TAIWAN

Made By

Gaurav Agrawal
Vishakha Jain Rashi Garg Goorslakhan Sandhu

Neha Agrawal

COUNTRY FACTS
Capital- Taipei Area- 35,981 km sq. Population- 2.3 Million(2013) GDP growth rate- 4% (2011) GDP per capita- $39,400 (2012)- Ranks 19th Agriculture as share of GDP- 1.6% (2009) Industry as share of GDP- 29.2% (2009) Services as share of GDP- 69.2% (2009 Infant Mortality rate (per 1,000 live births)- 5 (2011) Population below poverty line- 1.16% (2011) Life Expectancy- 75 years

 Labour force- 11.2 million (2011)

Services- 58.8 % Industry- 35.9% Agriculture- 5.2%

Main industries: Electronics, communications and information technology products.

Public finances: Revenues- $78.25 billion (2011 est.), Expenses- $88.66 billion (2011 est.) Ease of doing business- Ranks 16th

Taiwan
Officially the Republic of China (ROC) is a state in east Asia and the first constitutional republic in Asia. Neighbouring states include the Peoples republic of China to the west, Japan to the east and northeast, and the Philippines to the south. Taipei is the political capital as well as economic and cultural centre in Taiwan. The quick industrialization and rapid growth of Taiwan during the latter half of the 20th century has been called the Taiwan miracle". Taiwan is one of the Four Asian tigers" alongside Hong Kong, South Korea and Singapore.

Taiwan is world leaders in manufacturing information technology.

DEVELOPMENT PERIOD OF TAIWAN

In 1945, very poor economic conditions prevailed after the rule of Japanese on Taiwan. In 1960s, Taiwan has changed from an agricultural to an industrialized economy mainly through foreign investment by:
Overseas Chinese
United States Japan Western Europe

They introduced modern labor-intensive technology.

In period of 1973 1982, the GDP rose at an annual average of 9.5%.

 In 1980s Taiwan continued its success which was based on a shift in industrial structure towards more capital-intensive & more energy-efficient. By 1990, Taiwans economists wanted their export industries to account 80% GDP with the help of new sectors: - electronics & information processing - energy sciences - aeronautical engineering & genetic engineering

 Later foreign trade has been major in Taiwans rapid growth. The value of trade tripled in each 5 year period since 1955 & increased nearly six times between 1975 1990. This has changed from agricultural commodities to 90% industrial goods especially:
Notebook computers
Scanner Motherboards

PC monitors During the 1980s, the continuing export success and attractiveness of foreign investors from Japan & the United States.

During 1990, this enabled to generate large surpluses and build up foreign exchange reserves.

 During 1997, when Asian currency crisis hit, Taiwan was able to withstand the shock between than any other East Asian economy. In 1998, Taiwan was the only one which experienced a 5% DP growth rate among East Asian economy & the 5th highest in the world.

PEST ANALYSIS
POLITICAL FACTORS
The one china policy restricts Taiwan from becoming an independent country but doesnt object to conduct cultural and economic exchange with other countries. Taiwan has offices in other nations with various names like Taipei Economic and Cultural Office. Taiwan has been able to develop good diplomatic and economic relations with the US.

 It is one of the best places to invest , partially due to the stable government.

Taiwan has an excellent manufacturing and industrial network with the Asian countries.
For some investors, Taiwan is a risky place due to its strained relationship with china. Willingness to maintain good relationship with china for the sake of economic growth and market opportunities. Taiwan is based on its rule of law.

 ECNOMICAL FACTORS: -

Social Factors
Steady growth in population , indicates a bigger market for sale and potential for new business. Average life expectancy- 76.54 years (2001) 78.63 (2011). Growing trend implies that there is a raising number of retirees interested in leisure products like
Health products medication, Luxury and travel items

Last 4 years birth rate trend 8.99/1000 births.

TECHNOLOGICAL
Taiwan's information and communications technology companies play a key role in the global supply chain for electronics products. Examples of Taiwans global market share in manufactured IT products:
90%: Notebook PCs 80%: Motherboards 70%: PDAs 70%: LCD monitors 50%: Mobile phones 30%: Smart phones

 Taiwan companies are also among the world's leaders in products that save energy and reduce carbon emissions.

Taiwan also has several other areas of strengths including:

Biotechnology Food Technology Nano Technology Textile Technology Precision machinery Metal industry

 Taiwan is undoubtedly one of the most advanced telecommunications networks in Asia.

85% of household own computer 79% has internet access 75% has broadband access 95% uses broadband connection

DURING THE ASIAN CRISIS

Effects of the 1997/1998 South east Asian financial crisis were not limited to financial turmoil, they also had impact on Taiwan causing exchange rates, interest rates, and share prices to fluctuate violently. The impact on its financial markets was comparatively small compared to that in South Korea and other economies

Table 1 provides data on the economic growth rate, consumer prices inflation rate and the rate of unemployment. Compared with others, we find that Taiwan has higher economic growth rate, a lower inflation rate and lower unemployment figures.

 Table 2 provides data on fluctuations in the exchange rate and the stock price index.
Combining the two figures, we find that Taiwan had the least fluctuation during the 1997/1998 crisis period. Analysis of the two-year period, from 1997 to 1999, shows that Taiwan, Singapore, Hong Kong, and Japan comprised the group with the least fluctuations.

Taiwans performance during the crisis

Despite the adverse impacts, the Taiwanese economy still grew at a rate of 6.7%, its highest annual growth rate for the previous five years and it just fell to 4.6% in 1998. It still represented the highest growth rate amongst all the neighbouring Asian countries.

POST CRISIS
In table 2 it shows GDP growth dipped from 6.7 to 6% in the slow down period of 1998. The economy recovered its position and went back to 6.4% in 1999. Table 3 shows the decline in exports from 8.9 to 6.4% in 1998. In 1999 exports shoots up to 8% which signifies the recovery Table 4 shows consumer price inflation rise from 1.4 to 2.8% in 1998 and it reduces again to 2.4% in 1999

Exchange Rates
In addition, the slowdown in domestic economic growth in 2013 will create excess capacity that will take time to work out.

However, as healthy GDP growth reduces the supply overhang, companies' ability to raise prices should increase later in the forecast period.
Economic growth is also likely to provide strong employment prospects, allowing workers to negotiate higher wages that will push up firms' costs and increase demand-side price pressures. Partly because of this, annual producer price inflation in 2012-16 is expected to be significantly higher than the rate of consumer price rises, at an average of 3.2%.

Taiwans Foreign Exchange Reserves

 The New Taiwan dollar will remain broadly stable against the US dollar in 2012.

The CBC has indicated that it will allow the local currency to strengthen in order to combat domestic inflation. However, it will be reluctant to allow the currency to appreciate too quickly lest it damage the country's struggling export sector. In 2013-16 strong current account surpluses should ensure that the currency's rate of appreciation accelerates against the US dollar.

 In addition, the US currency will be relatively strong in the forecast period, and the New Taiwan dollar will therefore appreciate significantly against major currencies such as the euro and the yen. Inflows and outflows of speculative capital will meanwhile continue to play an important part in determining short-term changes in the New Taiwan dollar's value

Monetary policy
Since September 2011 the Central Bank of the Republic of China (CBC, Taiwan's central bank) has kept interest ratesunchanged, leaving its main policy interest rate, the discount rate, at 1.875%. The decision to increase oil and power prices in April has made inflation a concern for the authorities, supplanting their previous focus on supporting economic growth amid continuing uncertainty in the external environment. However, policy interest rates are unlikely to be raised until late 2013, when the economic recovery should be more firmly on track.

Thank You