A visiting business professor yesterday said that public policy-makers should run the government like a business while shying away from making protectionist moves in order to build up its business climate and the nation's competitiveness.
"Markets inspire, leaders manage adjustments and defensive moves often fail," Ralf Boscheck, a professor of economics and strategy at the International Institute for Management Development (IMD) in Switzerland, told a business forum in Taipei.
While heralding a liberal government in the marketplace, Boscheck stressed the importance of public policy initiatives, which he said can help nurture businesses if policymakers know when to let go.
Panelist Nelson Chang (張安平), vice chairman of Chia Hsin Cement Corp (嘉新水泥), disagreed, saying that a "hands-off" policy is the best as a government allows the market mechanism to prevail.
The government should act as a business coordinator and facilitator, which encourages creativity, as well as a supplier of infrastructure, Chang said.
Addressing Taiwan's national competitiveness, Boscheck said that the IMD sees the country as a "very open and developed economy," and ranks it in sixth place in the 2003 IMD Competitiveness Yearbook, released in May.
Although the nation's competitiveness hinged on its economic fundamentals, business effi-ciency, government efficiency and government-business relations, the government's increased deficits appear to be a major concern, Boscheck said.
Growing government deficits, as opposed to the nation's low corporate profit taxes, seem to suggest that an overhaul of the tax system will be inevitable, he said.
Privatization of state-owned enterprises is also vital to future economic development, he said.
As China's domestic markets gradually open up, Boscheck also urged Taiwan to leverage its advantages in culture, language, business practices and experience in the greater China region as it becomes the most dependent economy on China.
"The last thing you can afford is political intervention into what is required for businesses," Boscheck said, referring to the China-Taiwan trade interdependence.
Although risks of economic bubbles may be emerging in China, that country has demonstrated its potential to be the only developing nation with cheap labor and low manufacturing costs to attract foreign investments while leap-frogging in technological development, he said.
Acer Group chairman Stan Shih (施振榮) said the nation should take utilize its advantages in information technology and play an important role integrating and leveraging all its Chinese resources in the Asia-Pacific region and greater Chinese markets.
"Taiwan should enhance its software and service core competence, which is critical for the next [economic] miracle," he said.
Vice Premier Lin Hsin-yi (林信義) said Taiwan would become one of the most popular places in the world for businesses as it moves up the economic-value chain.
"We expect Taiwan to develop as an Asian research and development center and global-logistics hub," Lin said.
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