly out of fear that its talent will otherwise be absorbed by the US.

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