This year, the Year of the Snake according to the lunar calendar, is also sometimes referred to as the Year of the Little Dragon. Starting about three decades ago, hard work created an economic miracle here, making Taiwan one of the four “Asian Tiger” economies, along with Hong Kong, Singapore and South Korea, and turning it into a model for economic development for developing countries.
Times have changed and after having once been the leading tiger economy, Taiwan has fallen behind in every respect, while the other three have continued developing. “Asian Tiger economies” is now a term of the past and Taiwan alone is still trying to hold on to past glories, failing to change and move on. This is why our economy has been so sluggish.
These signs of economic decline have been especially noticeable during President Ma Ying-jeou’s (馬英九) time in office, with three of Taiwan’s worst four years in terms of economic growth occurring in his first three years in power. This year will pose many more challenges.
There is no point in criticizing Taiwan just for the sake of it, but at the start of Year of the Little Dragon, looking back at Taiwan’s past successes and discussing possible trends that may influence future global economic development could perhaps serve as a useful reference to those running the country.
The biggest variables affecting global economic development in recent years are the linking of global networks and constantly changing technologies. These variables are closely followed by the ability to innovate and work hard.
In the past, Taiwan capitalized on the opportunities offered by the global economic environment and cashed in on its own advantages while availing itself of all beneficial internal and external factors to make stunning economic progress.
During the Cold War era, Taiwan stood firmly with the US against communism. At that time, members of the liberal camp practiced capitalism, emphasized business and trade development and established comprehensive legal systems to protect commercial activities and private property.
This caused economic growth to increase greatly and income levels to soar. Communist countries implemented planned economies primarily based on nationalization and state-owned enterprises. Private property was not protected and an emphasis was placed on redistribution instead of economic growth. Production became ineffective and resources were wasted while people remained poor.
To increase the economic power of the liberal camp and highlight the superiority of the democratic system, the US implemented the Marshall Plan in western Europe, while in Asia it focused on helping Japan grow.
The result was that West Germany and Japan recovered from the war and rapidly became the second and third-largest economies in the world. After its economy took off, Japan took the lead in steering other Asian economies toward economic development, and the four Asian tigers constituted the second wave of Asian economies to experience strong growth.
However, this environment had changed greatly by the 1990s. In 1978, China initiated its economic reforms and the Soviet Union and communist countries in eastern Europe had started to collapse by 1989. Once this happened, the polarized power structure that had characterized the world in the Cold War also collapsed.