Taiwan Miracle
History
The Taiwan Miracle refers to the rapid growth of the Taiwanese economy in the latter half of the twentieth century. Taiwan, along with Hong Kong, Singapore, and South Korea were together called the Asian miracle.
The Taiwanese economic miracle may have begun prior to the end of World War II. In 1962 Taiwan had a per capita gross national product (GNP) of $170, placing the island's economy squarely between Zaire and Congo. But, by 1997 Taiwan's per capita GNP, adjusted for purchasing power parity (PPP), had soared to $19,197, contributing to a Human Development Index similar to that of European countries such as Spain, Portugal, and Greece.
According to economist Paul Krugman, the rapid growth was made possible by increases in capital and labor, but not an increase in efficiency. In other words, the savings rate increased, and work hours were both lengthened and many more people, such as women, entered the work force.
Future Growth
Though the Celtic Tiger refers to the rapid growth of Ireland during the 1990s and borrows the Tiger from the Asian Tigers, current KMT chairman and mayor of Taipei Ma Ying-jeou recently visited the island to gain ideas for re-igniting the economic growth of Taiwan, which has become much more modest since the late 1990s.
One major difference with Ireland, of course, is the native English fluency of the Irish, which many economists believe has contributed to Irish economic miracle. Mirroring Hong Kong and Singapore, the ultimate goal is to become a country fluent in three languages--Taiwanese, Mandarin (the national language of both China and Taiwan), and English, becoming a bridge between East and West.
Consolidation of the financial sector remains a concern as it continues at a slow pace, with the market split so small that no bank controls more than 10% of the market. Recently, credit card debt has become a major problem, as Taiwan does not have an individual bankruptcy law. Taiwan also remains undeveloped in some sectors, such as the lack of a bond market.
Generally, transportation infrastructure is very good and continues to be improved. Many infrastructure improvements are currently being pursued, such as the nearing completion of high speed rail service connecting all major cities on the western coast, from Taipei to Kaohsiung; the first subway lines are to open in Kaohsiung by the end of the year; the country's highways are very highly developed and in good maintenance, continue to be expanded, especially on the less developed and less populated east coast, and a controversial electronic toll system has recently been implemented. The Taiwanese government has chosen to raise private financing in the building of these projects, going the Build-Operate-Transfer route, but significant public financing has still been required and several scandals have been uncovered. Nevertheless, it is hoped that the completion of these projects will be a big economic stimulus, just as the subway in Taipei has revived the real estate market there.
Taiwan continues to rely heavily on its technology sector, a specialist in manufacturing outsourcing. Recent developments include moving up the food chain in brand building and design. LCD manufacturing and LED lights are two newer sectors in which Taiwanese companies are moving. Taiwan also wants to move into the biotechnology sector, the creation of flourescent pet fish and a research-useful flourescent pig being two examples. Taiwan is also a leading grower of orchids.
Debate on opening "Three links", with China is also ongoing, with the security risk of economic dependence on China being the biggest barrier. By decreasing transportation costs, it is hoped more money will be repatriated to Taiwan and that businesses will be able to keep operations centers in Taiwan while moving manufacturing and other facilities to China. Taiwan hopes to become a major operations center in East Asia. In addition, many businesses and areas in Taiwan hope to make money from Chinese tourists if and when the three links are negotiated.