According to The Economist, Taiwan forecast 2009 GDP to shrink by 3.5%. Across the strait, China predicted a much reduced growth of 6%, highest on the chart, seconded by India’s 5%.
The media has been fixated on the trial of Mr. CHEN Shui-Bian: the former president indicted for corruption, massive embezzlement, and money laundering. He foolhardily refused to capitalize on China’s amazing growth during his 8 years of presidency. Alas, Taiwan is arguably best positioned: it has sufficient capital, advanced industrial managerial talents, the same language and heritage, and the memory of how to best manufacture in the world.
The new president, Mr. MA Ying-Jeou, won the election largely on the economic platform. He made good with one of his campaign promises to open the island for direct flights to major China cities: Beijing, Shanghai, ShenZhen, etc. He also opened Taiwan for China tourists and other activities. Those measures should help, but matter little to the GDP.
Many optimists hope for a transformation, from an export- to service-based economy. Taiwan has long lost its labor costs competitiveness. It wishes to become the equivalent of silicon valley, only larger, that offers diversified design expertise: electronics, industry design, pharmaceutical, life-science, or even software. “We have talents and the resolute,” claimed these hopeful people.
Japan and Singapore were hopeful too. Vietnam and parts of China are aiming for the same goals. Good old original silicon valley is holding on to the reign real tight. Talents and will power are not enough to achieve the goal. There must be long-term programs, focused funding, and a few good people at the top driving it.
The island is still mired in internal politics, like Japan. Guess it is not surprising that Japan is also contracting by 3.2%.