PDF(2.7mb) - 國家政策研究基金會

What’s Wrong with Taiwan’s Economy? Impact of Globalization 35
34 percent in total production and the production share
of heavy industries in manufacturing reached 46.97
percent. The export share of industry rose to 53.89 percent
in the two decades ending 1986. Since 1986, the
leading sector of manufacturing has been electric and
electronic machinery industries.
labor across the Strait but also helped the upgrading of
Taiwan’s domestic industry, especially in ICT industries.
4 In 2007, Taiwan’s exports to China contributed
44.57 percent to the growth of Taiwan’s economy.
Taiwan’s cost of labor began rising fast in the
mid-1980s. The New Taiwan dollar appreciated thanks
to the huge trade surplus. Land access became difficult.
The Labor Standard Law went into force, while environment
protection was made a government policy priority.
All this forced Taiwan businesses to start outward
foreign direct investment first in Southeast Asia and
then in China. 2 From 1991 to 2007, the accumulated
approved outward FDI had reached US$117.09 billion
in 2007, of which 55.40 percent went to China. Of the
investments in China 31.52 percent were in the manufacturing
of computer and electronics parts, components
and products. Manufacturers converged heavily in
Jiangsu and Guangdong provinces (67.88%). Despite
government restrictions on Chinese trade, Taiwan’s
outward investments in China, direct or indirect, have
remained very active since 1996. The strategy of Taiwan
investors in China is mainly to utilize the international
division of labor across the Strait, which not only
increased the efficiency in resources allocation between
the two sides, but also induced and facilitated Taiwan’s
exports to China. 3 The exports increased from US$3.28
billion in 1990 to US$21.21 billion in 2007, with the
trade surplus rising from US$2.51 billion to US$18.29
billion. Since 2002, China has surpassed the United
States as Taiwan’s top export destination. The outward
FDI in China, not only realized the vertical division of
2 In 1987, the government lifted the Martial Law and
allowed people in Taiwan to visit their relatives in
China. Many Taiwan businesses started to investing
in China through third places, such as Hong Kong
and the Cayman Islands.
3 See, for example, Chuang and Lin (2007) for evidence
of the division of labor across the Strait.
4
For example, the export share of
high-technology-intensity products increased from
26.7% in 1990 to 53.9% in 2005. See also Chuang
and Lin (2007) for further evidence of the technology
upgrading of manufacturing industries.