The fourth is in the use of capital and funds. Austerity is awarded, as is saving money, instead of spending it where it is useful. As a result, economic development takes a negative approach because it is focused on whether expenditure is necessary instead of taking a positive approach and saving what is needed while investing when doing so is warranted, for example, by improving added value rates and productivity. Taking this negative approach has begun to hurt the national economy.
When Ma first became president, he talked a lot about deregulation and reconstruction and tried to lead the nation away from the perils of isolationism. He said Taiwan would reform open up to competition. However, after five years in power, Ma has introduced more restrictions and controls to the nation’s political and economic landscapes, and seems to be leading Taiwan toward a socialist, or even a communist, economy, with the government giving up on the efficiency and competitiveness emphasized by free-market economies.
To echo The Economist’s warnings to Hollande, if Ma is unable to show the resolve and ability to carry out reforms before it is too late, then in the remaining three years of his term, the political and economic situation is bound to get even worse. Investor confidence, the confidence of the business world and even the confidence of society will be lost and Taiwan’s competitiveness will become increasingly weak.
Bert Lim is president of the World Economics Society.
Translated by Drew Cameron