The Asian Tigers, the four countries that successfully carried out industrialization with rapid economic growth (more than 7 percent annually in 1960-1990), have continued to improve their competitiveness since the dawn of the 21stcentury and have already secured their place on the global market. The two of the famous four (Hong Kong and Singapore) have become global financial centers whereas the other two (South Korea and Taiwan) have become the world’s leading producers of information technology. Having had a chance to revisit Taiwan, one of the tiger countries, almost 10 years later, I would like to talk about the cause and effect of their rapid development, and the challenges they face today. It is hoped that this article would contribute to the current discussion around how Mongolia can diversify its economy. Taiwan covers an area of over 36,000 square kilometers, which equals the half of Dundgovi province’s territory, but has a population that is seven times larger than Mongolia’s. Let us hear what the blue magpie, the symbol of the island of Taiwan, has to say.
COURSE OF ECONOMIC MARVEL
It is said that the infrastructure built by Japan, the gold brought from China, the aid given by the United States, and the government regulated loans paved the way for Taiwan’s remarkable development.
When ruling Taiwan in 1895-1945, Japan built the infrastructure of road, railway, education, and health. During Japanese rule, Taiwanese people spoke Japanese and adopted their standards followed in production and service sectors. The population of Taiwan grew 2.5 times to reach 6.6 million in the period of 50 years under Japanese rule.
In 1950-1965, The United States provided the Taiwanese government with an economic aid worth 1.5 billion USD and a military aid worth of 2.4 billion USD in the form of goods and raw materials. Until the United States and China established formal diplomatic relations in 1971, the United States was still providing military support to Taiwan in the form of weapon supply and military training. Having been defeated in the long lasting civil war, Chiang Kai-Shek, who was the leader of the Kuomintang (KMT/the Chinese Nationalist Party), evacuated to Taiwan with 110 tonnes of gold (the entire reserve of China’s central bank) and tens of millions of USD that were taken in secrecy. Using the gold, the bank of Taiwan printed new currency and sold one Taiwan dollar for 40,000 former dollars, which stopped the super inflation that had started when the Japanese left Taiwan.
Taiwan began pursuing an industrialization policy to substitute imports and promote exports by the end of 1950s, which was their starting point to become an Asian tiger. As international trade expanded, Taiwan was included in the list of countries the United States would provide favorable trade conditions despite the absence of diplomatic relations between the two. Taiwanese industries started to undergo diversification as competition became fiercer. Having been exporting sugar, rice, banana, and pineapple to Japan, Taiwan soon started sending processed food, textile products, electric devices, computers, and chemical products abroad. The United States became their top consumer. As Taiwan purchased oil solely from international market, their economy was always dependent on global market prices. Although the central bank and state-owned companies implemented many mega projects in infrastructure, the credit of development that made them an Asian tiger must go the hardworking people of Taiwan.
ACHIEVEMENTS AND CHALLENGES
Taiwan, which is referred to as Chinese Taipei in international relations today, is currently the 20th biggest economy in the world, and its GDP per capital has reached 20,000 USD, which prompts others to describe Taiwan as a developed, capitalist country. Even though Taiwan’s average life expectancy reached a high 79, they are in one of the countries with the lowest net population growth.
Except for the 2000-2008 when the Democratic Progressive Party was the ruling party, the KMT Nationalist Party has always been in power. However, only three months ago, Ko, a university professor who ran in the election as an independent candidate, became the mayor of Taipei city. It started a political storm.
Taiwan’s inflation rate has been 4 percent on average for the last 55 years while their currency rate has always been stable (1 USD equaled 40 TWD in 1960, 25 TWD in 1990, and 30 TWD in 2015). However, Taiwan has spent almost 10 years now without seeing any increase in the average salary. It poses the risk of losing capable workforce to abroad. As there has been no increase in income for the last 10 years and the price of real estate has been going up, the younger people have reduced opportunities to buy an apartment.
The agricultural sector, which comprised one third of GDP in 1952, makes up only three percent of GDP today while the services sector comprise 73 percent of GDP. The traditional labor intensive industries, most of which have gone out of the country, have been replaced with more technology intensive industries. Taiwan has already become a part of the value chain of the global electronics industry. Taiwan implemented 10 mega projects in 1970-1990 in highways, electric power grid, railway, airport, seaport, steel, ships, oil distillation, industrial park, and nuclear power plant. Taiwan has pursed its policy to reduce government involvement in economy since 1990.
Taiwan is transforming its economy into a knowledge-based one today. They are developing all kinds of software, building computers, working on data processing, and promoting research and development. Taiwan is also promoting finance, education, and health services with a successfully implemented policy to attract clients from abroad and develop tourism. The government has supporting its universities and colleges to enroll more international students by offering scholarships. As a result, the total number of foreigners who came to Taiwan on short and long term study has reached 50,000. Taiwan is planning to increase this number to 130,000 by 2020. About one thousand Mongolians are now studying their profession along with English and Chinese languages in Taiwan. Also, many Mongolians now travel to Taiwan to receive medical services.
FRIEND AND FOE
Chine sees Taiwan as a part of its territory. The One-China policy is respected by almost all countries, including Mongolia. Nevertheless, every country is developing its economic relations with China. Taiwanese companies are now considered as the largest investors in many Asian countries. A representative office of Taiwan’s economy, trade, and culture is being established in many countries. As soon as the Democratic Progressive Party acquired ruling power in 2000, they revised their definition of China, printed maps where Mongolia was in separation, changed high school textbooks, started accepting Mongolian passports, and soon allowed free exchange of people between Taiwan and Mongolia. It did not take long before the permit for Taiwan to establish its representative office in Mongolia was granted. Ever since, the relations between Taiwan and Mongolia have been improving.
Introducing direct flights to Taiwan allowed the number of Chinese tourists to go up. Around 75,000 Chinese tourists visited Taiwan over the Lunar New Year holiday. A Taiwanese businessman says that China is a friend and foe because working together brings profits despite rebuffing.
This is the summary of the narrative sang by the blue magpie from the beautiful island of Taiwan.