The era of the “new economy” has arrived. If it is to achieve anything, new policies should be implemented that aim to bring wealth and prosperity to the nation and its citizens. Under globalization, economies large and small are busy pressing forward. Some of them are busy putting out fires and some are too busy to figure out the right direction to take.
Taiwan’s economy has been stumbling around for a long time without a ray of sunlight. It has been a long drought without a drop to drink, but why?
Issues facing the nation at this stage include innovating economic vitality; developing cutting-edge scientific and technological projects; making finance, taxation and fiscal policies more flexible and able to produce added value; seeking stability in healthcare and long-term care; simultaneously building defense and civil industries; renewing and regenerating the labor force; establishing focal points of culture and creativity, smart cities and the cloud; systematizing regional medical and security alerts; providing education resources, etc. The nation will also very soon run up against problems associated with falling birth rates.
All of these are factors in the rise and fall of the nation’s competitiveness and they are indicators of the systematic nature of safeguards of the public’s wellbeing.
There are a small number of nations that have no natural resources to utilize, but want to be among the leaders in the global economic rankings, so they definitely need to have special features and advantages, otherwise they become “sunset nations.” If a nation’s economic added value keeps falling year after year and it is not an exporter of natural resources and raw materials, and if it thinks it can make its GDP grow year after year and turn its economy around just by relying on people’s hard work, it is certain to end in tragedy.
Very few nations can survive entirely on the basis of their service sectors, without any need for manufacturing and Taiwan is not one of those miraculous exceptions. If we have no economic locomotive and try to get by just by walking on our own two legs, we must prepare to be eliminated in the jungle of global economic competition.
In building advanced technology industrial clusters, we cannot again cling to the fantasy of Taiwan as a technology island. Instead, we should, with the strategic guidance of external demand — outward transfer — establish cutting-edge advanced technology clusters with internal impetus — inward innovation.
So only the effect brought about by a new technology economy — the multiplier effect of new cutting-edge technology — can bring about a deep and long-lasting influence on economic development.
Just relying on a nation’s internal market demand cannot spill over to achieve an effect of appropriate economic scale — it can only repeatedly defer the influence of economic activity.
The only way is to commercialize cutting-edge advanced military technology to produce a symbiotic effect that enables its use and purchase or consumption to create marginal added value that is far greater than the multiplier effect, thus generating profit for the next action. This can be seen in nations that have successful proponents of the new economy such as the US, Germany and Israel, and this is the right direction for our industrial policies to take.
Without cutting-edge value-added forms of manufacturing, there is no way of guaranteeing a nation can survive and remain competitive. Even in a nation such as Singapore, semi-manufacturing services and sea and air transport are the foundations of its economy, while finance and services are supplemental.
Taiwan still lacks an all-English-language environment, and it also lacks Hong Kong’s advantage of a “back factory” inland manufacturing supply chain, so everything depends on helping the nation helping itself before others would be willing to contribute.
When it comes to modes of fostering internal competitiveness, we could learn from Germany’s system of craftsmanship vocational education, which it uses to foster outstanding scientific and technical talent.
Another index nation and model for Taiwan to emulate and learn from is Israel. From its education system to its science and technology policies, with respect to developing both civil industries and military products, Israel plans them in connection with technology sharing and global market development, and its situation is very similar to Taiwan’s external environment.
Taiwan’s national manufacturing industries must rapidly transform to escape their difficulties. This must involve strengthening newly emerging high-tech industries, especially those industrial categories in which Taiwan is a world-class leader.
For example, in the 1980s, Taiwan’s motherboards accounted for more than 80 percent of world output, so Taiwan was able to influence the world market on the basis of its strength alone. Modern Taiwan should do its utmost to transform advanced technology to apply it to the extent that the whole of mankind must use it. Therein lies a boundless and robust national potential.
Let us analyze this by taking hydrogen as an example. It is an energy source that can be used in hydrogen-powered cars, scooters and so on. It uses the chemical principles of water splitting and regeneration to split and recombine water through reverse engineering. The same technology can be used for military purposes in submarines, where it is the best source of oxygen, allowing submarines to remain submerged for longer without surfacing to replace their air, which would reveal their whereabouts.
Hydrogen-oxygen technology uses the method of generation through splitting and reforming water to assist propulsion and at the same time it can reduce the threat of the greenhouse effect caused by carbon dioxide. This hydrogen-oxygen technology can encourage innovation in peripheral compound material industries and spur breakthroughs in cylinder strength and pressure technology.
So, popularizing hydrogen-oxygen propulsion has boundless potential for maritime Taiwan, and prospects for high profits are foreseeable.
Nanotechnology is another field that encompasses photocatalysts, the photoelectric industry and new display-panel technologies. The Environmental Protection Administration’s Ecolife platform is steering the development of alternative energy, which can greatly reduce the consumption of energy resources.
At the same time, photoelectric lasers have the advantage of low energy consumption. Their applications range from big ones, such as military railguns and laser air defense systems such as Israel’s Iron Dome, to tiny ones such as those used in laser medicine and various forms of nanofiber fine laser processing. These should all be points for emphasis in scientific and technological research and development.
Carbon fiber is very hard, strong, light, highly resistant to chemicals and heat, has low thermal expansion and is highly resonant. It is used in stealth aircraft, tanks and battleships for its lightweight and anti-reflective properties, and is very much worthy of high-level development and application.
From manpower development to cutting-edge technology research and development, from the commercial application of cutting-edge technology to the formation of high-tech manufacturing industry clusters and the development of Taiwan’s new economy — beyond maintaining Taiwan’s national strength, these things are probably the only solution for the nation to establish a new economy.
Only when there is economic prosperity can the state have more fiscal resources to put into social welfare enterprises, look after the public’s health and provide its citizens with equal opportunities for development.
If people have happy lives and a sense of pride, they are sure to identify more closely with their nation. The right policies will deeply embed Taiwan in the global market’s value chain, making it a center of beneficial interests for the whole world, so that China’s intentions of using military force against Taiwan might be mitigated for fear of losing more than it gains. Such an arrangement would be the best international guarantor of Taiwan’s national security.
Yu Yaw-shun is an assistant professor in the Chung Hua University’s finance department and Tseng Chien-yuan is an associate professor in its public administration department.
Translated by Julian Clegg
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