Taiwan Energy and Security

Taiwan Energy and Security

Economy and energy

Upon arrival on Guomindang Island in 1949, Taiwan had a substantially agricultural economy, based on the cultivation of sugar and rice. The 1950s, on the other hand, coincided with an important industrialization process built around the export of manufactured goods. In the following two decades, the Taiwanese economy was thus able to experience exponential growth, thanks to the development of industries that were able to export their products at competitive prices on international markets, benefiting from very low processing costs, due to the high availability of labor and subsidies provided by US financial aid, which significantly lowered production costs. Since the 1980s, the Taiwanese secondary sector has undergone a significant evolution,

In the last twenty years, many Taiwanese companies have chosen to relocate their production processes, due to the increase in labor costs on the island that followed the improvement in living standards. If at the beginning the new workforce was sought in other states of Southeast Asia, with the elimination of restrictions on commercial traffic in the Taiwan Strait, it is precisely mainland China that has gradually established itself as the main destination for Taiwanese industrial investments. Taiwan has also become one of the largest investors in Thailand, Indonesia, Malaysia, the Philippines, Vietnam, as well as in China itself.

The decrease in the importance of the industrial sector on GDP has been accompanied by an exponential increase in that of the services sector, which has come to generate approximately 65-70% of the national GDP. Of some importance is the information technology sector and, in particular, that of hardware components for the assembly of computers. Two of the world’s five largest laptop computer companies, Acer and Asus, are Taiwanese.

According to indexdotcom, the growth of the Taiwanese economy has proved constant over time and in sectors: the average annual growth rates of 9% recorded in the 1960s, 1970s and 1980s have also remained high over the last fifteen years, during which GDP almost doubled.

Despite the expansion of the economic sectors, the secret of the success of the country, which has led to Taiwan in the quartet of the so-called ‘Asian tigers’ (together with Singapore, South Korea and Hong Kong) and has prompted several observers to speak of a Taiwanese miracle , however, remains firmly linked to the manufacturing industry, as evidenced by the fact that exports consist of industrial products. The data relating to GDP per capita are perhaps the most emblematic to represent the figure of this success: from $ 170 at the beginning of the 1960s to more than 41,000 in 2014.

In recent years, President Ma Ying-jeou has tried to implement a liberal economic reform agenda. The goal is to expand the private sector by trying to attract foreign investment to the country. To do this, the government has proposed the experimental opening of seven special zones, the ‘Free Economic Pilot Zones’ (Fepz), within which fiscal and bureaucratic incentives would be guaranteed to stimulate investment. However, the Taiwanese parliament has blocked the start of the FEPZ for now, demonstrating the persistence of a strong protectionist orientation.

Defense and security

For a country that has faced a controversy linked to its very existence since its inception, which over the years has always shown itself to be on the verge of escalating into an armed conflict, the defensive sector is crucial. The constant threat of an invasion by the PRC has led the Taiwanese governments to maintain a very large and well-equipped armed forces. In addition to having a large number of paramilitary forces, Taiwan is one of the countries in the world with the largest number of active soldiers per thousand residents (12.4 in 2012), a situation that has remained constant over the years.

The four-year report (March 2013), which the defense ministry compiles in the first ten months of the life of each new administration, provides for a reduction in the armed forces. The final goal is even more ambitious: for 2015 we think of the elimination of compulsory conscription in favor of a four-month military service and an army of volunteers only. Moreover, it is a natural factor given that the low population increase of the island, less than 1% for five years, has made it probable that the conscription of 2020 will still halve the number of recruits, compared to 2000.

The United States continues to play a vital role. In addition to being the largest arms exporter in the DRC for about 1.8 billion dollars, Washington closely monitors the area: as part of the disputes between Japan and the PRC over the Diaoyu / Senkaku islands, for example, a pair of military aircraft Americans entered the air zone claimed by China on the disputed archipelago without identifying themselves according to the rules prescribed by Beijing. Since 1949, moreover, the US has deployed a significant military presence providing protection during the crises of 1955, 1958 and 1996. During the latter, in particular, Washington has fielded the largest contingent in Asia since the time of the Vietnam War. Taiwan is aware that, as an imperative condition to remain independent or to avoid a forced invasion, the balance of forces in the East China Sea area must be maintained. Maintaining the difficult balance could however take on a new dimension in relation to the tensions in the South China Sea and, in general, in areas potentially rich in energy resources.

Taiwan Energy