Taiwan's Economy and Science and Technology
I. Economic Overview
Since 1949,
Taiwan's economic development has roughly gone through four periods:
(I) Economic Recovery Period (1949-1952). At that time, Taiwan's population increased dramatically, prices soared, industrial and agricultural production almost came to a standstill, while military expenditures accounted for more than half of fiscal expenditures, making life difficult for the people and bringing the economy to the brink of collapse. In response, the Taiwan authorities adopted a series of policies and measures aimed at stabilizing society and restoring the economy, including land reform, reform of the currency system, foreign exchange trade control, and prioritizing the development of the electric power, fertilizer, and textile industries, etc. In the 1950s, Taiwan's agriculture developed rapidly, with a growth rate averaging 4.7% per year. In addition, from the second half of 1950, the United States began to implement economic assistance to Taiwan, injecting large amounts of money to help Taiwan recover its economy. By 1952, Taiwan's economy had basically recovered to its highest level before World War II.
(2) The period of agricultural development (1952-1960). At that time, Taiwan's economy was basically based on agriculture, with a surplus of labor, serious deficits in both foreign trade and the balance of payments, an extreme shortage of foreign exchange, and an inability of the public to consume imported industrial goods due to low incomes. With the guiding principle of seeking development through stabilization, the Taiwan authorities established the policy of fostering industry through agriculture and developing agriculture through industry. The land reform promoted the improvement of agricultural labor productivity, and agricultural products and their processed products accounted for a very high proportion of total exports, as high as 71.5% in 1957, becoming the main force of foreign exchange earnings. The Taiwanese authorities, in turn, captured profits by means of unequal exchanges, such as fertilizer for grain and compulsory purchases, and transferred it to the industrial sector. In the industrial sector, the center of gravity was placed on livelihood industries that did not require much capital, did not have high technological requirements, and had a short lead time for building factories, so as to replace imports with on-island production in order to adapt to the island's level of consumption and to save foreign exchange expenditures, create more job opportunities, and alleviate the pressure on employment. It has formed agricultural and sideline product processing industries such as sugar, tea, pineapple and lemongrass oil, as well as import-substituting industries such as cement, glass, wood products, paper making, fertilizers, textiles, cooking oil, flour, plastic raw materials and products, man-made fibers, bicycles, sewing machines, and household appliances.
(3) The period of export-oriented economic development (1960-mid-1986). Due to the narrowness of Taiwan's market, the product market for import-substituting industries was already saturated at that time, and continued development would lead to a lack of economic strength. Taiwan seized the opportunity of changes in the international division of labor at the time to take advantage of the international comparative advantage of low wages to vigorously develop the processing and export industries to drive economic development, and successively amended or formulated policies and measures aimed at promoting exports, such as reforming foreign exchange trade, implementing the "Regulations on Incentives for Investment," encouraging private savings, providing tax and financing incentives to export manufacturers, and establishing the Export Processing Industry (EPI). and financing incentives for export manufacturers, and the establishment of export processing zones and bonded warehouses. During this period, foreign investment played an important role in Taiwan's industrialization and export expansion, and private enterprises shifted from import substitution to export industries, becoming the main force of economic growth. Taiwanese enterprises imported production materials from Japan and exported industrial goods to the United States, creating a triangular trade relationship that depended on Japan for production and the United States for markets. Taiwan's industry developed at a rapid pace. From 1963 to 1973, the average annual growth rate of industry was as high as 18.3%, of which the average annual growth rate of manufacturing industry was 20.1%, and the proportion of industrial output value in the GDP was increased from 26.9% in 196O to 43.8% in 1973; the proportion of industrial products in the export trade value was increased from 32.3% in l960 to 84.6% in l973. By now, Taiwan's industry had established an industrial pillar based on export processing zones, with processing industries such as light textiles and home appliances as the core, thus leading to the development of the economy.
