Thu, Aug 24, 2006 - Page 8 News List

Which country should we emulate?

By Lin Cho-shui 林濁水

When it was in power, the Chinese Nationalist Party's (KMT) financial and economic brainstrust basically came from the Industrial Development Bureau (IDB, 工業局) and the Bureau of Foreign Trade (BOFT, 國際貿易局).

Prior to the 1980s, those who dictated policy included former finance minister Lee Kuo-ting (李國鼎) and former premier Sun Yun-suan (孫運璿), both of whom started out as engineers. They focused much of their attention on the nation's manufacturing industry.

In the 1990s, after trade in manufacture had taken off, foreign trade officials from the BOFT basically took charge of financial and economic policy.

Faced with the issue of industrial transformation, the nation's foreign trade officials tended to adopt a defeatist approach toward the possibility of keeping the manufacturing sector in Taiwan. That is why former KMT premier Vincent Siew's (蕭萬長) earliest plans for an Asia-Pacific logistics hub in the country did not include the manufacturing sector.

Nor did the original idea behind his "green value-added island" concept -- aimed at making the country a hub for global value-added services -- proposed at last month's Conference on Sustaining Taiwan's Economic Development include the manufacturing sector: Its vision was to transform Taiwan from a manufacturing center into a center for all sorts of services. Both these ideas follow the development patterns of Singapore and Hong Kong.

Siew's plan to make Taiwan into a "value-added island" is intended to connect the country to the rest of the world.

To accomplish this, the plan says, the country has to learn from Ireland, Finland and the Netherlands.

The only thing that these three European countries have in common with Taiwan is that they are all small countries, but the population of each of the three nations is smaller than that of Taiwan.

Although these three countries have fared very well on the economic front in recent years, they do not have anything in common in terms of economic development models.

Finland's economy depends largely on Nokia, the world's leading mobile phone supplier. This is probably a very difficult model to emulate and, in particular, there is nothing to learn in terms of value-added services, which lies at the core of Siew's proposal.

In comparison, the Netherlands' overall industrial development is more balanced, and it is fairly advanced in the agricul-tural, biotech, technology and services sectors.

However, the Netherlands' technology, agriculture and biotech sectors are focused on cutting edge innovation and not value-added services at all.

When it comes to its service sector, the Netherlands has the same kind of irreplaceable geographical advantage as Hong Kong, and that isn't really something that can be readily applied here either.

Both Finland and the Netherlands have international brands that are being sold all over the world, and they are indeed integrated into the global economy. However, Finland only relies on Nokia for that connection, and that link doesn't measure up to Taiwan's many and varied firms that have a global reach.

Emulating Ireland sounds even stranger, since that country has no advanced multinational corporations of its own.

On the contrary, foreign multinationals are setting up factories in Ireland for original equipment manufacturing (OEM) of biotech products as well as computer hardware and software.

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