Tue, Mar 21, 2006 page8

• Media's bias on economics shows

  • By David Su 蘇經綸
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  IT seems that every time I hear Chinese-language media reports about the economy, I get nothing but how Taiwan's competitiveness is declining, how the income gap is continuing to grow and how the misery index is now at an all-time high. These reports also contend that the standard of living has been at a virtual standstill for the past decade, and now trails behind Asia's three other Little Dragons -- Singapore, Hong Kong and South Korea.

  However, when I read statistics released by international research organizations comparing Taiwan's performance with other countries, I notice that they come to a completely different conclusion. When I see these conflicting reports, it makes me wonder whether they are talking about the same country.

  In the 2005 World Competitiveness Yearbook published by the International Institute for Management Development in Lausanne, Switzerland, Taiwan ranked higher than ever before, coming in at 18th place, ahead of South Korea. South Korea, in fact, ranked at the bottom among the Four Little Dragons.

  Taiwan was also the best performing Asian country in the World Economic Forum's The Global Competitiveness Report 2005-2006. In addition, Taiwan was ranked number one in Asia for combined transformation and governing competence by Germany's Bertelsmann Transformation Index, a global ranking that analyzes and evaluates development and transformation processes in 119 countries.

  International institutions measure a nation's income gap in terms of the Gini index. Taiwan's Gini index, according to the Directorate General of Budget, Accounting and Statistics (主計處), peaked in 2001 at 0.35, and has fallen steadily over the past four years.

  From 1996 to last year, Taiwan's misery index has been one of the lowest compared with the other three Little Dragons, with only that of Singapore being lower at an average 0.5 percent. For three years during this period, Taiwan also had the lowest misery index among the four, with two of those years -- 2003 and 2004 -- occurring under the Democratic Progressive Party's (DPP) rule.

  The standard of living is generally expressed in terms of GDP per capita to measure purchasing power parity. According to the CIA's World Factbook, Taiwan's GDP per capita last year was US$26,700, not far behind Singapore's US$29,700. Total GDP growth per capita from 1999 to last year -- basically since the DPP took over -- was 66 percent. This was not only the highest among the Four Little Dragons, but it also outpaced the 63 percent per capita income growth in China during the same period.

  There is more. Since 2003, China has been the largest single destination for South Korean exports. And in 2004, South Korea jumped up the rankings to become China's third-largest foreign investor. As South Korea's reliance on China increases, local investment in South Korea itself has suffered. During the same period, Taiwan's GDP grew at a faster pace than South Korea's owing to the government's "no haste, be patient" policy.

  The US publication Business-Week produces an annual list of the world's top 100 high-tech companies, one of the main criteria being the rate of stock price increase, which is seen as an indicator of companies' future earnings power. Last year's list included 12 Taiwanese companies, a figure second only to the US', and twice as much as the combined number of firms from the other three Little Dragons.

  The difference between how international institutions interpret statistics on Taiwan and how the Chinese-language media paint the economy has never ceased to confound me. Simply put, the Chinese-language media tend to sensationalize differences in domestic performance over time (vertical analysis), whereas the international institutions I have mentioned compare the performance of different countries within a specific time frame (horizontal analysis).

  Sad to say, the Chinese-language media lack the international outlook of other institutions. One other crucial factor is the pro-China, or should I say, pro-Communist, mentality of the press in Taiwan. After all, it is not as if the Taiwanese media and the international institutions are looking at two different countries.

  David Su is a doctoral student of economics at the University of Rhode Island.

  Translated by Paul Cooper
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