Economic and Social Challenges in Taiwan

Abstract

This paper attempts to provide insight into the challenges and problems Taiwan faces today. As one of the Asian economic miracles of the 1970s and 1980s, Taiwan implemented a special way that consisted, at least in part, of the adoption of many core elements of Japan’s experiences, namely the so-called developmental state model that was followed by the Asian Newly Industrialized Economies. But in other important ways, Taiwan also followed its own path. In terms of the economic and social challenges that influence Taiwan’s future development, this article denotes the issue of the high exposure to and growing dependence on the People’s Republic of China (PRC), as well as the need for a shift in terms of the main drivers of the future economic development to preserve Taiwan’s competitiveness and mitigate the risks of brain-drain and social unrest.

In this light, Taiwan should give up insisting on the principle of low labour costs, and this may give impetus to the two-decades-long salary stagnation and to domestic consumption. Taiwan may only be competitive in the future if it allows for an increasing focus on domestic R&D and innovation in new industries and if it puts more emphasis on sustainability. Besides relying on secondary research, the author incorporates the outcomes of interviews conducted with academic and business professionals during his research fellowship in Taiwan in 2017.