Thu, Nov 15, 2012 - Page 8 News List

Free competition in business vital

By Tu Jenn-hwa 杜震華

Out of all the world’s economies, Taiwan is ranked 139th in terms of area and 51st in terms of population. GNP is the 28th highest in the world, it is 20th in economic scale and sixth in terms of foreign reserves. Internationally, its economy is generally viewed as that of a medium-sized country. However, because Taiwan’s major export markets have traditionally been the US, Japan and Europe — and lately China — Taiwanese think of themselves as coming from a small country.

As a result of the recent global economic sluggishness, the nation has tried to find a country to emulate, but nobody knows whether the model should be Germany’s excellence in craftsmanship, the UK’s skill in the cultural and creative industries, the US’ commercial strengths, the Netherlands’ success in logistics, Switzerland’s expertise in biotechnology or the success Ireland has had with information technology.

It is widely believed that Hong Kong and Singapore have the two best economies in the Chinese-speaking world. Hong Kong’s government goes to great lengths not to get involved in the economy, while Singapore’s government plays a very active role and does so effectively. Both of these governments have produced economies that perform very strongly.

The worst thing for any economy is a government that wants to get involved, but that does so ineffectively.

However, a fair basis is necessary when making such assessments. After World War II, in the 1950s, Hong Kong and Singapore were already commercial centers, both with a GDP double that of Taiwan’s. The three economies are now more closely comparable, meaning that over the long term, Hong Kong and Singapore have not performed as well as Taiwan, so there is no need for Taiwanese to feel ashamed.

In a market environment characterized by fair competition, the amount an industry produces will be similar to the ratio of the population it employs. For example, the US’ agricultural industry employs about 0.7 percent of the US’ total manpower, creating 1.2 percent of the nation’s gross output value. The US’ industrial sector utilizes 20 percent of the nation’s manpower to produce 19 percent of total output, while its service sector employs 79 percent of the workforce to produce 80 percent of the US’ output value.

In Australia, 3.6 percent of the workforce is in the agricultural sector, which produces 4 percent of the country’s total output value. The Netherlands’ agricultural sector uses 2 percent of the total workforce to produce 2.7 percent of its output value, and in Israel, 2 percent produces 2.5 percent of total output value.

These countries all have highly productive agricultural sectors.

However, in Taiwan, the agricultural sector uses 5 percent of the workforce to create less than 2 percent of the nation’s gross output value, which shows that productivity in the agricultural sector is too low.

If its agricultural sector is unable to overcome these difficulties, Taiwan will never be able to join the ranks of more advanced countries.

China’s agricultural sector offers yet another contrast to the examples mentioned. China uses 37 percent of its total workers to produce a mere 10 percent of its gross output value. This is clearly because farmers are not allowed to move into the cities, which creates a vicious cycle in which productive forces cannot reach a balanced state.

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