Economy
The economy of the RoC is a dynamic, open, modern, export orientated, high-tech economy with low level of unemployment, but limited natural resources forcing the country to rely on imported raw materials and energy resources. This economic “miracle” was achieved gradually, starting 70 years ago when RoC was relying on significant US economic aid and investments.
From 1951 to 1962 the US economic aid to RoC represented more than 30% of the domestic investments and continued to be important for the RoC economy till 1970’s. Although the country was receiving the U.S economic aid for many years, the government in Taipei accelerated in the 1950’s the country’s shift from subsidized import-substitution to export-led growth economy.
The first step towards the industrialization of the country was the land reforms that created a class of landowners with capital, which invested in new economic endeavors. Furthermore, many well-educated and wealthy Chinese had already settled in Taiwan before the Nationalists retreated to the island from the Chinese mainland. These factors together with central government planning and universal education, brought advancement in agriculture and industry and helped the economy to grow by an average of 9.21% each year between 1952 and 1961.
Within 34 years, the economy of the country shifted from an agriculture-based economy in 1952 (32% of the GDP) to an industrial orientated economy in 1986 (47% of the GDP). The transformation of the economy occurred gradually. Initially the economy of the country was mostly agricultural, a necessary policy to feed the existing and new population. The next step was the development of cheap, labor-intensive manufacture such as textiles and toys.
The orientation of the economy changed dramatically in the 1970’s with the expansion of the heavy industry and the infrastructure of the country. The next decade, the economy of the RoC became increasingly open, the government privatized several state-controlled enterprises and shifted the local economy to the development and production of advanced electronics. One of the most important initiatives was the establishment of the “Hsinchu Science Park” by the National Science Council in 1981, that hosts today the majority of the high-tech companies of Taiwan, which employ 130.000 people.
Since the 1980’s the RoC successfully diversified its trade markets, reducing its share of exports to the U.S from 49% in 1984, to 20% in 2002, while its exports increased to other countries including PRC. The export orientated economy helped the RoC to establish a long-lasting significant trade surplus and increase dramatically the Gross Domestic Product (GDP) of the country. According to the Statistical Yearbook of the Republic of China, the GDP of the island state in 1981 was US$49.063 Billion increased by 18.55% compared to the previous year. The rapid increase of the GDP of the country continued for another 10 years.
From 1981 to 1991, the GDP of the RoC was increased by 178.31%, while from 1991 to 2001 it was increased by 102.2%. The following two decades the economy developed in a lower but steady rate. From 2001 to 2011 the GPD was increased by 40.89% and by 24.32% during the period 2011-2018.
Although, as it has been mentioned above, the economy of the country is mainly export orientated, the global financial crisis of 2007-2010 did not affect Taiwan. On the contrary all these years the economy of Taiwan grew steadily. Crucial role to this achievement had the economic stimulus package that the government launched during the global economic crisis. This package valued US$5.6 Billion, provided financial incentives for businesses, for small and medium sized business, as well as tax breaks for new investments and low-income households.
Furthermore, the government stimulus package focused on the development of the infrastructure of the country and the increase of the exports to new markets such as Russia, Brazil and the Middle East. The government policy proved to be effective and by November 2010 the economy recovered.
The following six years, the GDP (at current prices) of the country developed steadily and was increased by 1.44% in 2011, by 2.91% in 2012, by 4.04% in 2013, by 6.47% in 2014. Between 2015 and 2018 the growth of the GDP followed a declining rate of increase.
More specifically in 2015 the GDP increased by 4.90%, in 2016 by 2.93%, in 2017 by 2.44%, and in 2018 by 2.18%. This situation changed in 2019 when the GDP started increasing again. At that year the GDP increased by 2.90%, in 2020 by 4.71% and in 2021 by 9.66%.
According to the Statistical Yearbook of the Republic of China, the GDP of the island state in 2021 was US$774.942 Billion (at current US$ prices) increased by 15.77% compared to 2020.
The external trade of the RoC increased rapidly between 2007 and 2021. The exports of the country increased steadily during this period by almost 79.5% from US$248.67 Billion in 2007 to US$446.37 Billion in 2021.
During the same period, the imports of the RoC increased from US$222.98 Billion in 2007 to US$244.19 Billion in 2008, followed by a sudden reduction to US$177.59 Billion in 2009, because of the global financial crisis and increased again in 2010 reaching US$255.74 Billion.
From 2011 to 2014 the value of the imports was stabilized to approximately US$287 Billion annually (2011: US$287.31 Billion, 2012: US$276.46 Billion, 2013: US$277.34 Billion, 2014: US$281.09 Billion) and reduced for one more time during the following two years (2015: US$236.38 Billion, 2016: US$229.19 Billion) a trend that was stopped in 2017, when the imports increased and reached US$257.2 Billion, and US$284.79 Billion in 2018.
The increase of the value of the imports continued over the following three years and in 2019 the imports reached US$285.65 Billion, while the next two years they reached US$286.14 and increased dramatically (an increase of 33.3%) to US$381.49 in 2021.
During that period, 2007-2021, the trade balance of the country had always been positive with relatively small fluctuations.
Most of the products the country exported in 2021 were: Intermediate Products (US$350.755 Billion, 78.57%), Capital Goods (US$56.107 Billion, 12.56%), Consumer Goods (US$ 37.235 Billion, 8.34%), and Others (US$ 2.282 Billion, 0,5%)
Most of the products the country imported in 2021 were: Agricultural and Industrial Raw Materials (US$264.807 Billion, 69.41%), Capital Goods (US$68.843 Billion, 18%), Consumer Goods (US$43.575 Billion, 11.42%) and Others (US$4.269 Billion, 1.11%)
Regarding the buyers of the products that the RoC produced and exported in 2021, most of them were from (a) Asia (71.94%, US$321.16 Billion), (b) North America, Central America & South America (17.12%, US$76.43 Billion), (c) Europe (8.62%, US$38.48 Billion), (d) Oceania (1.3%, US$5.84 Billion) (e) Africa (0.49%, US$2.22 Billion) and (f) Others (0.49%, US$2.23 Billion).
Regarding the suppliers of the products that the RoC imported in 2021 most of them were from, (a) Asia (68.98%, US$263.015 Billion), (b) North America, Central America & South America (13.22%, US$50.436 Billion), (c) Europe (12,39%, US$47.273 Billion), (d) Oceania (4.36%, US$16.662 Billion), (e) Africa (1.04%, US$3.987 Billion) and (f) Others (0.039%, US$121 Million).
The export-orientated economic policy of the RoC managed to keep unemployment at very low levels.
According to the Statistics Authority of the country, the unemployment rate for both sexes was 3.7% in 2018 and 4% in 2021. Since 2001 the unemployment level fluctuates between minimum 3.7% in 2018 and maximum 5.9% in 2009.
On the other hand, the Per Capita GDP of the RoC increased steadily over the last 40 years, from US$2,720 in 1981 to US$9,125 in 1991, to US$13,397 in 2001, to US$20,866 in 2011 and to US$33,011 in 2021.