(IV) Period of Economic Transformation (l986 to the present). Since the 8Os, due to changes in Taiwan's internal and external economic environment, the NT dollar appreciated sharply against the US dollar, wages also rose sharply, there was a shortage of labor, and the labor-intensive processing and export industries gradually lost their comparative interests and comparative advantages, leading to a low willingness to invest in the private sector, and the economy was in a predicament. For this reason, the Taiwan authorities in 1986 proposed the implementation of liberalization, internationalization, institutionalization of economic transformation, to further improve and perfect the market economy mechanism, and industrial upgrading and expanding foreign trade markets outside the U.S. as a major adjustment to determine the communications, information, consumer electronics, semiconductors, precision instruments and automation, aerospace, advanced materials, special chemicals and pharmaceuticals, health care and pollution prevention and so on. Ten emerging industries have been identified as the pillar industries. After nearly 10 years of economic transformation, Taiwan's economy has made some progress in liberalization and internationalization, and industrial upgrading has begun to bear fruit, with capital- and technology-intensive industries accounting for 61.5% of the manufacturing industry, among which the information industry has developed particularly prominently, with its output value ranking among the world's top. The center of gravity of Taiwan's foreign export market has also gradually shifted from Europe and the United States to Asia, with the proportion of exports to the United States dropping from 48.8% in 1984 to 23.7% in 1995, and the proportion of exports to Asia rising from 32.8% in 1998 to 52.6% in 1995. The structure of export products has also changed considerably, with electronics, information, machinery, electrical machinery and means of transportation accounting for more than 50 per cent of total exports. Outward investment grew substantially and began to become a net capital-exporting region, accumulating to about US$30 billion in outward investment by mid-1995. During this period, Taiwan's economic ties with the motherland and Hong Kong also became increasingly close.
The reasons for Taiwan's faster economic development are summarized as follows:
(1) It benefited from the large amount of U.S. economic aid and the development of the post-war capitalist world economy. The United States from their own strategic interests, from 1950 to 1965 to Taiwan's economic assistance *** counted l5 billion U.S. dollars. 15 years, "the U.S. aid on average accounted for about 34% of Taiwan's gross investment, thus compensating for Taiwan's merchandise and labor people over the 91%". U.S. economic assistance to Taiwan is not limited to funds or materials, but also includes military assistance, low-interest loans, direct investment, technology transfer, and personnel support. The role of USAID in the process of Taiwan's economic development is not trivial. According to Taiwanese scholars, without USAID, "Taiwan's economy would have lagged behind by at least 20-3O years". In addition, the post-war economic boom in the West in the 1960s-7Os provided a huge market for Taiwan to develop an export-oriented economy.
(2) The property and talents brought from the motherland played an unmissable role. When the ruling group of the Kuomintang was defeated and retreated from Taiwan, it transported 800,000 taels of gold from Shanghai as well as a large number of silver dollars and U.S. banknotes to Taiwan, transferred 2 billion dollars to American banks such as Citibank and Volkswagen by the Kung and Sung families, and brought a large number of various types of financial and economic talents with it. These funds and talents played an important role in the development of Taiwan's economy. In addition, the ruling group of the Kuomintang transported a large amount of machinery and equipment to Taiwan.
(3) The people of Taiwan have made important contributions to economic development. The hardworking, thrifty, and hard-working people of Taiwan have made important contributions to Taiwan's ability to increase its savings rate to gather capital and to develop international markets. Farmers made sacrifices in the process of industrialization, and small and medium-sized entrepreneurs became the main protagonists of export trade.
(4) The Taiwan authorities have formulated economic policies such as seeking development while stabilizing. For example, in the development strategy to develop agriculture and labor-intensive industries before developing capital- and technology-intensive industries; to develop import-substituting industries before developing export-oriented industries, a better combination of Taiwan's actual situation, and effectively take advantage of the opportunity of the changes in the international economic environment.
