The Taiwan Paradox: Overseas Success, Domestic Stagnation
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Taiwan’s image overseas is influenced by a few high-profile companies, but the domestic economy is dominated by state-owned enterprises. They are often inefficient, heavily protected and ‘crowd-out’ alternatives, making the economy more dependent on exports for growth, at a time when the global trading environment is becoming less benign and competition for Taiwanese companies is growing ever stronger. Export performance is also increasingly dependent on success in niche areas and generic products exposed to fierce competition from elsewhere. The need for domestic reform to sustain growth has therefore become more urgent and cannot continue to be postponed. A bilateral investment agreement with the EU provides an opportunity to kick-start this but only if it addresses market access restrictions and technical barriers to trade.