Many people in Taiwan are demanding that the government and the business sector redouble their efforts to strengthen the economic structure and effect an improvement and transformation of industry, but nobody has come up with exactly what direction these changes should take or how they should be implemented.
We should, perhaps, start with the impact global changes and trends are to have on Taiwan.
Will Taiwan meet globalization head-on, or will it take a more passive approach, and let itself be carried along by the process?
Whatever the case turns out to be, we must first facilitate structural changes in society, as well as industrial and economic transformation on a national level. This starts with the government, which needs to also address how its own management mechanisms operate. Only then will we see an improvement in Taiwan’s international competitiveness.
The first transformation we should consider is how, after the globalization of the knowledge-based economy in the 21st century, all economic activities became fully service-oriented.
In the globalized market, it is service economies or knowledge-based economies that have led the way in how the majority of advanced nations have developed.
The traditional way of viewing an economy purely in terms of agricultural, industrial and commercial activities is now obsolete. In the post-modern era, the prevailing idea is that “everything is a service industry.”
Therefore, the first thing we need to consider when it comes to the pursuit of overall development is how we should best go about utilizing trade in services to replace the traditional model that we have used for the past 60 years of selling manufactured goods.
The ultimate strategic goal of Taiwan’s service industry, the industry that we need to promote most of all, should be to concentrate our resources and focus on developing tradable services for the global market.
The second thing we need to think about is how much of our GDP the manufacturing sector accounts for.
In Taiwan, manufacturing already accounts for an unacceptably low percentage of our GDP. Normally, it should be at about the 25 percent mark.
Only by ensuring that the manufacturing industry accounts for a sufficient share of GDP can a country’s economy remain robust, while also maintaining a basic level of competitiveness and clout.
The third thing we need to look at is how advanced nations proceeded with their own transformation. We will see that the economies of advanced nations all moved from an early labor-intensive structure to being capital intensive and then developed toward being service intensive, and even knowledge intensive and creative intensive.
It is of paramount importance that Taiwan follows this process.
Unfortunately, the opposition parties have allowed themselves to oppose reforms and attempts to transform industry, despite the national and social costs of doing so, and despite being entirely sympathetic to the original idea, because of populist concessions to a public that often allows the heart to dictate their opinions.
The main question in all of this is whether Taiwan’s economy and society will be able to come in line with overall global trends during these tough times, as has happened in South Korea, and successfully transform and upgrade, while focusing on pushing the advantages of our key industries and gaining a share of the global market.
Bert Lim is president of the World Economics Society.
Translated by Drew Cameron
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