Rigid Systems Holding Back Taiwan Development

The government offered little more than platitudes in response to recent warnings on Taiwan’s economy by academicians of Academia Sinica, but they presented a bleak picture of the future if measures are not taken to address their concerns.

The country will fall into “middle-income” limbo in the next decade if it fails to deal with “three evil hands” that are stalling the economy, said academician Wang Ping, an economics professor at Washington University in St. Louis, CNA reported.

Wang said Taiwan’s economic development is being held back by “rigid” systems in the three areas—the law, environmental assessments, and Taiwan-China relations—that could leave Taiwan stuck in the so-called “middle-income trap” and see at least 15 countries catch up with it in the next 10 years.

The middle-income trap refers to a period of economic stagnation after a country’s per capita income reaches a certain level because the country is held back by rising labor costs, weak financial and legal systems, and the lack of high-end talent, among other factors.

As a result, the country cannot achieve technological innovation as advanced as that in developed economies while its manufacturing costs cannot fall as low as those in underdeveloped economies, Wang said at Academia Sinica.

The economist was there to help present a “Taiwan Industrial Reform and Competition Strategy Proposal” developed by Academia Sinica, Taiwan’s top research institution, after a years-long study.

In the proposal, the institution argues that “Taiwan in the 21st century faces a constantly shrinking international presence. It can only rely on its strengths in trade to fight for international limelight.”

Taiwan’s economic situation faces enormous challenges, however, including a rapidly declining economic growth rate, a summary of the proposal said.