Globalisation

Case Study – Taiwan

With everything that has been said so far, you can be forgiven for being confused about globalisation. Is it something that you should support? Or would you be better off joining the next protest that is held in the streets of your capital city? Before you make a decision, there is one very important thing that we should do. We have looked at what globalisation is, and we have explored the views of various stakeholders. What we need to do is stop and look at the countries which are at the centre of the controversy. Only then will you be able to make a truly informed decision. To begin, we will look at Taiwan.

Taiwan is a small island not far from the coast of China. There is a great deal of controversy over the governing body in Taiwan. In 1895 Taiwan was declared part of the Japanese empire, but then after World War Two it became part of China. Although there were disputes at that time, China effectively ruled Taiwan. In 1947 a particularly aggressive approach by China saw many thousands of people killed; the Taiwanese government came to be dominated by the Chinese Nationalist Party. At the same time, a new direction for the Taiwanese economy was established.

The ruling Nationalist Party ordered that the Taiwanese people would produce the products which China needed. Accordingly, the people of Taiwan began providing China with the agricultural products that it produced. As they were inefficient at producing these items (such as sugar cane), the cost had to be underwritten through international aid. Until 1960, this aid came from the USA. After 1960, the government in the United States decided to stop supporting Taiwan in this way. As a result, the people of Taiwan were forced to find a way in which they could become more efficient. This marked a turning point for the Taiwanese economy – they had to do something radical, or their citizens would starve.

As it happens, the government of Taiwan decided to move away from their ties to China. They made two major decisions at this time, both of which helped them to embrace globalisation. The first was to allow an increase in foreign investment in their country. The second was to give the people of Taiwan control over the land that they owned – for the first time the people were allowed to choose how to use their own resources. In this way, the Taiwanese government was choosing to follow the path of globalisation.

This leads to an obvious question: Did it work?

In assessing whether or not these decisions have benefitted the people of Taiwan, we will use one very strict criterion: are all of the people who live in Taiwan better off today than they were in 1960? If everyone is better off, then we would have to conclude that the government of Taiwan made a wise decision in the early 1960s. As it turns out, the answer is a resounding yes. The people of Taiwan are significantly better off as a result of their government’s decision to embrace globalisation.

There is an abundance of evidence that we can use to prove this point. In 1960, the economy of Taiwan was almost entirely agricultural. Today, over 90% of their GDP is generated through the production of sophisticated manufactured goods. For example, Taiwan is the world’s largest supplier of computer monitors. Only 2.5% of their economy is based on agriculture today.

But simply changing product lines is not enough evidence to prove that the people of Taiwan are better off. To do this, we need to look at the economic data. The following evidence strongly suggests that the assertion made above is true:

The Taiwanese economy has grown at an average rate of 8% per annum since the decisions of the 1960s were implemented, and it continues to grow at around 5% per annum today.
Almost all of the growth in the Taiwanese economy has been generated through exports. Trade increased five-fold in the 1960s, and then ten-fold in the 1970s. Total trade doubled in the 1980s, and then doubled again in the 1990s. Today, this small island off the coast of China is the eighth largest trading partner of the United States.
In 1960, Taiwan was considered a third world economy, and it was supported by foreign aid. Today it is firmly entrenched as a developed country. In fact, in 2005 they ranked 23rd in the world in terms of GDP per capita. This makes the people of Taiwan richer than the people of New Zealand (28th), and not far behind Australia (16th).
The inflation rate in Taiwan is around 2.3%, which compares favourably with the 2.5% that Australia has averaged in the last ten years. The unemployment rate is 4.2%. In comparison, Australia did not fall below 5% between 1973 and 2005.

There is no doubt that the people of Taiwan are happier with their economic situation today than they were in 1960. Allowing them to own their own land encouraged the people to make decisions that would increase their own living standards. This resulted in an increase in productivity, and a change in the type of products that people made. It is also true that the people of Taiwan went through some difficult times; in the 1960s and 1970s the people of Taiwan worked for low wages producing a huge variety of inexpensive goods for department stores in western countries. Many people can still remember finding a “Made in Taiwan” sticker on the bottom of just about everything.

In choosing to pass through this stage, the people of Taiwan have become wealthy. In one generation they have moved from being a third world country, to being a leader in the global economy.

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