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Commercial Times: Figures reveal Taiwan's economic plight

2013/05/28 11:12:34

According to the late British economist John Maynard Keynes, a poor society needs only a small amount of investment to maintain full employment, but more investment is needed to reach the same goal in a wealthier society.

The concept underscores Taiwan's current economic plight. Insufficient investment is precisely the fundamental reason behind Taiwan's sluggish economy.

Private-sector investment as a percentage of Taiwan's gross national product was only 14.9 percent in 2012 and 15.4 percent in 2011. The figures not only were lower than the levels of 17-18 percent recorded before the global financial crisis but also far inferior to South Korea's 24 percent.

For a very long time, our government has focused only on the manufacturing sector while seldom paying attention to the service sector when it comes to promoting private-sector investment.

Taiwan has pushed to develop its travel services industry over the past four years, but investment in the service sector remains extremely insufficient.

Investment in the hotel and restaurant industry, for example, accounted for 11.9 to 12.9 percent of its gross output between 2008 and 2011.

During the same period, investment in the wholesale and retail industry ranged between 9.3 percent and 9.9 percent of gross output, while investment in arts, entertainment and leisure services was between 10.1 percent and 12.3 percent of gross output.

With the service industry contributing 70 percent of the country's gross domestic product and 60 percent of employment, is the government directing proportional attention and resources to the sector? The top priority now is not stimulating the economy and private consumption, but thoroughly resolving the problem of insufficient investment, especially in the service sector. (Editorial abstract -- May 28, 2013)

(By Y.F. Low)