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Despite inflationary pressure caused by rising oil prices, Taiwan’s economy posted a respectable performance in 2007, with a real GDP growth rate of 5.7 percent. In that year, according to International Monetary Fund statistics, it was the 24th-largest economy among the 179 economies ranked by it, and, according to the World Trade Organization, it was the world’s 16th-largest merchandise exporter and 17th-largest merchandise importer. As of the end of 2007, it had the fifth-largest foreign exchange reserves in the world.
Authoritative annual surveys of the world’s economies—including those conducted by the World Economic Forum, Business Environment Risk Intelligence, International Institute for Management Development, and Economist Intelligence Unit—have consistently ranked Taiwan among the world’s top nations with respect to potential for long-term economic growth and technological development. Survey results for 2007-2008 (see table “Global Survey Rankings” on pages 42-43) were no exception.
As in preceding years, high- and mid-high- technology manufacturing was the economy’s best-performing sector in 2007, accounting for about 60 percent of manufacturing production value. The lion’s share of high-tech revenues was generated by companies located in the Hsinchu Science Park, Southern Taiwan Science Park, and Central Taiwan Science Park. According to statistics of the National Science Council, the three parks’ combined revenues in 2007 came to nearly NT$2 trillion (US$61 billion), representing a growth of more than 12.3 percent over the previous year.
The highest-flying performer during the year, boasting 28.1-percent growth, was the optoelectronics segment, which includes makers of flat-panel displays as well as solar energy cells and related equipment. In second place was the biotechnology segment, with a 23.5-percent jump in revenues.
As of the end of 2007, Taiwan led in production of large-sized TFT-LCD panels, accounting for over 46 percent of global unit shipments. Although the production value of Taiwan’s semiconductor industry as a whole grew by a modest 5.3 percent in 2007, it nevertheless maintained a nearly 67-percent global market share in the integrated-circuit (IC) chip contract manufacturing sector—an industry pioneered in Taiwan—as well as more than 44 percent of the IC packaging market and 63 percent of the IC testing market. With fourteen 12-inch IC wafer foundries currently in operation and four more under construction, Taiwan’s chipmakers are solidly positioned to keep the lead in contract manufacturing for years to come.
Believing that Taiwan will flourish only as an open economy, the newly elected KMT administration of President Ma Ying-jeou has promised to put greater emphasis on economic deregulation in order to unleash the vitality of the private sector. Further, the new government plans to invest some US$130 billion over the eight-year period from 2008 to 2016 on infrastructure programs, dubbed the “i-Taiwan 12 Projects,” in the areas of transportation, industry, and environment. These programs are aimed at strengthening national competitiveness and improving quality of life while at the same time creating job opportunities. Tax and financial reforms are also high on the administration’s agenda, with a view to stimulating investment and establishing Taiwan as an asset management center for the Asia-Pacific region.
2007 Economic Profile
GDP (nominal): US$383.343 billion
GDP per capita (nominal): US$16,792
GDP per capita (PPP estimate by IMF): US$30,126
SERVICES accounted for 71.05% of GDP. Key players in this sector included wholesale and retail operations (18.60% of GDP), financial services (10.04%), real estate and leasing businesses (8.16%), and transportation, storage and communications providers (5.94%).
MANUFACTURING accounted for 23.76% of GDP. Important manufactured goods included IC chips, LCD panels, other semiconductor and electronic components, precision instruments, electrical machinery, mechanical and electrical appliances, textiles, plastics and other petrochemical products, and iron and steel.
AGRICULTURE accounted for 1.45% of GDP. Major produce included rice, vegetables, fruit, flowers, and tea. Animal husbandry included pig and poultry raising and dairy operations. Organic farming continues to grow in scale as the public becomes more health-conscious and environmentally aware. Aquaculture is a major component of the fishing industry.
2007 Trade & Investment Profile
Bilateral trade volume: US$465.93 billion
Exports: US$246.68 billion Imports: US$219.25 billion
Trade balance: US$27.43 billion surplus
Top export destinations: mainland China (including Hong Kong) 40.7%, ASEAN-6* 14.5% (Singapore 4.3%), United States 13.0%, European Union 10.8% (Germany 2.1%), Japan 6.5%, South Korea 3.2%
Top import sources: Japan 20.9%, mainland China (including Hong Kong) 13.6%, United States 12.1%, European Union 9.1% (Germany 3.2%), South Korea 6.9%, Saudi Arabia 4.7%
Foreign exchange reserves: US$270.3 billion (end of 2007)
Registered inward direct investment: US$15.36 billion
Registered outward direct investment: US$16.44 billion
(mainland China-bound: US$9.97 billion)
*ASEAN-6: Six of the ten member states of the Association of Southeast Asian Nations, including Thailand, Malaysia, Indonesia, the Philippines, Singapore, and Vietnam
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Global Survey Rankings |
Topic of Survey
(Date of Publication) |
Rank |
Countries Surveyed |
Surveying Institution |
Investment climate
(April 2008) |
6
(1A) |
50
|
Business Environment Risk Intelligence |
Information Technology Industry Competitiveness Index
(July 2007) |
6
|
64
|
Economist Intelligence Unit |
| World Competitiveness Scoreboard (May 2008) |
13
|
55
|
Institute of Management Development |
Global competitiveness
(October 2007) |
14
|
131
|
World Economic Forum |
Business environment outlook
for 2008-2012
(April 2008) |
18
|
82
|
Economist
Intelligence Unit |
Index of Economic Freedom
(2008) |
25
|
157
|
Heritage Foundation, Wall Street Journal |
Networked Readiness Index
(April 2008) |
17
|
127
|
World Economic Forum |
Broadband penetration
(2007) |
20
|
Top 30
|
UN International Telecommunication Union |
E-government performance
(July 2007) |
3
|
198 |
Brown University |
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