Based on past experience, it can be seen how Taiwan managed to overcome poverty and create an economic miracle based mainly on the right development strategies.
Early on, the creation of export processing zones allowed the nation to capitalize on the advantages offered by its skilled labor force and the hardworking spirit of Taiwanese. This brought rapid change to the economy, transforming it from an agricultural society to an industrial society, laying the foundations for fundamental change.
The establishment of science and industrial parks was another milestone in the process.
An example was developing the electronics industry and employing skilled foreign workers coupled with preferential policies and complete support for target industries — such as the foundry model of operation for integrated circuit design in which Taiwan became a world leader.
This entire process led to a further two decades of growth and prosperity.
The main reason the economy has stagnated is that it has become dependent on China, with the result that it cannot set its own economic direction, for example in areas such as employment, pay and tax revenue.
Even worse, although Chinese businesses were dependent on the Taiwanese supply chain in the past, in the past few years, China has leveraged its huge population advantage as well as its “white-box” brands — inexpensive multifunction electronic products made by less well-known brands.
China’s brands have thus experienced strong, rapid growth and moved from quantity to quality in terms of production.
Beijing then used this to spur the development of its local supply chain. This has threatened the continued existence of China-based Taiwanese businesses.
If Taiwanese industry is unable to upgrade and transform, it will have a hard time not being passed over.
The second reason for Taiwan’s stagnation is that the global economy is moving away from the Second Industrial Revolution, which was mainly based on the use of fossil fuels, toward the Third Industrial Revolution.
This new revolution is based on digital Internet-based technologies, such as 3D printing and renewable energy sources like solar power and wind, hydraulic, geothermal and biomass energy.
Renewable energy sources are likely to become a basis for the main industries of the future, which will include cloud computing, 4G communication systems, online retailing and electric cars that are already exciting interest.
It is easy to see that the Ma administration is still stuck in the Second Industrial Revolution.
Look at the example of the Fourth Nuclear Power Plant in Gongliao District (貢寮), New Taipei City (新北市), and the double hike in fuel and electricity prices.
Add to this Ma’s view of nuclear power as a necessity to cope with future energy demands because of the government’s failure to adopt alternative energy sources.
As such, it is doubtful Taiwan will see any forward-looking policies in response to future trends.
If the Ma administration wants to revive the economy, it must stop relying on China and scrap its outdated Second Industrial Revolution thinking.
It must also have concrete policies — that it carries through — to foster growth in new industries.