TAIWANESE ECONOMY

TAIWANESE ECONOMY

Abstract

Taiwan is an East Asian country that has risen from a poor economy to become one of the top countries with a good nominal GDP. Her economic growth is outstanding making the country become an area of study in economics. The performance on the growth of the country will be analyzed between 1960 and 2019. This study aims to identify and elaborate patterns of growth. The research on the country is vital to discover and explain how it was able to grow rapidly within a short period relative to other countries. Other countries from the east of Asia grew at the same rate as Taiwan. Nations who have dominant economies could accomplish what Taiwan did within three centuries. The accomplishment of reaching maximum GDP within fifty years was a shock to the United States. The unique circumstances set by the East Asia economies were a record to reckon with. The economic rise of china with other east Asia countries was necessary to be understood as it threatened the economic dominance of the U.S. since the two trade together, it is crucial to under if their economic growth would remain at the same growth rate. Understanding of their economic growth patterns is also important. It is also paramount that we understand the history of these countries’ economic growth by looking at their rise.

As can be seen from the statistics in Table 1, Taiwan’s GDP from 1960-2019 has grown extremely rapidly, starting at just about 27 billion international dollars in 1960, to over 1 a trillion international dollars (I$) in the year 2019. This country was behind the U.S and Japan’s GDP data.  Both countries had over a half a trillion international dollars and the U.S toping in the list with a three trillion 1$. During that time the economy of Taiwan was weak and poor. However, the year 1970 its economy rose by half from 25 to 69 billion international dollars. The growth rate went on until 2010 where it took a different trend and the economy was still growing at a low rate. The country’s GDP rose from 731 to 924 billion international dollars. It was in 2014 where Taiwan gross domestic product crossed to trillion dollars and became worth one billion international dollars. The country’s economy grew more than the previous decades almost doubling its GDP. Japan’s GDP became similar to that of Taiwan. Asian countries were behind in the 1960s but rose drastically. Both Taiwan’s and Japan’s economies were termed as miracles in that Asian continent.

Table 1: comparison of the Taiwan, USA and Japan GDP’s, 1960-2019

The second table shows the GDP per capita of the three countries using the patterns followed in the gross domestic product table. It shows an increase in GDP per capita in both japan and Taiwan even though the US lead throughout. These increases in per capita GDP through doubling has made huge gaps between the USA and the Asian country close. There is a doubling of Taiwan’s GDP per capita in the period of 1960 to 1990. After this doubling in 1990, it further increases by $5, 000 every decade up to 2019. Taiwan’s GDP per capita was able to surpass Japan’s from the 2000s until 2019 where a difference of about $8000 is witnessed. Between 2010 and 2019, there has been a great difference than there was in the USA and Taiwan’s GDP per capita. Taiwan may surpass the USA’s GDP if it continues in this growth rate for a few decades.

Table 2: GDP per capita comparisons between Taiwan, USA, and Japan from the year 1960 to 2019

Table: annual GDP growth rate among Taiwan, Japan, and the U.S from 1960 to 2019

From table three above, few vital facts can be distinguished. There has been a constant GDP growth over decades in the United States. The increase has shown a fluctuation of one and two percent.  This shows a steady-state in the U.S economic growth. However, there has been a huge fluctuation in the growth rate of two Asian countries. Both of these countries show a bigger flux than the USA. The annual Taiwan growth rate in 1970 was higher than japan and the U.S with a rate of 11.3%. A steady growth rate between the two Asian nations was witnessed and had a fluctuation of about 2%.

Figure one: GDP per capita of the USA, Japan, and Taiwan between 1960 to 2019 (I$)

The line graph above was found to be more precise than the table two of GDP because a clear picture is shown about Taiwan surpassing Japan’s GDP per capita. This occurred in the year 2002 where Taiwan was able to rise in GDP per capita over Japan for the entire decade. This trend increased till 2019 where Taiwan is still above Japan in GDP per capita. The surpass is also reserved for the USA according to research. The results show that if Taiwan will continue like this in the coming decades, it will probably surpass the US as it did to Japan. It is evident from the graph that the economy of Taiwan is nearing that of the USA and both seem to be having a similar steady-state. A major converging is expected if the country continues in with that rate of growth. This converging implies that the United States and Taiwan’s steady-state will be equal.

Figure two: the annual rate of growth among the USA, Taiwan, and Japan from 1960 to 2019 in percentage

Source: Penn world tables.9 database

The second figure shows clear answers than the ones presented by the first graph. Growth rates of the three countries are shown by displaying annual decreases and increases. It goes contrary to figure one’s slow constant rise. The transition of the Taiwan economy from agricultural to the industrial economy made the country saw a rise in the annual GDP. There was a huge growth from 1960 to 1962. The change made the nation produce goods at low costs adding more money to the GDP than when it previously depended on agriculture only. A sharp drop in GDP was experienced in Taiwan due to the withdrawal of economic aid from the United States. The country was left to struggle on its own while trying to stabilize the industrial economy.

The governments of Taiwan begun in 1970 to push for the development of powerful industries like chemical plants. This new strategy saw annual growth in GDP in that decade. The growth rate was stopped by the OPEC crisis affecting both the U.S and Japan. A decline of six percent is seen through the graphs. The economy then rapidly grows by 15% while Taiwan experiences both an increase and a decrease in the few years. In 1985, an appreciation of 14% in GDP is felt not only in share prices but also in foreign exchange. The country’s economy grew more although each year’s growth was less than the previous. There was a decrease in growth from the year 1990 to 2000 due to a financial crisis that affected most of the East Asian nations. A currency depreciation was found to be affecting the financial systems of the country after a few tests from investors. The economy of Taiwan rose by 8% in 2009 faced by a major recession that affected also the U.S. This recession was caused by the USA making Taiwan have a small growth rate till 2019 where it began to stabilize.

In conclusion, the above evidence shows that Taiwan will continue near the united states GDP growth rate. The U.S was able to maintain a slow growth rate due to the recession in 2009. Taiwan on the other side stabilizes its growth rate which is higher than the U.S rate. If the growth rate of this Asian country continues in the like manner, it will gradually catch up with the USA growth rate in the coming two decades. This country has proven itself by surpassing Japan’s GDP per capita. It will maintain this gap created and reach the catch up with the USA’s slowly growing economy.