SOME DEVELOPMENT INDICATORS OF TAIWAN: A COMPARATIVE STUDY OF EAST ASIA IN THE EARLY POSTWAR PERIOD

Abstract

This chapter presents the initial conditions of the pretakeoff period of Taiwan as compared with other comparable neighboring countries like South Korea, Japan and China. It presents the degree of "institutional readiness" of Taiwan, one of the newly industrializing economies (NIEs) in 1970s and 1980s, for takeoff to rapid economic development. We start from comparing the social indexes (including cultural, health and educational efforts), political freedom, defense burden and so forth. We then compare economic development indicators of Taiwan in the 1970s, the period in which Asia was just starting to emerge, with other Asian newly industrializing countries (NICs), namely, South Korea, Singapore and Hong Kong. In some comparisons, we also included Japan, China and the United States.

1.1 Introduction

Special interest in East Asia has been aroused again recently from Japan's emergence as a world industrial power (Patrick and Rosovsky 1976). After much acclaim of Japan as number one (Vogel 1979), people began realizing that not only Japan but also the smaller, newly industrializing countries (hereafter NICs) in Asia, such as Hong Kong, South Korea, Singapore and Taiwan, have followed closely and performed as well as Japan, although on a smaller scale (Little 1979). These five fast-growing countries, along with China and North Korea, are now viewed as a "challenge" and a "threat" to the United States and the Western world. They are known as the Eastasia Edge (Hofheinz and Calder 1982). With this perspective, this chapter examines some development indexes of Taiwan.

Taiwan's economic performance has been one of the best among the nations in the world after World War II. In fact, among 134 countries, for the period between 1950 and 1975, Taiwan's annual growth rate of per capita gross national product (GNP) in 1974 US dollars was 5.3%, ranking fifth, behind only Japan (7.6%), Swaziland (7.0%), Iraq (5.9%), and Greece (5.4%) (Morawetz, 1977, 77–80). In recent years the Taiwanese economy has been in the spotlight again as a new study has disclosed that Taiwan might be one of the few countries that has achieved this rapid growth with an equitable distribution of family income (Fei, Ranis and Kuo 1979). Since there currently exists extensive literature on the Taiwanese economy itself (e.g., Ho 1978; Galenson 1979), the purpose of this chapter is to compare some of its development indicators with those of selected countries.

1.2 Some Economic Indexes

It should be noted first that the term "development" has different meanings. Here we use it in a broad sense to include some economic, social and political aspects of Taiwanese society. Each of the indexes chosen is explained as it is introduced. Theoretically, an international comparison of these indexes may be made among all the countries in the world, as we have done previously (Hsiao and Hsiao 1981), or among countries in the same geographic area (WT 1980), or among those at similar levels of development (WDR 1980). Since most people like to compare themselves with a similar reference group, the emphasis of the comparisons in this chapter will be on the NICs, especially among the Asian NICs: Hong Kong, South Korea, Singapore and Taiwan. Whenever appropriate, we also compare the Taiwanese indexes with those of other countries not among the NICs.

With a population of 17 million in mid-1978, Taiwan is a large country, ranking 37th among 153 UN members, and is comparable to the former East Germany, Sudan and Peru. Taiwan is rather small in terms of its area (36,000 km2), ranking 116th among UN members. It is 70% larger than Belgium (21,000 km2), but is slightly smaller than the Netherlands (41,000 km2). The large population and small land area make Taiwan one of the most densely populated countries in the world. It has 472 persons per km2, the sixth highest among UN members, although it is only about one-eighth as dense as Singapore and Hong Kong. Apparently population density has little to do with the degree of development, as shown in Table 1.1.

The most important, although controversial, economic development index is per capita gross national product (GNP). GNP is a measure of the total gross domestic and foreign output claimed by the residents of a country. It is the sum of gross domestic product (GDP) and net factor income abroad (WT 1980, 6). At current market prices, Taiwan's per capita GNP in 1977 was $1,179, ranking 51st among 126 countries according to the World Bank (WT 1980, 430). It is slightly higher than South Korea ($977) and Turkey ($1,110, not shown), and is almost the same as Mexico ($1,164, No. 52) and Panama ($1,195, No. 50).

Taiwan's per capita GNP in 1977 is also higher than all those of the Asian countries except Japan ($6,511), Singapore ($2,820), Hong Kong ($2,622) and Fiji ($1,326). An alternate index to per capita GNP is per capita energy consumption, which is measured in kilograms of coal equivalent to petroleum, natural gas, coal and lignite, hydroelectricity and nuclear power consumed, excluding traditional firewood. This is shown in row 5 of Table 1.1. Taiwan's figure is certainly high, indicating a vigorous industrial country. However, in contrast with GNP per capita, Taiwan's energy consumption seems too high, particularly when it is compared with Hong Kong and South Korea, which is probably an indication of a lack of effective energy conservation policies in the country.

Although per capita national income is rather low, Taiwan's average national savings rate is high. It is measured by the total gross national savings between 1972 and 1977 divided by the total GNP at current market prices for the same period. With average national saving ratio at 29.6%, Taiwan ranked 12th among 126 countries. Other countries with high average saving ratios are mostly oil-producing countries, except Japan, which had 34.4% and ranked seventh. High saving ratios result in high investment and consequently a high growth rate. Since Taiwan is a resource poor country, a high saving...