(5) The development of cross-Strait economic and trade relations has had a significant impact on Taiwan's economic development. Over the past decade or so, cross-Strait economic exchanges and cooperation have taken on a certain scale, and a situation of complementarity and mutual benefit is taking shape, with the motherland having become the hinterland for Taiwan's economic development. Taiwan's huge annual surplus from cross-Strait trade has ensured the balance of its trade balance and increased its investment capacity on the island. A large number of Taiwan's labor-intensive enterprises have invested in the mainland, easing their difficulties in developing on the island and facilitating the transformation and upgrading of Taiwan's industries, especially the growth of high-tech industries. The rising share of the motherland in Taiwan's export share has reduced Taiwan's excessive dependence on the U.S. market for foreign trade, and has also played an important role in stabilizing Taiwan's economy.
Taiwan's economy has a high GNP per capita, but the domestic demand market is small, fewer natural resources, and a weak scientific and technological base, which constrains Taiwan's economy and creates the characteristics of a "shallow dish economy". This characteristic is mainly manifested in the high degree of dependence on overseas markets and technology; in 1980, Taiwan's economic development dependence on foreign trade was as high as 95.6%, of which the dependence on export trade also amounted to 47.89%; in 1995, although the degree of dependence declined, it was still as high as 81.65%, of which the dependence on export trade was still 42.36%. In recent years, although Taiwan's industrial upgrading has achieved certain results, but the key technology is still high dependence on foreign countries, such as integrated circuit chip production has jumped to the forefront of the world, but the circuit design of this key technology is still mainly dependent on developed countries. Therefore, although Taiwan's industrial upgrading has made progress, there has been no breakthrough in overall industrial technology, and the basic pattern of weak capacity for independent development of industrial technology remains unchanged. Taiwan's economy has a high degree of external dependence and is subject to the influence and constraints of the external environment. In recent years, Taiwan's economy has been able to maintain moderate growth, and the effects of new market development and trade creation have been greater than those of technology creation.
For a long time, Taiwan's financial situation has been poor, the tax base has shrunk, and the annual growth rate of tax revenue has declined from 19.7% in 1992 to -6.7% in 2001. At the same time, the expenditures of the public treasury and the "national treasury" at all levels have been growing rapidly, and in the structure of the expenditures, the expenditures on armaments have accounted for a large portion of the fiscal budget, for example, in the fiscal budget of 1996, the "national defense expenditures" (excluding the special budget for the purchase of armaments) accounted for 22.1 percent; If administrative expenditures are taken into account, the proportion of unproductive expenditures in the overall fiscal expenditures is very large. The fiscal situation has continued to deteriorate, and by 2002, the total debt of the Taiwan authorities was close to NT$4 trillion, with the debt balance accounting for more than 30 percent of GDP.
Taiwan's economic development has also been affected by the island's intense internal political disputes and the instability of cross-strait relations. In recent years, Taiwan's political party disputes have been unusually intense and frequent, greatly affecting the formulation and implementation of relevant policies and regulations, and becoming one of the reasons for administrative inefficiency; coupled with rampant "black money politics", the progress and quality of many major projects have been negatively impacted. At the same time, the unstable cross-strait relations caused by the secessionist policy of the Taiwan authorities have affected the willingness of Taiwan's private capital and foreign capital to invest in Taiwan.
In summary, the major problems facing Taiwan's economy are all deep-rooted political and economic structural problems. Although the Taiwan authorities have taken certain corresponding measures, some of which are not unhelpful, it is difficult to solve the problems at root.
Science and technology
The development of science and technology in Taiwan is closely related to its economic development, and since the post-war period, it has gone through the following three stages of development:
The first stage was the foundation period (l959-1968). In the 1950s, the Taiwan authorities took economic stabilization as the main goal, and were unable to take care of the development of science and technology. It was not until 1959 that the Taiwan authorities promulgated the "Program for Long-Term Development of Science and Technology", the main objective of which was to enrich the foundation for the development of science and technology. In the same year, the Council of Science for Long-Term Development (CSLTD) was established to plan and promote long-term scientific research. During this period, the direction of scientific and technological research was based on basic science, and various subsidies were provided to foster research talent.
The second stage was the period of initial development (1969-1980).
