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GROWING TOGETHER • Taiwan and Los Angeles County INTRODUCTION Los Angeles County is America’s most populous and diverse county and has been strongly influenced by its connections to the people and economies of the Pacific Rim. Since the end of the Second World War, the economies of Taiwan and Los Angeles County have become increasingly interconnected. The relationship between Taiwan and Los Angeles County is based on strong business, financial and cultural ties. Over the years, Taiwanese-Americans have made an indelible impact on the socio-economic fabric of the Los Angeles region. The connections that have been forged in the past and the new possibilities that will open up in the future are featured in this report. Overview of Report The objective of this report is to describe the long-established, deep and growing ties between Taiwan (officially, The Republic of China) and Los Angeles County. This report provides a comprehensive look at the relationship between Taiwan and Los Angeles County. It begins with the historical ties and then takes a close look at the Taiwanese economy. Next, the analysis details the economic links between the two and focuses on the critical trade links. Fourth, the report explains the significant role played by Foreign Direct Investment (FDI) and cites investment prospects for the future. Fifth, the study examines the business and financial links between the two areas by profiling firms that are based in Los Angeles County and active in Taiwan as well as major Taiwanese firms with a presence in Los Angeles County. Sixth, the report highlights the personal connections between Taiwan and Los Angeles County, including educational, cultural and network ties. The final sections of the report describe challenges and opportunities that lie ahead for this partnership and presents recommendations to further solidify the relationship. Taiwanese Economic Miracle The Taiwanese economic miracle refers to the rapid economic development of Taiwan that began in the 1960’s and accelerated in the 1970’s. Taiwan is one of the “Four Asian Tigers” a group of economies that also includes Singapore, Hong Kong and South Korea. All four economies pursued a similar economic development path initially that included protectionist trade policies and industrialization based on import substitution. However, Taiwan’s economic development path included a combination of policies that was unique to the island nation. These policies included import substitution, gradual economic reforms, opening up markets and export extensions. Based on data from IHS Global Insight 1 , over the thirty year period from 1952 to 1982, the Taiwanese economy grew by an average of 8.7% annually and then by an average of 7% annually from 1983 until 1986. From 1965 until 1985, Taiwan’s GDP increased by roughly 360%, while industrial production expanded by nearly 700%. Economic growth improved the living standards of Taiwanese citizens. GDP per capita was less than US$200 (comparable to countries in Africa) in the early 1950s, but economic development in Taiwan was transformational as GDP per capita and household incomes skyrocketed. Taiwan has been on par with high-income advanced economies such as Germany, Canada and Australia since the late 1980’s. Today, Taiwan’s GDP per capita (PPP) 2 is close to US$40,000. Moreover, the Gini Coefficient 3 , which measures income inequality in an economy, fell from 0.6 in the 1950’s to 0.3 in 1980, implying a more even distribution of income over time. By 1980, Taiwan had a lower Gini Coefficient than some advanced economies in Western Europe. 1 Based on inflation-adjusted U.S. Dollars. 2 PPP accounts for the price differentials in each country and equalizes prices while market exchange rates do not and are based on strictly converting from the Taiwanese Dollar to the U.S. Dollar. 3 The GINI coefficient measures the distribution of income in an economy. The GINI coefficient ranges in value from 0 to 1. Lower values correspond to a more even distribution of income, with 0 representing perfect income equality. It may be used to compare income inequality over time and across economies. 4 LOS ANGELES COUNTY ECONOMIC DEVELOPMENT CORPORATION
INTRODUCTION • Taiwan and Los Angeles County Taiwan’s economic development has been rapid, almost miraculous, and it has significantly impacted the global, the U.S., California and Southern California economies in multiple ways. First and foremost, Taiwan revolutionized the global electronics industry, as it has evolved into a semiconductors powerhouse and the world’s largest chipmaker. It is the second largest information and communications technology (ICT) hardware manufacturing country in the world. Taiwan’s semiconductor, optoelectronic, information, and communication products make-up more than 70% of global production. Roughly 70% of the global silicon wafer original equipment manufacturer (OEM) production value is also related to Taiwan’s production. Based on 2013 figures, Taiwan has the twentieth largest economy (at US$930 billion) in the world based on purchasing power parity (PPP) or the twenty-fifth largest economy (at US$489 billion) on a nominal basis or using market exchange rates. Taiwan’s economy is closely interconnected to the U.S. economy as a direct result of economic globalization. American firms (particularly computer related companies in the Silicon Valley) have invested heavily in Taiwan in order to benefit from the technological expertise of the nation. The U.S. is one of Taiwan’s top trading partners and American consumers have had a major impact on Taiwan’s export-led growth. Moreover, Taiwan’s economy is closely linked to California and Los Angeles County as a large percentage of U.S. investment and trade are tied to Los Angeles County, as described below. Los Angeles County Profile Los Angeles County Ranked #1 in the U.S. County population 10 million Asian population roughly 1.5 million Labor Force 5.0 million Professional/scientific/tech over 275,000 service employees Asian-owned businesses over 183,000 Total trade value L.A. Customs District $415 billion Los Angeles County is the most populous county in the United States, encompassing over 26% of California’s population. If it were a separate state, Los Angeles County would be the eighth largest by population. With a $583 billion economy, Los Angeles County ranked as the twenty-first largest economy in the world in 2013 4 . Its economic output was larger than Sweden, Norway, Poland, Belgium and Taiwan. L.A. Firsts: Some Things Born in the Los Angeles Area • The Internet • The Space Shuttle • The The B-2 stealth aircraft made by Northrop Grumman, and the Douglas DC-3, the first commercially viable passenger airplane • Disney characters: Mickey Mouse & Donald Duck • Barbie Doll • The Modern T-shirt (for USC in 1932) • The Fortune Cookie • The Mars Exploration Rovers Curiosity, “Spirit” & “Opportunity” • New VW Beetle • Epogen/Neuprogen (Bio-Tech Blockbuster Drugs) • The multi-channel recording process • THX Sound System (for movie theaters) • The Modern Theme Park – Disneyland • Celebrity PR • The Hula Hoop • The Aeron Chair 4 Based on inflation-adjusted U.S. Dollars. LOS ANGELES COUNTY ECONOMIC DEVELOPMENT CORPORATION 5
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Page 4 and 5: GROWING TOGETHER • Taiwan and Los
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SECTION SIX • Personal Ties Assoc
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SECTION SIX • Personal Ties Taiwa
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SOURCES • Taiwan and Los Angeles
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