According to commit4fitness, Taiwan is an island country located off the coast of mainland China and is one of the world’s leading economic powers. Its economy is largely driven by the manufacturing sector, with electronics, machinery, and petrochemicals being especially important. The service sector also plays an important role in the Taiwanese economy, with tourism being particularly prominent. Financial services are also a major contributor to GDP growth. Agriculture was once an important part of Taiwan’s economy but has since been replaced by industry as the main economic activity. In addition, there is a growing high-tech industry in Taiwan that has attracted many foreign investors.
According to abbreviationfinder, TW is the 2 letter abbreviation for the country of Taiwan.
Taiwan has the world’s 16th highest gross domestic product (GDP). GDP increased by three percent in 2018. GDP per capita amounts to USD 25,530 (2019). In East Asia and Southeast Asia, only Singapore, Brunei, Japan and South Korea have a higher GDP per capita. Unemployment is 3.8 per cent (2017).
Historical background
Economic development
According to countryaah, Taiwan was created in 1949 after the communist victory in the civil war on the mainland (China). Since 1950, Taiwan has experienced an almost explosive economic development, and has changed from a laid-back agricultural community to an industrialized country with significant commodity exports. Industrial production has been the most important driver of the economy.
Economic developments are closely linked to close political and economic relations with the United States before 1972, close economic relations with Japan and growing economic and cultural relations with China after 1987.
From 1950, Taiwan (along with South Korea, among others) was perceived by the United States as the front line area against Communist China. Under considerable American influence, intensive, state-controlled development strategies were implemented, with remarkable growth as a result. Taiwan, along with South Korea, Hong Kong and Singapore, were referred to as the newly industrialized economies or the “four tigers”.
Unlike South Korea, Taiwan never developed large commercial and industrial conglomerates. The main part of the business structure has instead consisted of small and medium-sized family businesses, including large state monopoly companies, including energy supply, petroleum industry and telecommunications. The strong state control of the economy was first reduced in the 1990s through the beginning liberalization of import trade, banking and financial services and other service industries.
Thanks to a solid economy and large foreign exchange reserves, Taiwan was relatively well-rested through the great Asian financial crisis of 1997-1998. To counter diplomatic isolation, Taiwan has used parts of its foreign exchange reserves to provide politically motivated assistance to particular Caribbean and Central American countries with which it has diplomatic relations. (In 2019, Taiwan had diplomatic relations with 14 countries of the UN member states and the Vatican).
Despite the foreign policy isolation, Taiwan’s foreign trade has increased significantly. With only 21 million inhabitants, Taiwan consolidated its position as one of the world’s foremost trading nations in the 1990s. In 1995, foreign trade was $ 215 billion, and both imports and exports passed $ 100 billion for the first time. In 2005, foreign trade totaled $ 350 billion. Only at the turn of the millennium was Taiwan overtaken by China as a trading nation.
Relationship with China
Chiang Ching-kuo, son of China’s President Chiang Kai-shek, became prime minister in 1972. Upon his father’s death in 1975, he took over as leader of Kuomintang and was elected president in 1978. Until his death in 1988, he gradually changed the strictly authoritarian form of government, and the one-party system was broken in 1986. At the election that year, the Democratic Progressive Party (DPP) gained a quarter of the vote and established itself as the leading opposition party. DPP’s slogan has been “one China, one Taiwan”, ie an independent Taiwan and no to reunite with China. The DPP, which led a minority government from 2000 to 2008, has traditionally been concerned that economic cooperation with China would make the country too dependent on the Chinese market and thus vulnerable to political pressure. Nevertheless, there was a strong increase in trade with China between 2000 and 2008. In 2000, exports to China accounted for only 2.9 percent of Taiwan’s total exports, while in 2006 it reached 23.2 percent.
At the 2008 parliamentary elections, Kuomintang gained power and switched to a more conciliatory and cooperative course in Beijing. As a result, investors got freer rein. Taiwanese companies were increasingly focusing on products for the growing Chinese middle class.
Primary industries
The primary contributions contribute 1.8 percent of the country’s GDP and employ 4.9 percent of the working population (2017).
Agriculture
Intensive cultivation of rice and sugar cane, partly on large plantations, was organized under the Japanese rule to supply the Japanese domestic market. During the period 1949–1953, the Kuomintang government, with support and pressure from the United States, implemented land reform, which contributed to the fact that small family farms are now the most common form of operation.
Agriculture is completely dependent on fertilizers due to the monoculture of old times on a soil which is poor in nature. About a quarter of the land area is cultivated, of which about half is used for wet rice production, often in rotation with other crops. Rice cultivation is heavily subsidized, but production is still declining. Rice is the main ingredient in the diet and is grown in most places. In slightly higher areas, barley, wheat soybeans and sorghum are grown. Sugarcane is grown on Taichungsletta and Pingtungsletta.
Since the 1980s, horticulture has developed rapidly. A variety of fruits are grown, with pineapple and mango as the most common, and a large variety of vegetables.
Pig is a leader in animal husbandry, followed by cattle and sheep. Of poultry, most hens are kept, followed by ducks and geese. Since the mid-1960s, animal husbandry has gradually been transferred to large industrial farms, and meat is produced for export.
Forestry
The forest covers about half of the land area and covers mostly mountain terrain. It is therefore partially inaccessible for commercial exploitation. Important tree species are bamboo, teak and various pine species. The authorities have focused mainly on the conservation of the forest since the 1980s, and the harvesting is therefore minimal.