From the late 1960s to the 1970s, the focus of Taiwan's industrial development shifted from light industry to heavy industry, raising the demand for industrial technology. For this reason, in 1968, the Taiwan authorities promulgated the "Twelve-Year Science Development Plan", which further strengthened applied science research while expanding the research base and improving science education, and successively established the Industrial Technology Research Institute (ITRI) and the "Applied Technology Research and Development Group (ATRDG)" of the Executive Yuan. The government has established the Industrial Technology Research Institute and the "Applied Technology Research and Development Group", and emphasized the promotion of enterprise investment in scientific and technological research.
The third stage is the period of comprehensive promotion of science and technology development (1980 to the present). As Taiwan's economy entered a period of transition after the mid-1980s, the low level of science and technology has become one of the main obstacles to industrial upgrading and social development, and the Taiwan authorities began to increase investment in science and technology funding and personnel, and formulated a series of corresponding plans and development strategies in order to realize the long-term goal of building Taiwan into a "science and technology island". In 1978, the Taiwan authorities convened the first Science and Technology Conference, which was attended by industry, government, and academia, and in the following year promulgated the "Science and Technology Development Program," which serves as the highest guideline for the development of science and technology at this stage. Since then, the conference has been held every four years to formulate new development policies and programs.
Since the 1980s, Taiwan's science and technology development has been relatively rapid. In terms of investment in S&T development, in the 10 years from 1986 to 1996, research funding increased 4.8 times, from 1.14% to 1.85% of GNP; the number of researchers increased twofold, from 14.3 to 33.4 per 10,000 population. In terms of scientific and technological research and development results, the number of local patent projects reached 19,410 in 1996, 3.3 times the number in 1986; Taiwan's international ranking in terms of the number of SCI papers published improved from 28th in 1989 to 20th in 1994. In terms of developing technology-intensive industries, the establishment of the Hsinchu Science-Based Industrial Park in Taiwan in 1980 has promoted the development of high-tech industries such as information and semiconductor communications, and the export value of high-technology-intensive products accounted for 39.7% of total exports in 1997, more than double the 1986 figure. At present, Taiwan's information industry and semiconductor industry output value has jumped to the world's third and fourth respectively, becoming the world's important processing and production base, semiconductor integrated circuit production technology has approached and reached the world's advanced level.
From the development characteristics of science and technology, due to Taiwan's small economy, small and medium-sized enterprises accounted for the vast majority of the private scientific and technological research and development of the innate lack of Taiwan's scientific and technological administration in the process of scientific and technological development in a dominant position. Of the total investment in S&T funding, official investment accounted for more than 60% in the 1980s, with the private sector accounting for less than 40%; private investment increased relatively in the 1990s, with the official and private sectors still accounting for about half each. At present, the scientific and technological research system mainly consists of the science and technology administrative departments and public enterprises belonging to the research institutions, specialized consortiums research alumni organizations, universities and private enterprises belonging to the research institutions.
From the point of view of the division of labor in scientific and technological research, basic research is mainly undertaken by the "Central Research Institute" and the institutions of higher learning, applied scientific and technological research is mainly undertaken by the Industrial Technology Research Institute and the research institutes belonging to the science and technology administrative departments, military science and technology by the Zhongshan Institute of Science and Technology is responsible for the commercialization of the scientific and technological achievements and marketability is undertaken by enterprises. The commercialization and marketization of scientific and technological achievements are undertaken by enterprises.
While Taiwan has made rapid progress in science and technology development since the 1980s, it is still far behind developed countries in general, and even lags behind South Korea, which is at the same level of economic development, because of the size of its economy, the structure of its enterprises, and its human resources. For example, Taiwan's total investment in science and technology is only half that of Korea. The backwardness of the overall level of research and development has made Taiwan's high-tech industry heavily dependent on Japan and the United States in terms of key technologies, key components, etc.; most Taiwanese manufacturers still rely on the introduction of production technology. Information, semiconductor and other industries, although the development of faster, but due to the lack of their own key technologies, most can only be taken by commissioned processing and manufacturing mode, most of the profits by the mastery of key technologies and components of foreign manufacturers to draw away.