Overview Of The Economy of Taiwan
Taiwan has a capitalist economy, which means that privately-owned companies decide on production techniques and operate to earn a profit. Banks and industrial companies that were previously owned by the state are now also privately owned. The economy of Taiwan is the 19th largest in the world in terms of purchasing power parity. It is considered an advanced economy by the International Monetary Fund and has the highest Global Entrepreneurship Index in Asia. Additionally, it ranks as the 5th largest economy in the region of Asia.
In 2014, its nominal gross domestic product (GDP) was $529.6 billion and GDP per capita was $22,598. This country has a workforce of 11.54 million and an unemployment rate of only 4%. Of these employed individuals, 58.9% work in the services industry. This is followed by 36.1% in industry and 5% in agriculture.
Leading Industries Of Taiwan
As evidenced by its employment pattern, the services sector is the leading industry in Taiwan. In fact, it contributes 73% of the GDP. Overall, the economy is very diversified with several different industries. Some of the most important of these include communications and information technology, electronics, petroleum refining, chemicals, armaments, chemicals, food processing, and textiles.
Top Export Goods and Partners Of Taiwan
In 2014, Taiwan exported $318 billion worth of goods. This economy is largely reliant on its export industry, which makes it vulnerable to global market fluctuations. Its principal exports include electronics, flat panels, ships, petrochemicals, machinery, metals, textiles, plastics, and chemicals. A large percentage of its exports go to the following countries: China (27.1%), Hong Kong (13.2%), United States (10.3%), Japan (6.4%), and Singapore (4.4%).
Top Import Goods and Partners Of Taiwan
The 2014 imports to Taiwan totaled $277.5 billion, giving this country a positive trade balance of $40.5 billion. A positive trade balance means this country exports more than it imports. Its major imports include: electronics, machinery, crude petroleum, computers, coal, organic chemicals, and metals. A large portion of its imports come from the following countries: Japan (17.6%), China (16.1%), and the US (9.5%).
Challenges Faced By The Economy of Taiwan
Despite the apparent health of this economy, Taiwan does face some significant challenges to continued growth. The economy has recently stagnated. Its exports have been decreasing over the past few years, and work wages have not kept up with the cost of living. Additionally, the GDP only increased by .7% in 2015 which is significantly less than the 3.9% growth the country saw in 2014. Unfortunately, this country relies on exports for economic growth and other countries like Hong Kong and South Korea have become more competitive in this area.
Future Economic Plans Of Taiwan
To combat the previously mentioned challenges, the government of Taiwan has created a plan for the future of its economy. Part of this plan involves transitioning the economy to more technology-related and service-oriented jobs. It is also planning to diversify its export partners to avoid relying on exporting to just a few countries. The government also intends to continue with its stimulus package plan of infrastructure development and improvement, tax breaks for new businesses, and increased spending for social services. This means the country will continue operating at a deficit in order to further boost the economy.