Taiwan's economic growth has been sliding in recent years, hitting a record low of minus 2.1 percent in 2001. Last year, the growth rate bounced back to 3.2 percent, but the drive for growth was still not strong enough. unemployment continues to rise, setting record highs of 4.57 percent in 2001 and 5 percent last year.
Amid the economic doldrums, the Cabinet approved two project proposals on Dec. 18 last year, one for increasing public-service jobs and the other for expanding public construction. The Cabinet also approved two special budget bills that will put an extra NT$70 billion into the creation of 115,000 job opportunities, in the hope of boosting economic growth to 3.52 percent and reducing unemployment to below 4.5 percent this year.
However, due to wrangling between the ruling party and the opposition, the Legislative Yuan has failed to pass the bills and the economic stimulation proposals.
The rising unemployment is due to both structural unemployment and rising cyclical unemployment. Along with industrial upgrading and changes in the industrial structure over the past 10 years, Taiwan has moved from traditional labor-intensive industries to capital-intensive, technology-intensive and now to knowledge-intensive industries. This is an inevitable path as the economy develops and Taiwan moves toward becoming a fully developed country.
However, in this process of economic development, the new technology-intensive industries and the service sector cannot absorb all the labor freed up by traditional labor-intensive industries. Structural unemployment continues to rise as labor-intensive industries move to China en masse. In fact, this phenomenon corresponds to the experience of developed countries in Europe and America.
The rise in cyclical unemployment, meanwhile, was caused by the economic decline both at home and abroad that began in the second half of 2001. Being an open economy, Taiwan relies heavily on other countries. The nation's combined import and export value frequently exceeds 100 percent of its GDP and export value often exceeds 50 percent. For this reason, its economic ups and downs are deeply influenced by whether the international economy (in particular the US economy) is bullish or bearish.
The US economy has been in the doldrums since the second half of 2001. Its high-tech industries are facing stagnation or even negative growth. Electronic and IT products have been Taiwan's prime exports over the past two or three decades. When the US high-tech industries see slow growth or even decline, Taiwan's electronic and IT industries inevitably bear the brunt. Naturally, the impact on Taiwan's economy is beyond question.
The most obvious testament was private investment growth in Taiwan, which was at a historic low of minus 29.17 percent in 2001. Private investment growth for last year is estimated to be 0.3 percent. Besides, public investment growth dropped from an average 7.28 percent in the 1980s and 3.78 percent in the 1990s, to minus 1.92 percent in 2001 and minus 5.6 percent last year.
The above statistics reflect the fact that the current economic downturn domestically was caused by insufficient effective demand. According to the British economist John Maynard Keynes' principle of effective demand, an expansionary fiscal policy (eg, expansion of public investment and government expenditure) can effectively boost the economy and reduce unemployment under such circumstances.
Joseph Stiglitz, winner of the 2001 Nobel Prize in economics, also pointed out, in an article in late November 2001, that in the face of the US economic downturn -- caused by current insufficient demand -- an expansion of government expenditure is a better approach than tax cuts when it comes to stimulating the economy and reducing unemployment. This idea can also be applied to Taiwan's situation.
Taiwan has also been affected by both the US-Iraq war and the outbreak of severe acute respiratory syndrome (SARS). These have significantly damaged the tourism, aviation and other industries. Under these circumstances, the Executive Yuan's proposed NT$50 billion expanded public construction budget is not a cure, but it will at least help meet urgent needs.
This plan is indeed a good policy that will boost the economy and reduce unemployment.
Unfortunately, the opposition parties have accused the DPP of using the plan to curry favor ahead of the presidential election next March. Hence, they have tried hard to block the budget in the legislature. Not only did they block the budget in the previous legislative session, they did not support it in this session either. They have proposed an alternative plan which would allocate the money directly to local townships, instead of city and county governments.
Of course, the pan-blue camp controls more cities and counties than the DPP does. If the DPP's proposal to distribute the budget to cities and counties is really an attempt to secure votes, isn't the direct budget allocation to local townships also a trick aimed at attracting votes?
It's understandable that, in their desire to win back political power next year, the opposition parties do not wish to see the ruling party perform well or boost the economy. Winning back power, however, depends on real ability and better policies -- not the obstruction of every government policy.
The public view the legislature as a source of chaos and demand legislative reform because they are deeply disappointed by such political wrangling. Can't the opposition parties see this now? Do they really think that the public would allow both KMT Chairman Lien Chan (連戰) and PFP Chairman James Soong (宋楚瑜) to stage a comeback by bringing down the economy and worsening unemployment? The people are not blind. The opposition's trick will never work.
The opposition should stop blocking the Cabinet's budget proposals for the sake of hundreds of thousands of unemployed families across the nation.
Wang To-far is a member of the Taipei Society.
TRANSLATED BY FRANCIS HUANG AND EDDY CHANG
Could Asia be on the verge of a new wave of nuclear proliferation? A look back at the early history of the North Atlantic Treaty Organization (NATO), which recently celebrated its 75th anniversary, illuminates some reasons for concern in the Indo-Pacific today. US Secretary of Defense Lloyd Austin recently described NATO as “the most powerful and successful alliance in history,” but the organization’s early years were not without challenges. At its inception, the signing of the North Atlantic Treaty marked a sea change in American strategic thinking. The United States had been intent on withdrawing from Europe in the years following
My wife and I spent the week in the interior of Taiwan where Shuyuan spent her childhood. In that town there is a street that functions as an open farmer’s market. Walk along that street, as Shuyuan did yesterday, and it is next to impossible to come home empty-handed. Some mangoes that looked vaguely like others we had seen around here ended up on our table. Shuyuan told how she had bought them from a little old farmer woman from the countryside who said the mangoes were from a very old tree she had on her property. The big surprise
The issue of China’s overcapacity has drawn greater global attention recently, with US Secretary of the Treasury Janet Yellen urging Beijing to address its excess production in key industries during her visit to China last week. Meanwhile in Brussels, European Commission President Ursula von der Leyen last week said that Europe must have a tough talk with China on its perceived overcapacity and unfair trade practices. The remarks by Yellen and Von der Leyen come as China’s economy is undergoing a painful transition. Beijing is trying to steer the world’s second-largest economy out of a COVID-19 slump, the property crisis and
As former president Ma Ying-jeou (馬英九) wrapped up his visit to the People’s Republic of China, he received his share of attention. Certainly, the trip must be seen within the full context of Ma’s life, that is, his eight-year presidency, the Sunflower movement and his failed Economic Cooperation Framework Agreement, as well as his eight years as Taipei mayor with its posturing, accusations of money laundering, and ups and downs. Through all that, basic questions stand out: “What drives Ma? What is his end game?” Having observed and commented on Ma for decades, it is all ironically reminiscent of former US president Harry