General

Taiwan has a developed capitalist economy that ranks as the 19th largest in the world by Purchasing power parity (PPP) ,ranks as 18th in the world by gross domestic product(GDP) at purchasing power parity Per capita(person) and 24th in nominal GDP of investment and foreign trade by the Republic of China (ROC) government which governs Taiwan. In keeping with this trend, most large government-owned banks and industrial firms have been privatised. Real growth in GDP has averaged about 8% during the past three decades. Exports have grown even faster and since World War II, have provided the primary impetus for industrialisation. Inflation and unemployment are low; the trade surplus is substantial; and foreign reserves are the world's fifth largest.

In 2001, agriculture constituted only 2% of GDP, down from 35% in 1952. Traditional labour-intensive industries are steadily being moved offshore and with more capital and technology-intensive industries replacing them. High-technology industrial parks have sprung up in every region in Taiwan. Taiwanese investors and businesses have become major investors in the PRC, Vietnam, Thailand, Indonesia, the Philippines and Malaysia. It is estimated that some 50,000 Taiwanese businesses and 1,000,000 businesspeople and their dependants are established in the People's Republic of China (PRC). The tightening of labour markets has led to an influx of foreign workers, both legal and illegal.

Because of its conservative financial approach and its entrepreneurial strengths, Taiwan suffered little from the Asian Financial Crisis of 1997-1999 compared to many of its neighbours. Unlike in neighbouring Japan and South Korea, small and medium-sized businesses make up a large proportion of businesses in Taiwan.

The global economic downturn, however, combined with poor policy coordination by the new administration and increasing bad debts in the banking system, pushed Taiwan into recession in 2001, the first whole year of negative growth since 1947. Due to the relocation of many manufacturing and labour intensive industries to the PRC, unemployment also reached a level not seen since the 1970s oil crisis. Growth averaged more than 4% in the 2002-2006 period and the unemployment rate fell below 4%.

Since the global financial crisis starting with United States in 2007, the unemployment rate has risen to over 5.9% and economic growth fallen to -2.9%. However, Taiwan managed to emerge from the crisis in very good shape. In 2010, economic growth reached 10%, the highest rate in almost 30 years, international trade jumped more than 39% to $526.04 billion, and the job market rose with most businesses set to recruit. As a result, the IMF estimated Taiwan's 2010 GDP-PPP per capita at over $34,700, surpassing those of Finland, France and Japan.

Taiwan is a member of the Asian Development Bank (ADB), the World Trade Organization (WTO), and the Asia-Pacific Economic Cooperation (APEC) forum. Taiwan is also an observer at the Organisation for Economic Co-operation and Development (OECD) under the name Chinese Taipei. Taiwan's top five trade partners in 2010 are the PRC, Japan, US, the European Union and Hong Kong.

Overview