Describe Taiwan's economy while standing on one foot

If you had to summarize–in the space of a couple of sentences–Taiwan’s current economic standing in the world (especially as ranked against other countries), what would you say? What measures would give the fairest picture? This is for literary purposes, God help us all.

On a related note, is it true that Taiwan once had the world’s largest foreign exchange reserves? If so, during what years did this glorous era occur?

Taiwan’s economy is in the late stages of a transition from a light manufacturing based economy to a service, high technology, and branded products based economy, as manufacturing work has been moving to China at light speed. There are plenty of examples of companies which have responded too slowly to change, but for the most part, the individual companies who make up the base of Taiwan’s economy are handling the transition quite well.

On a side note, I continue to be amazed by the skill with which Taiwanese enterprises as a group handle a rapidly changing business environment.

How’s that?

[quote]On a related note, is it true that Taiwan once had the world’s largest foreign exchange reserves? If so, during what years did this glorous era occur?
[/quote]

I think that is true and it wasn’t so long ago, perhaps in the mid to late 90s. My guess is about 95, 6 or 7.

Taiwan’s economy in a couple of sentences? I bet I can do it in one: neither your arse nor your elbow. The place is not an advanced economy, but neither is it a undeveloped one. It’s stuck in that sad no-man’s land where policymakers can’t decide if it’s a good idea to protect IP or help local businessmen steal as many ideas from hapless foreign firms as they get their hands on. This basic schitzophrenia has been going on for almost 2 decades now, and partially explains why I keep meeting these weird-arse people with BMWs and over-educated children who think they’re poor. Go figure.

Ah fuck it! I just chipped a tooth on a bloody carrot.

Hmmm. Taiwan’s economy in two lines…
“It’s very well made in Taiwan.
HAhahahahahaaaaaaa!!!”

There ya go.

I’m sure Taiwan’s forex reserves have never been higher than Japan’s.

Thank you! Tomas and Guangtou have especially given me food for thought, since they are thinking about this in very different (and important) directions. To put all this in perspective, I’m trying to summarize Taiwan within a page or so–for people who don’t know anything–and thought it important to touch on economics. (For the sake of comparison, I just named the two main languages without saying much about them, but that doesn’t work so well with economics.)

Wikipedia, stealing from the CIA, gives the following worldwide rankings for Taiwan:

GDP (Nominal): 21
GDP (Nominal, per capita): 37
GDP (PPP): 17
GDP (PPP, per capita): 24

Which is really hard to summarize, but it does suggest that Taiwan as (a) somewhat important in the grand scheme of things, and (b) doing alright for itself. Unfortunately, there’s no one “best” number, and just comparing it to Korea or Eastern Europe seems too simplistic (not to mention subject to rapid change).

I’m sure I should mention the importance of the electronics industry, esp. computer parts. Not sure whether it’s worth it to continue the list with plastics, chemicals, and so on…

On the forex reserves issue, I seem to remember Taiwan being #2 in the late 1980’s. After Japan, of course.

Thanks everybody, and keep ‘em comin’!

Taiwan’s economy…

Stagnating due to increased focus on politics. Starved of Asian bi-lateral and multi-lateral agreements. High turn over of failed businesses.

Omni, IIRC, Taiwan did hold the highest spot back in the 1980s… mid 80s? Again, IIRC, Taiwan regularly traded places with China or Japan for the top spot back then… back when Taiwan was still trumpeting its “economic miracle” status…

I could be mistaken… but, that’s what I think I remember…

But, here’s now:

Edit: Well, maybe Omni is correct… I cannot find anything indicating that Taiwan ever held the top spot in forex reserves…

Taiwan is Japan ~10 years ago. Both countries have had their respective “economic miracles” and like Japan, Taiwan has entered a period of decline and economic stagnation. There are differences however. Taiwan’s companies will have a competitive advantage in doing business in China due to common language and culture, but unlike Japan it has struggled to build brand recognition. Unless this changes, wages for many professions will decline or unemployment will rise. Taiwan’s economy will see a significant resurgence if China is forced to value its currency more appropriately.

One thing the government loves to trumpet is that Taiwan has progressed from being the world’s biggest producer of such items as shoes, electric fans, bicycles, umbrellas, thermos flasks, etc. in the mid 1980s to the world’s biggest provider of such high-tech goodies as mask ROMs, foundry products, IC packaging and testing, CD-R and DVD-R discs, glass-fiber fabric, etc. today.

It’s also worthy of note that the service sector’s share of Taiwan’s GDP has risen from a tad under 50% in 1986 to 73.3% last year (comparable to advanced Western countries), and is continuing to rise steadily.

The Japan-Taiwan comparison is typically overplayed for one key reason: Taiwan’s trade as percentage of GDP is and has always been much higher than Japan’s. Trade constitutes around 15% of Japanese GDP, but for Taiwan, it’s up around 100%. This means Taiwan is far more integrated into the world economy and when the US catches a cold (i.e. has a growth dip and stops importing as many silicon chips), Taiwan gets pnemonia (sp?) - the reverse is also true. The sheer size of the Japanese domestic market means that it can quite happily grow or dip independent of what is going on around it - which was what happened so breathtakingly during the go-go 90s. Think about this: Japan is about half of the East Asian economy and about 8% of the world economy. It’s huge. Taiwan doesn’t even register by comparison.

Taiwan’s brand recognition problem is intimately linked to the small size of its domestic market. Japanese firms always had a solid core of local consumers to practice on. Pretty soon after start-up, Taiwanese firms have to look abroad for custom. And what’s the easiest way to crack international markets if you’re a nobody? OEM - the story of Taiwan’s growth over the past four decades.

Taiwan’s economy could easily take it in the teeth if there is a major revaluation of the yuan. The NT$ is likely to follow the yuan up, which means the trade holiday that the island has been enjoying over the past 12 months could dry up overnight.

I’ve just been looking at the forex reserve figures for 1979-2006, and see that there actually was one year (1991) when Taiwan stood at No. 1 (with US$82.4 billion). The next year, Germany rose to the top, and in 1993 Japan retook the lead (which it had held for several years before 1991) and retained it right up to this year, when China rose to the top. The latest figures, for June of this year, are: China US$943 billion, Japan US$856 billion, and Taiwan US$260 billion.