Inclusive institutions that cultivate talent across society have propelled Taiwan to “one of the most extraordinary economic experiences in world history,” Nobel laureate James Robinson said yesterday.
“The Taiwanese experience is dramatic,” Robinson said, referring to Taiwan’s significant rise in GDP per capita during a lecture in Taipei.
According to the IMF, Taiwan’s GDP per capita rose from US$2,370 in 1980 to US$37,830 this year, an increase of nearly 1,500 percent.
Photo: CNA
Robinson said that long-term growth in Taiwan was contingent on a political and economic system that created broad-based incentives and opportunities for innovation, allowing a meritocratic environment in which all “latent talent in society can get to the top.”
Hallmarks of inclusive institutions include robust rule of law and intellectual property protections, said Robinson, who was awarded the 2024 Nobel Prize in Economic Sciences for his work with Daron Acemoglu and Simon Johnson.
This stands in contrast with “extractive institutions,” which Robinson said concentrate political power and economic opportunities in the hands of a narrow elite.
While such systems can achieve some initial growth, it is only “transitory,” as the elite eventually prioritizes political control and wealth extraction over the broad-based incentives needed for sustained innovation, he said.
Addressing China’s sustained growth despite its extractive political institutions, the University of Chicago professor suggested that this relies on a temporary and unstable combination of inclusive economic institutions and extractive political institutions.
He warned that this structure is fundamentally incompatible with an advanced, innovative economy, as political control will eventually undermine innovation, citing the disappearance of high-profile entrepreneurs like Jack Ma (馬雲), founder of Alibaba Group Holding Ltd (阿里巴巴).
“I just think you can’t have a modern, inclusive, innovative economy when Jack Ma criticizes the government and then disappears. It can’t happen.”
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