Fishing
Since the 1960s, Taiwan has built up a large ocean-going fishing fleet, which includes 21,974 fishing vessels (2017). The previously important coastal fishery now has little economic significance, partly as a result of industrial pollution of the coastal waters. The total catch of seafood amounts to 748,000 tonnes (2017). Important fishing ports are Chilung, Kaohsiung, Suao and Makung. On the island of Taiwan, there are a total of 90,000 smaller fish farms.
Mining, energy
Mineral resources are generally small. The deposits of coal, oil and natural gas are small and of little economic value. Otherwise, sea salt is recovered along the west coast, as well as some sulfur, marble, limestone and dolomite.
Hydropower resources are estimated at around 5 GW, of which 4.68 GW has been developed (figures from 2016). With the small domestic energy sources, the energy supply is entirely dependent on imported raw material. Taiwan has two nuclear power plants in operation, which contribute about 15 percent of the country’s power generation. Construction of a new nuclear power plant began in 1999, but was temporarily halted in 2000 due to environmental considerations. More than three-quarters of energy production takes place in the south, making the energy supply to the north vulnerable to natural disasters.
Industry
The industry contributes 36 percent of the country’s GDP and employs 35.9 percent of the working population.
Modern industrial development began in the 1950s when the authorities, with considerable American help and advice, initiated an import substitution policy. The purpose was to build up a separate industry for the production of lighter consumer goods for the domestic market by means of strong restrictions on imports. Through clearly defined objectives, the authorities controlled access to credits, raw materials, equipment and manpower.
In the 1960s, the policy was changed to export-oriented, and Taiwan began to take an active part in the world economy. Foreign investment (from the US, Japan and overseas Chinese) was attracted by cheap, disciplined and well-educated labor. Export-oriented zones were created in several places. In particular, the textile industry and the production of electrical household appliances were expanded. At the same time, the strong protection of the domestic market was maintained.
From the mid-1970s to the 1980s, the industrial structure was gradually adjusted to a greater focus on the heavy industry. Major development projects were initiated and included iron and steel mills, petroleum refining, petrochemical industry and production of machinery and equipment, besides strong expansion of the energy supply and transport.
Throughout the 1990s, the production of high-tech information products evolved to become a new economic mainstay. Many companies have evolved from merely being producers for foreign clients to developing their own world-leading products themselves. The labor-intensive part of production was moved to China and other countries, while most of the high-tech operations were retained.
Taiwan is now one of the world’s largest manufacturers of hardware (software), software (software), display terminals, motherboards and more. Other important industrial products are chemicals, textiles, iron and steel, machinery, cement, motor vehicles and motor vehicle parts, as well as pharmaceutical products. The high-tech industry is particularly concentrated on a high-tech industrial park, which was opened at Hsinchu in 1980, and later expanded several times. New high-tech industrial parks were later opened at Tainan and Taichung.
Tourism
In the period from 2008 to 2018, the number of tourists increased from 3.85 to 11.07 million. This represented an increase of just over 200 percent. In 2015, 5.7 million tourists came from China, including Hong Kong and Macao, 1.6 million from Japan and 700,000 from South Korea.
Transport and Communications
The total road network is 43,206 kilometers, of which 42,793 kilometers with a fixed tire. Highways on the west coast of the island connect Taipei in the north with Kaohsiung in the south. It is also a freeway that connects the west coast with the east coast. The railway network covering 1692 kilometers (2018) provides a continuous connection around the island. There is a high-speed railway between Nangang, Taipei and Kaohsiung.
The island of Taiwan has three international airports: Taoyuan near Taipei, as well as Kaohsiung and Taichung airports. Kaohsiung has the country’s largest port. Other major ports are Chilung and Taichung.
Taiwan’s strategic location in East Asia and the country’s technical and financial resources have resulted in several international freight companies having their regional headquarters in Taiwan. The world’s eighth largest container shipping company is Taiwanese, and a number of international aircraft manufacturers have been established in Taiwan.
Foreign Trade
In 2017, Taiwan’s exports amounted to USD 349.8 billion, while imports amounted to USD 259.0 billion. With this, the country had a foreign trade surplus of 90.8 billion US dollars.
The most important export products are petrochemical products, motor vehicles and motor vehicle parts, ships, communication equipment, electronics and computer equipment. The five main markets for Taiwan’s exports are: China (28.8 percent), Hong Kong (12.4 percent), the United States (11.8 percent), Japan (6.9 percent) and Singapore (5.2 percent).
The main import products are oil, gas, coal, steel, motor vehicles, chemicals, machinery, equipment products, ingredients for the plastics and clothing industry and textiles. The main markets for Taiwan’s imports are: China (19.3 percent), Japan (16.2 percent), ASEAN countries (12.0 percent), the United States (11.7 percent) and EU countries (10.0 percent)).
Taiwan’s strong economic growth is largely due to the country’s competitiveness and growth in the export market. Wholesale trade completely overshadows trade in services (shipping, transport and tourism) abroad. On the other hand, the lack of natural resources and a relatively small domestic market make Taiwan dependent on foreign trade. Large foreign trade surpluses since the 1970s have led Taiwan to be among the ten countries in the world with the largest foreign exchange reserves (2019). Since the beginning of the 1990s, Taiwan has gradually opened its economy by reducing tariffs and facilitating access to a wider range of foreign imports.
Taiwanese capital makes twice as much foreign direct investment (mostly to China, followed by Southeast Asia and the United States) as the country receives. The largest investors in Taiwan are Japan and the United States. Taiwan receives no financial aid from abroad. The country itself only contributes with insignificant development assistance, mainly to the few countries that still have diplomatic relations with Taiwan.