President Tsai Ing-wen’s (蔡英文) administration has been pursuing the “five key innovative industries” plan to jump-start the engines of economic growth across Taiwan. It includes developing an “Asian Silicon Valley” in Taoyuan, “smart” machinery in Taichung and “green” energy in Tainan.
It is not difficult to see that these measures are taken at least in part to drive a more balanced growth across Taiwan’s geographical regions. However, aside from industrial development, Taiwan should fundamentally revamp its administrative divisions to boost competitiveness.
From 2010 to 2014, various localities were combined and converted into six special municipalities: Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung. Taiwan has about 16 million people living in these municipalities, which account for about 70 percent of the total population and 64 percent of the budget allocated to local governments. While the number of special municipalities tripled, smaller localities have become increasingly marginalized, and the gap between urban and rural areas has widened. Many of the remaining 16 counties and cities have complained of a lack of development and resources.
From an economic standpoint, the composition of six special municipalities is unfavorable to overall national development. UN research has found that urbanization and income per capita are highly correlated. People living in more concentrated cities earn higher incomes. This is because cities are viewed as more appealing than rural areas and are more capable of attracting talent and capital.
The special municipalities are much smaller in size and population than world-class cities like New York, London, Hong Kong and Tokyo. New Taipei City has a population of slightly less than 4 million, while Taipei, Taichung and Kaohsiung each have about 2.7 million people. Taoyuan has 2.1 million people and Tainan has only 1.8 million people.
Administrative divisions in Taiwan should be redrawn to combine smaller cities and counties. Larger metropolitan areas formed by aggregating human and financial resources would fare better in global ranking, gain reputation and become more alluring destinations for doing business and holding international events.
The distance between Taipei and Kaohsiung is about 360km, with Taichung roughly in between. The boundaries of Taipei, Taichung and Kaohsiung should expand to incorporate neighboring counties and cities to increase productivity and create more opportunities.
Likewise, the joining of greater Taichung (Taichung, as well as Changhua and Nantou counties) and the union of greater Kaohsiung (Kaohsiung and Pingtung County) can create economies of scale. Taoyuan and Tainan should be downgraded to provincial cities.
Finally, the convergence of Hsinchu and Miaoli and the merger of Yunlin and Chiayi would achieve greater efficiency and prosperity.
Better environmental planning could alleviate the decline in living standards in cities. In addition to expensive housing, heavy traffic and widespread pollution, typhoons and earthquakes, exacerbated by soil liquefaction are likely to cause significant casualties.
Aside from economic considerations, local governance should also account for climate change, energy provisions, soil and water conservation.
The composition of local governments is awkward and inefficient. Taiwan would be better served by integrating existing counties and cities for the sake of economic competitiveness and well-rounded development.
Alfred E. Tsai is a student at Columbia University, where he is studying economics and political science.
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