Taiwan’s economic development
Taiwan’s economic ascendence in the second half of the 20th century was very much based on an export-driven growth model focusing on chemicals, electronic equipment, and international trade. The island successfully developed its electronics sector into an innovative and highly competitive industry, which is firmly integrated in global value chains. Today, Taiwan has become an important player in the production of semiconductors, with its IC foundries holding a global market share of 64 percent in 2021. Although the service sector accounts for more than 60 percent of total GDP, manufacturing is still the backbone of the economy. Growth rates in the industrial sector even outpaced those of the service sector over the last decade. At the same time, employment within the secondary sector stood at around 35 percent of the total workforce, while unemployment was low and consistently below four percent.International trade partners
As an export nation, Taiwan maintains strong international trade partnerships. The share of merchandise exports of the total GDP reached nearly 60 percent in 2023, while the trade surplus amounted to 80.6 billion U.S. dollars. The island traditionally maintains close economic ties with mainland China. Taiwan has outsourced a considerable part of its production to the mainland due to lower labor costs, making itself an important direct investor and supplier of intermediate products to China. Only recently, amidst growing political tension with the mainland, Taiwan has sought to diversify its trade partners and slightly reduced its reliance on China, with the European countries and the U.S. gaining significance.Backed by a strong demand for electronic products globally, Taiwan’s economic outlook remains largely positive. However, political factors in the relationship with China could be considerable risk factors for its future development.
