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Economic pessimism is avoiding the reality

"Political gridlock and a stagnant economy" has become a mantra for those who are pessimistic about Taiwan's future. Beijing claims that Taiwan's per capita GDP has been stagnant for a decade, and the blue camp is busy singing the praises of "China's rising." These issues have become the twin base of China's claims to Taiwan. This is propaganda.

First, rapid GDP growth is not necessarily reflected by personal income. To take Hong Kong as an example, its GDP growth rate between 2000 and last year was 5 percent, but incomes last year had fallen below what they were five years earlier. This is largely due to factors such as economic growth and increased immigration.

In a strict multinational comparative economic analysis, per capita GDP should be the key to an evaluation. Compared to the performances of the main economies in East Asia over the past decade (from 1996 to last year), only China and Vietnam, the two nations with a relatively low national income per capita, had steady economic growth while the remaining nations experienced economic recession to some degree. This performance is regarded by many economists in the world as being related to the 1997 Asian financial crisis.

Over the past decade, the worst declines in per capita GDP took place in South Korea in 1996, with a 40 percent drop, with Malaysia suffering a 32 percent decline. Hong Kong's per capita GDP almost 10 years after it was handed back to China in 1997, meanwhile, showed a 5 percent decline from 1996 when it was still a British colony. In Taiwan and South Korea, two nations that have made a successful transition to democracy, incomes showed the most noticeable increase.

Interestingly, although the pan-blue media is willing to admit to growth in Taiwan's per capita GDP over the past decade, it has intentionally slanted its view and favored reporting stories that do damage to the Democratic Progressive Party (DPP).

For example, its reports continue to emphasize that South Korea, one of the four "little tigers" in Asia, and which used to lag behind the other three, reported per capita GDP of US$14,114 last year, not far behind Taiwan's US$14,271. By doing so, it can prove the "inability" of the DPP government. But in the meantime, it fails to consider that South Korea's economic growth came at a painful price: its Consumer Price Index (CPI) has skyrocketed to a figure 14 times higher than Taiwan's.

If we calculate per capita GDP based on purchasing power parity (PPP), the figure in Taiwan exceeded South Korea's by US$1,300 in 2000, and by US$6,100 last year. In other words, five years after the DPP came to power, by factoring in PPP we can see that in fact Taiwan's per capita GDP is the highest of the four little tigers.

Also, the Bank of Taiwan's bad debt ratio has improved from the highest 8.8 percent in 2002 to 4.35 percent last year. The average jobless rate (from 2001 to last year) in Taiwan fell to 2 percent, lower than in Hong Kong. In the same period, the misery index in Taiwan was only 0.2 percent higher than Singapore, which was the lowest of the four little tigers. China's misery index last year was four times higher than Taiwan's.

Based on the above statistics, Germany's 2006 Der Bertelsmann Transformation Index results indicated that Taiwan ranked first in Asia in terms of transformation progress. Switzerland's Growth Competitiveness Index 2005 meanwhile ranked Taiwan first in Asia.

While economists around the world are endorsing Taiwan's economic development, the pan-blue media incessantly work to precipitate a crisis in the nation's economy. Could it be that it believes telling a lie a hundred times will turn it into the truth?

David Su is a doctoral student in the department of economics at the University of Rhode Island.

TRANSLATED BY LIN YA-TI
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