53 Taiwan

Tooze

“Taiwan is getting stronger and stronger in global tech manufacturing and especially in chips,” said Wu Chun-han, a hardware electronics engineer. “While that makes us indispensable to the world, it is resulting in something like the Dutch disease,” he added, a reference to economies where a boom in one sector impedes the development of others. Ko Wen-je, the former Taipei mayor who is challenging Taiwan’s largest two established parties, the DPP and the opposition Kuomintang, in the presidential race, also claimed that Taiwan was suffering from the “Dutch disease”. He pointed to a growing gap in investment and incomes between its tech sector and the rest of the economy. He has appealed to the economic concerns of swing voters with a constant drumbeat that the country must address its “five shortages” of power, water, land, workers and jobs for highly-qualified professionals. Economists agree that Taiwan’s economy is growing too lopsided. In the past two years, semiconductors accounted for almost 42 per cent of exports, up from about 33 per cent in 2016 when president Tsai Ing-wen and her Democratic Progressive party came to power. Meanwhile, the services sector which provides the majority of jobs — it employs 4.8mn people compared with just 663,000 in the chip industry — is languishing because sluggish consumption during the pandemic has weakened its mostly small companies.

Tooze (2023) Taiwan’s microchip dominance is risking Dutch disease